DENVER | Main Development Thread #7

[TakeFive]

Originally Posted by twister244

Denver should do what Minneapolis did a couple years ago, but we all know that won't happen.

Last I read the zoning change in Minneapolis has had virtually no impact.

Look at it this way:

Even in Phoenix (except in ghetto neighborhoods) the bottom of the SF home market is close to $300,000. The top of the market is $27 million but $15 million is average high end.

I'd assume in Denver the low end of the market is at least $400,000? Top of the market looks to be $14 million but $11 million is closer to average high end. So an average of $600,000 which falls between $400,000 and $11 million doesn't sound that crazy, does it?

[twister244]

Originally Posted by TakeFive

Last I read the zoning change in Minneapolis has had virtually no impact.

Look at it this way:

Even in Phoenix (except in ghetto neighborhoods) the bottom of the SF home market is close to $300,000. The top of the market is $27 million but $15 million is average high end.

I'd assume in Denver the low end of the market is at least $400,000? Top of the market looks to be $14 million but $11 million is closer to average high end. So an average of $600,000 which falls between $400,000 and $11 million doesn't sound that crazy, does it?

It does look crazy when you look at other cities with similar qualities of life, or better urban fabric. Go onto Redfin and put a price cap of $450k and see how many listings you get in Denver. Now... Go to Chicago (or some other nice midwest city) and put that same price cap. Are you going to still tell me Denver hasn't crossed a crazy threshold? Just in individual neighborhoods in Chicago, there are more listings under $450k than there are in all of Denver. Chicago is an outlier, for sure, but it's highlighting a dirty secret people might not realize yet. At some point, the cities that everyone perceives to be hip and affordable are quickly going to become the very thing they are fleeing - over-hyped and overpriced. I am probably biased in my posting here since my job can be done remotely long term, and I have tons of family in Chicago, but there is some truth here.

And of course zoning doesn't have an immediate impact. But it does ensure for proper development in the years following. The problem is Denver didn't see this level of growth coming, which is one thing. However, they aren't taking the necessary steps to address it moving forward. Instead we have this growing underbelly NIMBY sentiment that is pitting "natives" against transplants, while the city is becoming unaffordable for middle class folks.

[TakeFive]

Source

Originally Posted by twister244

It does look crazy when you look at other cities with similar qualities of life, or better urban fabric. Go onto Redfin and put a price cap of $450k and see how many listings you get in Denver. Now... Go to Chicago (or some other nice midwest city) and put that same price cap. Are you going to still tell me Denver hasn't crossed a crazy threshold? Just in individual neighborhoods in Chicago, there are more listings under $450k than there are in all of Denver. Chicago is an outlier, for sure, but it's highlighting a dirty secret people might not realize yet. At some point, the cities that everyone perceives to be hip and affordable are quickly going to become the very thing they are fleeing - over-hyped and overpriced. I am probably biased in my posting here since my job can be done remotely long term, and I have tons of family in Chicago, but there is some truth here.

I apologize since you have family in Chicago and downtown Chicago is very nice as are many parts of Chicago, I'm sure.

But I'm also aware that most municipal bonds and state bonds are rated one notch above junk. Both the city and the state are experiencing net out-migration. Doesn't necessarily mean one shouldn't live there though.

If I were to move to the upper mid-west, especially if I had a family I'd choose Columbus OH. Their bonds are rated Triple A (like Denver) and Ohio bonds are rated Aa1 - same as Colorado's.

Honestly, I understand Denver housing prices are rather high but compared to other desirable cities "west of the Mississippi"? I'd assume SLC and Boise are still lower and ofc all the desert cities and Texas.

I don't see any benefit in re-litigating Denver Zoning. I'm more flexible than NIMBY's but less flexible that YIMBY's. But it is what is and I still believe that zoning for fourplexes would accomplish little to nothing.

