DENVER | Main Development Thread #6

[comoneymaker]

Denver is #1 city in America to live.

http://www.bizjournals.com/denver/mornin...KFnWosLILtlTi+XRqrQ0532d390&t=1456934201

[CherryCreek]

Originally Posted by comoneymaker

Denver is #1 city in America to live.

http://www.bizjournals.com/denver/mornin...KFnWosLILtlTi+XRqrQ0532d390&t=1456934201

Well, crap. Now everyone will know.

[EngiNerd]

Based on the recent population influx, everyone already knows...

[RyanD]

Originally Posted by EngiNerd

Based on the recent population influx, everyone already knows...

Yep. And home inventory is at an all time low!

Home inventory levels slumps to record low

Home inventory levels in the Denver area slumped to an all-time low in February, according a report released on Tuesday.

There were a mere 3,963 active listings on the market last month, a 2.84 percent drop from 4,079 in February 2015 and a 6.1 percent drop from 4,221 in January, according to the report by the Denver Metro Association of Realtors. DMAR represents more than 6,000 real estate professionals.

To put February’s inventory numbers into context, last month the inventory level was down 73.5 percent from the 14,979 average active listings on the market in a February during the 30-year span from 1985 to 2015. Last months inventory level also was an 83.8 percent drop from the record high of 24,484 active listings set in 2006.

“Market activity is picking up, but home sellers appear to be holding out for the upcoming spring frenzy,” said Anthony Rael, Chairman of the DMAR Market Trends Committee and Denver real estate agent.

“This spring is shaping up to replicate last year’s market with high buyer demand significantly outweighing supply which will inevitably lead to bidding wars and higher prices,” Rael said.

By the numbers, other highlights reported by DMAR include:

There were 4,269 new listings added in February, a 10.8 percent increase from 3,853 in January and 0.68 percent more than 4,079 in February 2015.
4,151 homes were placed under contract, 15.21 percent more than the 3,853 in January and 1.82 percent more than 4,077 a year earlier.
2,753 homes sold and closed last month, 7.0 percent fewer than 2,960 in January, and a 10.3 percent drop from 3,069 in February 2015.
The average sold price last month for all homes was $377,917, up 9.04 percent from $346,572 in February 2015 and a 1.52 percent increase from $372,264 in January.
The median sold price of all homes as $330,000, up 11.67 percent from $295,530 in February 2015 and a 3.42 percent increase from $319,093 in January.
The average price of a single-home that sold was $417,734, an 8.10 percent increase from $386,421 in February 2015 and a 1.7 percent increase from $410,770.
The median price of a single-family home sold was $361,500, up 9.74 percent from $329,504 in February 2015 and up 4.78 percent from $345,000 in January.
The average price of a condo sold was $287,703, a 16.05 percent jump from $247,920 in February 2015 and a 6.13 percent increase from $271,094 in January.
The median sold price of a condo last month was $227,000, a 18.85 percent gain from $191,000 a year earlier, and a 5.58 percent increase from $215,000 in January
“Homes priced below $325,000 are in such high-demand that multiple offers well over list price will continue to be the norm until more listings come online,” Rael said.

[EngiNerd]

Double digit year-over-year median price increases....How are all of these stoners coming here affording that!

And then the very next article is this:

Rents rise 6.2% in Colorado.

National rents averaged 3.3% in February.

Rising rents could drive more people to buy homes.

http://www.denverrealestatewatch.com/2016/03/02/rents-up-6-2-in-colorado/

How, when there are no homes to buy, or in the price range where there actually is decent supply ($500k+) affordability becomes a huge issue for the average family.

http://www.dmarealtors.com/sites/default/files/content/dmar_markettrendsreport_february.pdf

[Agent Orange]

This topic has probably been hashed out before, but has there been any study into what degree the lack of condo construction might be increasing home prices? Obviously there are a lot of factors, but people who might have chosen a multi-family unit are being pushed into the single family market, or they're chasing a fixed supply of existing condos.

[CherryCreek]

Originally Posted by Agent Orange

This topic has probably been hashed out before, but has there been any study into what degree the lack of condo construction might be increasing home prices? Obviously there are a lot of factors, but people who might have chosen a multi-family unit are being pushed into the single family market, or they're chasing a fixed supply of existing condos.

