Why does ‘1.8’ make me worry?

Sometimes, positive economic numbers can give one pause.

Take, for example, the figure “1.8.” Add the word “percent” to the end of that number, and you have the unemployment rate for the Boulder metropolitan statistical area — encompassing Boulder County.

Look at Larimer County, and the unemployment rate is slightly higher, at 1.9 percent. Unemployment stands at 2 percent in Broomfield County and 2.1 percent at Weld County.

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Defining “full employment” is a difficult task, with some economists saying that anything below 5 percent is an acceptable level. Over the years, I’ve heard definitions of “full employment” at 3 percent. But few would argue that the 1.8 percent to 2.1 percent range does not constitute full employment.

The fact that Boulder County enjoys the lowest unemployment rate in the nation — with the other counties of the Boulder Valley and Northern Colorado not far behind — gives credence to the feeling that business owners and human-resource managers have every day, as they struggle to fill positions, ranging from receptionists to skilled IT workers, from law clerks to physicians, from construction workers to bank executives: It’s a tight labor market.

The labor squeeze leads to wage pressure and causes local companies to recruit from far outside the region. Some are offering signing bonuses. Lack of workers is also stifling growth for some companies.

Adding to the difficulties are a few other numbers, including $1,008,970.

That’s the median home price in the city of Boulder during May, based on 74 sales, up from a median sales price of $890,000 a year ago.

Numbers in neighboring communities don’t approach those stellar heights, but it’s all relative, and housing prices are soaring throughout the Boulder Valley and Northern Colorado.

The median sales price in Estes Park reached $468,500, up from $405,000 a year ago; Longmont’s median price broke the $400,000 barrier, hitting $415,000 for the month, compared with $355,000 a year ago.

Fort Collins is approaching the $400,000 benchmark, coming in at $395,250, compared with $355,000 a year ago.

The median price in the Loveland/Berthoud market was $350,000, up from $345,000, while Greeley saw a median price of $277,500, up from $260,000 a year ago.

High housing prices can exacerbate the problems posed by extremely low unemployment. Even high-tech workers from the Silicon Valley, expecting to see significant price breaks compared to that region, are shocked at the price of housing in Boulder.

Those who couldn’t afford Boulder used to head to Louisville. As prices soared there, many looked to Lafayette. As prices climbed there, many looked to Longmont. Now, as Longmont surges to a median price of $415,000, the “drive-til-you-qualify” mentality continues, with many looking to Dacono, Erie, Firestone or Frederick.

But it doesn’t help matters that the entire Front Range — including Denver — is seeing soaring housing prices.

Low unemployment is a good thing. Increasing home values is another good thing.

But at some point, we have to ask, “Do we now have too much of a good thing?”

Christopher Wood can be reached at 303-630-1942, 970-232-3133 or via email at cwood@bizwest.com.