[Robert.hampton]

Originally Posted by twister244

It does look crazy when you look at other cities with similar qualities of life, or better urban fabric. Go onto Redfin and put a price cap of $450k and see how many listings you get in Denver. Now... Go to Chicago (or some other nice midwest city) and put that same price cap. Are you going to still tell me Denver hasn't crossed a crazy threshold?

I tend to agree but when I compare Denver to other peer-ish mountain west cities Denver’s prices actually don’t seem outlandishly out of touch. I can also work from anywhere but want to stay in an urban area close to the mountains. But when I start looking I can’t find much that provides significantly better value than Denver. When I look at Bozeman, Salt Lake City, Boise, or Bend I don’t see much more house for your money. Hell even Reno seems to be in the same neighborhood for real estate prices.

[SirLucasTheGreat]

Seems like things might be heating up around the 38th and Blake Station

Apartment developer pays $24M for site of planned 483-unit RiNo complex

https://businessden.com/2021/02/04/multi...r%23newsletter%23newsletter%23newsletter

[twister244]

Originally Posted by TakeFive

Source

I apologize since you have family in Chicago and downtown Chicago is very nice as are many parts of Chicago, I'm sure.

But I'm also aware that most municipal bonds and state bonds are rated one notch above junk. Both the city and the state are experiencing net out-migration. Doesn't necessarily mean one shouldn't live there though.

If I were to move to the upper mid-west, especially if I had a family I'd choose Columbus OH. Their bonds are rated Triple A (like Denver) and Ohio bonds are rated Aa1 - same as Colorado's.

Honestly, I understand Denver housing prices are rather high but compared to other desirable cities "west of the Mississippi"? I'd assume SLC and Boise are still lower and ofc all the desert cities and Texas.

I don't see any benefit in re-litigating Denver Zoning. I'm more flexible than NIMBY's but less flexible that YIMBY's. But it is what is and I still believe that zoning for fourplexes would accomplish little to nothing.

My point in posting about Chicago wasn't to advocate that Chicago is in better shape as a city compared to Denver....

And yes, Chicago is an outlier and there are other cities that are more comparable to Denver. But... I feel like Denver stands out right now amongst peer cities (maybe Austin being the exception) in how badly our supply/demand imbalance is. If you look at that article I posted, we keep breaking records of low housing inventory. This means we are heading into selling season with record low inventory, continued low mortgage rates of <3%, and an economy that's going to start opening back up. Anyone hoping to get a SFH or townhome for under $500k is about to see their hopes completely evaporate, if they haven't already.

And yes, you can go out to the burbs and find lower prices, but things are also going up there as well.

[The Dirt]

No point in debating TakeFive while he has his Boomer rose colored glasses on. Everything is fine because I got mine. #boomer4lyfe

[EngiNerd]

Originally Posted by twister244

I think it's already too late. This article that came out today is just depressing to read.....

https://www.westword.com/news/denver-average-home-prices-up-100000-in-a-year-11892826

$100k in one year. Let that sink in for a moment.

Denver should do what Minneapolis did a couple years ago, but we all know that won't happen.

That's pretty much the whole story in one image....supply has dropped off a cliff, but demand I would bet is still similar to what it has been in the last several year.

[EngiNerd]

Originally Posted by twister244

My point in posting about Chicago wasn't to advocate that Chicago is in better shape as a city compared to Denver....

And yes, Chicago is an outlier and there are other cities that are more comparable to Denver. But... I feel like Denver stands out right now amongst peer cities (maybe Austin being the exception) in how badly our supply/demand imbalance is. If you look at that article I posted, we keep breaking records of low housing inventory. This means we are heading into selling season with record low inventory, continued low mortgage rates of <3%, and an economy that's going to start opening back up. Anyone hoping to get a SFH or townhome for under $500k is about to see their hopes completely evaporate, if they haven't already.

And yes, you can go out to the burbs and find lower prices, but things are also going up there as well.