I think its not just condo construction, its home construction. We are like 4 years into the biggest boom in Denver history and, if I recall from 2015 news stories, home construction still lags where it was 10 years ago.

The Great Recession devastated home builders and made banks extremely skittish to lend absent perfect credentials and a "sure" thing of a business plan. Even years after the bust ended, financing remained tight as hell.

As the recovery took on a real head of steam around in here in 2011 and 2012 developers, either because they were unwilling or unable, were extremely slow to respond. These really big developments take years of lead times and that just wasn't happening. Although the new rental market may already be overbuilt, by comparison, I'm not sure the single family construction market has even, as of 2016, caught up to a pace of construction that matches to the needs out there.

Thus, existing stock continues to skyrocket in price.

[mhays]

This supports my arguement that inadequate condo prices are the main reason behind the lack of new condos. Somewhere in the $350,000(?) to $400,000 range the market thins out. Ok, the evidence is indirect.

[CPVLIVE]

Originally Posted by mhays

This supports my arguement that inadequate condo prices are the main reason behind the lack of new condos. Somewhere in the $350,000(?) to $400,000 range the market thins out. Ok, the evidence is indirect.

$325,000 is the entry point right now in central Denver. A quick check of the MLS listings this morning shows no condos for sale below $325,000. A total of 20 condos for sale between $350,000 and $400,000. Just 10 available between $325,000 and $350,000. This is for the zip codes of 80202, 80203, 80204, 80205, 80206, 80211, and 80218. Serious lack of supply.

[RyanD]

I mean we had 80 whole condo units built in Central Denver between 2014 and present day. That has to be the lowest of any metro size over 2.5 million.

From what I'm still hearing, it's the defects litigation. Even with the bill that passed, it doesn't stop what has been going on with the insurance companies. Developers STILL don't want in on the game.

Highly doubt it's because the people here aren't going to buy at that price point. If you built a Spire sized building (500 units) with an average price of 325k, that sucker would fill up in a year here.

Or... Is Denver not getting condos because us millennials suck, and aren't competent enough to buy real estate? Or don't have the means to? Like one or two on here think...

[s.p.hansen]

What's different with your supply limitations vs the rest of the Mountain West?

Between 2014-2015 Colorado grew by 1.66% at the same time Utah grew by 1.45% and Idaho grew by 1.38%.

http://www.bizjournals.com/denver/news/2...g-10-states-with-highest-population.html

Housing prices have not exploded in Utah or Idaho.

[mhays]

You couldn't build another Spire and sell for those prices.

In my area you have to average $750/sf to build a highrise condo, with our own set of troublesome liability laws. That's substantially more than most existing buildings. A wild guess might be that you'd need to average $600-650/sf in Denver, and that will go up substantially year by year.

My theory on the depth of the higher-end market is based on lack of sales relative to available inventory at those levels.

[mojiferous]

Originally Posted by s.p.hansen

What's different with your supply limitations vs the rest of the Mountain West?

Between 2014-2015 Colorado grew by 1.66% at the same time Utah grew by 1.45% and Idaho grew by 1.38%.

http://www.bizjournals.com/denver/news/2...g-10-states-with-highest-population.html

Housing prices have not exploded in Utah or Idaho.

But the starting population is larger, so the total number of people is larger. So despite the percentages being similar we're faced with considerably more people moving in and not enough new construction. Idaho would be at ~5.43% growth with the same population increase.

[s.p.hansen]

Originally Posted by mojiferous

But the starting population is larger, so the total number of people is larger. So despite the percentages being similar we're faced with considerably more people moving in and not enough new construction. Idaho would be at ~5.43% growth with the same population increase.

You guys added ~101,000 between 2014-2015 (5,456,574)

Utah added ~53,000 between 2014-2015 (2,995,919)

That's proportionate to the all the existing services and infrastructure in place. Why would Utah have more home builders than Colorado? How would they not be equally challenged? This is the USA where home builders can move to different states and set up shop. The supply argument you guys are making doesn't make sense.