You also have to consider property taxes in Illinois when looking at total cost of homeownership in Chicago, it is much higher than in CO....their property tax rate is roughly 4x that of Denver. So while it may appear more affordable on the face value of housing prices alone, the monthly mortgage costs will likely be very similar.

Edit: here's a good map showing relative property taxes...master planned community development tax districts can skew this obviously, but they likely could in most states as well.

https://learn.roofstock.com/blog/cities-with-highest-property-taxes

[twister244]

Yep, totally get the tax situation. A couple years ago, yeah, with taxes the COI of owning was comparable, but with Denver rising as fast as it has, the tables are beginning to turn compared to several cities.

[TakeFive]

Originally Posted by EngiNerd

Edit: here's a good map showing relative property taxes...master planned community development tax districts can skew this obviously, but they likely could in most states as well.

Any thoughts on how the repeal of the Gallagher amendment will impact property taxes going forward?

Originally Posted by The Dirt

No point in debating TakeFive while he has his Boomer rose colored glasses on. Everything is fine because I got mine. #boomer4lyfe

Let me paint a picture; perhaps it will help.

Ball Corp is a long time metro area company with its headquarters in Broomfield. In recent years Ball Corp has significantly restructured their operations:

Can giant Ball Corp. to build a new plant in Goodyear (AZ)

Ball Corp. said it will build a new beverage packaging plant in Goodyear while shuttering three beverage packaging plants elsewhere in the U.S. Goodyear is steadily becoming an industrial powerhouse in the Valley...

https://azbigmedia.com/business/economic...n-build-stateoftheart-facility-goodyear/

“We’re excited to begin construction on our new beverage packaging manufacturing facility in Goodyear,” said Carlos Medeiros, president, Ball Beverage Packaging North & Central America. “The Phoenix area’s skilled technical workforce and business-friendly environment are ideal for this expansion of our U.S. operations, which will allow us to better serve growing customer demand for specialty beverage cans in the southwest.”

The Demand side of the Demand/Supply curve
When you have more people trying to buy a limited supply of widgets, it tends to push prices higher. Just as important is how much money those people have in their pockets.

Ball Corp provides good-paying jobs but there's a big difference between what their factory workers make and what the guys/gals make at their headquarters.

Goodyear is a newer, growing area in West Phoenix. Just checked and you can buy a home starting at ~$300,000 (including new construction). Goodyear also has some nice areas where homes cost up to $1 million. Next door to Goodyear is Tolleson an older area with a more diverse housing stock that starts at ~$225,000.

Denver/metro has done an impressive job of recruiting (tech) companies who pay a handsome amount to their employees. Is this a good or bad thing? Is it because I'm a boomer?

Why would Ball Corp locate their manufacturing facility in west Phoenix? Here's what Chris Camacho has to say.

“Greater Phoenix is a hub for manufacturing facilities; more than 2,700 Arizona-based companies make this state one of the nation’s largest supply chain contributors for advanced manufacturing,” said Greater Phoenix Economic Council President & CEO, Chris Camacho.

The Goodyear site selected for the new facility made for an attractive selection due to the infrastructure in place, such as fully developed power, water and gas lines, and its proximity to the Loop 303 and Interstate 10 providing quicker distribution to filler facilities...

People who make less have fewer $'s in their pocket to spend on housing yet markets will adjust. Having 'cheap' land, access to utility infrastructure is obviously important. Phoenix/metro is business friendly to more pedestrian companies as much as hi-brow companies and is also developer friendly. Makes a HUGE difference.

Would you care to explain why/how my being a boomer has anything to do with the type of business and industry and earning level that Denver has/recruits as apposed to the same in Phoenix? You think my being a boomer is why it's less expensive to build in Phoenix and more costly in Denver, why people in Denver have more $'s in their pocket than those in Phoenix?

[TakeFive]

Originally Posted by twister244

Yep, totally get the tax situation. A couple years ago, yeah, with taxes the COI of owning was comparable, but with Denver rising as fast as it has, the tables are beginning to turn compared to several cities.

Good point.

Btw, it wasn't my intent to insult your preferences; just making observations. We all come from some place where we spent our formative years. These places will always hold special memories. I grew up in a small manure town an hour's drive southwest of the Dubuque IA. I can recall being impressed by my cousin's place which was in Sioux City IA; used to ski on the Missouri River. Of course for me that was 50 years ago.

https://www.marketwatch.com/story/this-i...-in-california-11612452891?mod=home-page

Home prices skyrocketed over the past year, but the economy has yet to catch up

And four states were rated as having undervalued housing markets: Connecticut, Illinois, Michigan and New Jersey.

Compiled by Fitch Ratings, they obviously looked at earnings (per capita) in evaluating housing costs. Denver wasn't listed but Las Vegas (which appreciated the most last year) and Dallas–Fort Worth were at the top for being overvalued.

Other states whose housing markets were found to be overvalued in excess of 10% included Arizona, Texas, Kansas, North Dakota and Washington, among others.

Denver one of worst cities for construction job loss, association says
Posted: Feb 2, 2021 by: Dan Daru - KDVR

DENVER (KDVR) — The sights and sounds of construction echo in the concrete canyons in lower downtown Denver. To the casual observer, one would think this is good. But according to the Washington, DC-based Association of General Contractors of America, you would be dead wrong.

A new report by the AGC, a 100-year-old trade association, tells the Problem Solvers that Denver is one of the worst cities in the nation for construction job losses. In the Denver metro area, 6,900 jobs were lost. That put Denver in the top five worst cities for lost work.

“Sadly, Denver, Aurora, Lakewood — the metro area — had one of the biggest losses of construction employment of any metro area in the country,” said Simonson.

This suggests that Denver was seen (last year) as being near equilibrium by developers. There was, at least in the central city, a lot of projects under construction; many that were in the 'finishing' phase and fewer projects coming out of the ground.

[wong21fr]

Originally Posted by TakeFive

Why would Ball Corp locate their manufacturing facility in west Phoenix? H

Because you're next to CA, but you're not in CA. AZ is CA's Mexico: cheap labor, lower cost of living, a lighter regulatory load, and well within easy transportation distance.

[TakeFive]

Originally Posted by wong21fr

Because you're next to CA, but you're not in CA. AZ is CA's Mexico: cheap labor, lower cost of living, a lighter regulatory load, and well within easy transportation distance.

Exactly! Thanks for confirming much of what I was saying. (And it has nothing to do with me being a 'boomer.')

Yes, I agree the proximity to SoCal is beneficial. Could have gone to Nevada; could have gone to Tijuana or Mexicali, Baja or Nogales, Sanora too. Phoenix does have a lot of people so that was also relevant. The question is why the difference is so great between Denver and Phoenix.

[wong21fr]

Originally Posted by TakeFive

Exactly! Thanks for confirming much of what I was saying. (And it has nothing to do with me being a 'boomer.')

Yes, I agree the proximity to SoCal is beneficial. Could have gone to Nevada; could have gone to Tijuana or Mexicali, Baja or Nogales, Sanora too. Phoenix does have a lot of people so that was also relevant. The question is why the difference is so great between Denver and Phoenix.

I thought you were trying to paint a picture of why Ball Corp would put a can manufacturing facility in Phoenix instead of Denver?

Population within 400 miles of Phoenix: ~35 million
Population within 400 miles of Denver: Cows

Both can serve as regional hubs, but the surrounding population density is vastly different. Which affects the kind of operations will find the areas attractive.

Phoenix is better situated for consumer/service based industries given the large population in the geographic area. It also has the benefit of investing in certain industries such as chip fabrication. It has more of a modern industrial base than Denver.

[The Dirt]

TakeFive, here's a lesson in brevity. There is no balance. The housing market is severely under supplied.