From 2010-2015 Colo: 8.5% (427,378)

From 2010-2015 Utah: 8.4% (232,034)

2010-2015 Colorado Average Cost for a House: ~$213,00- $292,200

2010-2015 Utah Average Cost for a House: ~$223,000- $223,300

Is there greater income inequality in Colorado now?

[Denver Dweller]

http://www.denverpost.com/business/ci_29586545/report-rtd-mallride-may-have-move-revitalize-16th

[CPVLIVE]

Originally Posted by s.p.hansen

What's different with your supply limitations vs the rest of the Mountain West?

Between 2014-2015 Colorado grew by 1.66% at the same time Utah grew by 1.45% and Idaho grew by 1.38%.

http://www.bizjournals.com/denver/news/2...g-10-states-with-highest-population.html

Housing prices have not exploded in Utah or Idaho.

Probably because babies don't buy houses. Here is a link to the census which helps distill the numbers.

http://www.census.gov/popest/data/state/totals/2014/tables/NST-EST2014-04.xlsx

This data set is for the four years from April 2010 to July 2014. Note Colorado had a natural increase of 138,257 and a net migration increase of 183,324. Utah had a natural increase of 153,509 and total net migration of 25,597. A healthy portion of Colorado's net migration was to Denver proper which is on pace to add 100,000 people from 2010-2016.

[CPVLIVE]

Originally Posted by mhays

You couldn't build another Spire and sell for those prices.

In my area you have to average $750/sf to build a highrise condo, with our own set of troublesome liability laws. That's substantially more than most existing buildings. A wild guess might be that you'd need to average $600-650/sf in Denver, and that will go up substantially year by year.

My theory on the depth of the higher-end market is based on lack of sales relative to available inventory at those levels.

IDK - Randy Nichols spent 175,000,000 to build the Spire and marketed and sold half the units at under $250,000 - $310/sf. This was before the (2007)recession and I assume he locked in his costs pre recession at the height of the then current boom (they lost their financing after the recession hit and had to scramble for another loan). What has changed since the height of that boom? Land and labor for certain but not commodities. Financing? Ins? I looked at a unit in the spire in December 2012 (900/sf) that the developer was asking $325,000 for that are now selling for half a mill.

[bunt_q]

Mhays doesn't know what he is talking about with respect to the Denver market. Fine, high rise condos are expensive. But it doesn't take $600/SF to build a three story condo building. And we have exactly zero of those being built. Anywhere in the state. That's clearly an anomaly. For all intents and purposes, it's illegal to build condos here.

F*** Central Denver. Time to leave this place. Ain't worth what we are forced to pay.

[s.p.hansen]

Originally Posted by CPVLIVE

Probably because babies don't buy houses. Here is a link to the census which helps distill the numbers.

http://www.census.gov/popest/data/state/totals/2014/tables/NST-EST2014-04.xlsx

This data set is for the four years from April 2010 to July 2014. Note Colorado had a natural increase of 138,257 and a net migration increase of 183,324. Utah had a natural increase of 153,509 and total net migration of 25,597. A healthy portion of Colorado's net migration was to Denver proper which is on pace to add 100,000 people from 2010-2016.

Ok that's a very important nuance, but it still seems strange that you guys have had your housing market blow up to the extent that it has. It seems more like it's just an unfriendly place to build a home.

[denconyny]

Originally Posted by comoneymaker

Denver is #1 city in America to live.

http://www.bizjournals.com/denver/mornin...KFnWosLILtlTi+XRqrQ0532d390&t=1456934201

Interesting the last paragraph of the article:

"Some might say that the city is experiencing a gold rush of a different color: green. After Colorado residents voted to legalize recreational marijuana in 2012, Denver has seen a surge in cannabis-related commerce, from dispensaries to magazines to high-tech paraphernalia like vaporizers, rolling papers, lotions and storage containers – and the industry is just gaining speed."

Finally, a mainstream publication at least giving positive attention to the millions of good people who like to smoke pot, but just are sick of the stupid pot laws in whatever current jurisdiction they may live, and if given any chance to make it possible..... they migrate to Denver...... current epicenter of the legalized marijuana industry.