Originally Posted by EngiNerd

[gopokes21]

Originally Posted by TakeFive

Denver one of worst cities for construction job loss, association says
Posted: Feb 2, 2021 by: Dan Daru - KDVR

This suggests that Denver was seen (last year) as being near equilibrium by developers. There was, at least in the central city, a lot of projects under construction; many that were in the 'finishing' phase and fewer projects coming out of the ground.

I wonder if some of these construction jobs are being automated or if Davis Bacon requirements are just putting the work out of reach for many subs. Here's an article effectively refuting the above, stating that Denver actually bucked the trend with significant growth in construction starts.

https://www.bizjournals.com/denver/news/...ial-multifamily-housing-starts-2020.html

I think when you get these counterbalancing viewpoints and articles the best way to settle these things is to take a drive and look around. There is nothing but construction everywhere you look around Denver.

[EngiNerd]

Originally Posted by gopokes21

I wonder if some of these construction jobs are being automated or if Davis Bacon requirements are just putting the work out of reach for many subs. Here's an article effectively refuting the above, stating that Denver actually bucked the trend with significant growth in construction starts.

https://www.bizjournals.com/denver/news/...ial-multifamily-housing-starts-2020.html

I think when you get these counterbalancing viewpoints and articles the best way to settle these things is to take a drive and look around. There is nothing but construction everywhere you look around Denver.

Anecdotal, but I am in the construction industry and work for a top CO structural and civil engineering firm...we are as busy as ever, and so are most of the contractors I talk to. I keep being surprised by these articles about construction job losses in Denver.

It's possible like you say that a lot of projects went on temporary hold in March/April (they did) but most have since kicked back off again. The job loss article appears to be only looking at March/April in their report, but it's difficult to tell.

[bunt_q]

Originally Posted by gopokes21

Seattle.

3.15 miles for $1.9 billion, of which half came from FTA. Doable.

Well, Sound Transit built that, and their service area has a population of 3 million. Not 750,000.

But I'll concede, 3 miles we could do. (I'll also ignore that there aren't a ton of $800 million FFGAs out there, but fine, assume we could get FTA to chip in.) We could do one of those.

3 miles doesn't change a damn thing transportation-wise anywhere you put it in Denver. But yes, we could afford a downtown transit tunnel. That's about it, and you'd still have to connect into it with something. Show us where you'd do your $2 billion tunnel that would transform transportation for central Denver as you have been describing.

I'd love to see this $2 billion game-changer for Denver drawn on a map. I'll give you a deal - if you can revolutionize Denver transportation with $2 billion, I'll make it happen for you. Not just on this forum; in the real world.

Originally Posted by gopokes21

But I guess it's more fun to choke on the thought of one funding source and the world's worst public financing plan.

What are you referring to?

Originally Posted by gopokes21

Meanwhile I guarantee you a billion here and a billion there will be put toward something that isn't even on the radar today.

Locally? How many billion dollar projects can you name in Colorado? I am pretty sure there have been two. I did one, and my partner did the other, so...

[TakeFive]

Originally Posted by EngiNerd

Anecdotal, but I am in the construction industry and work for a top CO structural and civil engineering firm...we are as busy as ever, and so are most of the contractors I talk to. I keep being surprised by these articles about construction job losses in Denver.

It's possible like you say that a lot of projects went on temporary hold in March/April (they did) but most have since kicked back off again. The job loss article appears to be only looking at March/April in their report, but it's difficult to tell.

Good points.

I was also wondering if how each accounts for starts etc might be a thing - but the Negative report not following along through whole year makes lots of sense to me.

Originally Posted by gopokes21

I wonder if some of these construction jobs are being automated or if Davis Bacon requirements are just putting the work out of reach for many subs. Here's an article effectively refuting the above, stating that Denver actually bucked the trend with significant growth in construction starts.

Good post.

With respect to Davis Bacon requirements, that applies to Federally funded projects. Additionally, I think the "local prevailing wage" applies as well. It has a complicated history according Wikipedia.