DENVER | Main Development Thread #7

[bunt_q]

Originally Posted by laniroj

which is that those I know living in the center city are leaving.

If you are drawing "Denver" that narrowly then I am sure a lot of people are getting priced out (or can't afford to change when they want something different), or they cashed out. My neighbors are in the cash out bucket - not that they weren't satisfied here, but family dynamics changed, and their equity in Denver now affords them a freakin' beach-view townhome in Santa Barbara. So they traded up.

That's not exactly the story of a city in decline, though. It's the story of a city that's gotten bloody unaffordable.

[CONative]

Believe it or not, Denver ranks #2 Hottest Housing Market. I know a lot of media and such focus on the negative numbers, but when you look at a number of metrics... it isn't as bad as some may think.

https://realestate.usnews.com/real-estat...s/the-hottest-housing-markets-in-the-u-s

[RyanD]

Originally Posted by CONative

Believe it or not, Denver ranks #2 Hottest Housing Market. I know a lot of media and such focus on the negative numbers, but when you look at a number of metrics... it isn't as bad as some may think.

Well that... Leads to...

Originally Posted by bunt_q

It's the story of a city that's gotten bloody unaffordable.

This. Especially when Central Denver only gets 500 or so condos built every decade.

[TakeFive]

Originally Posted by CONative

Believe it or not, Denver ranks #2 Hottest Housing Market. I know a lot of media and such focus on the negative numbers, but when you look at a number of metrics... it isn't as bad as some may think.

https://realestate.usnews.com/real-estat...s/the-hottest-housing-markets-in-the-u-s

https://www.denver7.com/news/local-news/...-of-top-10-metros-homebuyers-are-leaving

Point

The data collected by Redfin said homebuyers are relocating at an "unprecedented rate" due to
elevated mortgage rates, high home prices, and economic uncertainty.

Counterpoint

The list may come as a shock to many people familiar with Denver, but Matt Metcalf who has been in the real estate world since 1995, isn't surprised by the list.

“Statistically, it's fairly insignificant," Metcalf said about the study. "We're going to have some of those migratory changes over the years. But Denver still has a mass appeal, and I think we still have some pretty pent up buyer demand and people who really want to call this home long-term.”

I do enjoy anecdotal stories for what people do and why. They may be statistically insignificant or they may hint at what others may also be thinking.

For example, bunt may suggest that everyone on his block wants to move somewhere else but I also heard that two blocks over nobody wants to move anywhere else.

I think partly what is happening (as has been reported) many markets including Denver have 'normalized' meaning it's no longer the strong Seller's market but more balanced between buyers and sellers. The other thing that has occurred is interest rates dropped some after the 1st of the year which has encouraged many buyers to take action. There's likely been buyers out there that gave up on the 'bidding craziness' for buying a home but with a more normal market they're able to make a reasoned decision to buy.

[Sam Hill]

Originally Posted by CONative

Believe it or not, Denver ranks #2 Hottest Housing Market. I know a lot of media and such focus on the negative numbers, but when you look at a number of metrics... it isn't as bad as some may think.

https://realestate.usnews.com/real-estat...s/the-hottest-housing-markets-in-the-u-s

You and I may have opposite ideas of what constitutes a negative and positive number in this regard.

IMO, either demand needs to plummet, or inventory needs to skyrocket. Anything else is a continuation of this crisis.

When I see a headline about the Denver market cooling, I think, “oh, good news!”

I’m done with Denver being a “hot” market. An exodus would be great.

[TakeFive]

'We are doing our best': Denver landlords under pressure as lenders take operating control of high-profile towers
Feb 17, 2023 By Greg Avery and Kate Tracy – Denver Business Journal

Some of downtown Denver’s most iconic office properties, including two towers that have defined the city’s skyline, are struggling in a race to fend off lenders as post-pandemic vacancy rates threaten to upend landlord portfolios in the city.

Five office buildings with a collective $617.3 million owed to lenders — among them the famed “Cash Register Building,” Republic Plaza, which is Denver’s tallest building, and the Writer Square mixed-use property — are casualties of rising office vacancy rates caused by the shift to hybrid and work-from-home styles and the departure of oil company headquarters.

The buildings’ owners have fallen behind on loan payments and some have been unable to make balloon payments as the properties’ loans matured and financing came due, according to their most recent financial filings.

I had read recently in Bisnow that nationally this was anticipated to be a growing problem. Many prominent buildings like these in Denver were bought by Top Tier investors (like Brookfield Properties) who were able to over-leverage the properties. It also more of a problem with rising interest rates. Nobody could have predicted all the changes that have happened since the Pandemic and with leasing problems those same 'prominent' owners have no motivation to sell for a loss as they largely cashed out their equity years ago.

I suspect this also shows the cumulative impact of oil & gas companies consolidating and often leaving Denver in recent years.

[TakeFive]

Originally Posted by RyanD

Well that... Leads to... This. Especially when Central Denver only gets 500 or so condos built every decade.

It's just crazy to think back to how popular building all manner of attached housing was in the 1980's. Some also happened in central Denver including condo conversions.

But since the Great Recession it's been all apartments all the time. Even down here where building condos is not a problem the only new condos have been high-end either in downtown Phoenix or in Scottsdale. But mostly it's been lots of new apartment construction.

The apartment construction momentum was fed by high rates of return so why take the risk of building condos. Perhaps that will finally change with a still full pipeline of new apartment projects but it will take a couple of years I'd guess to see how this plays out.

Years ago I thought that light rail stations might become a popular place for condos but that hasn't happened either.

Originally Posted by Sam Hill

You and I may have opposite ideas of what constitutes a negative and positive number in this regard.

IMO, either demand needs to plummet, or inventory needs to skyrocket. Anything else is a continuation of this crisis.

When I see a headline about the Denver market cooling, I think, “oh, good news!”

I’m done with Denver being a “hot” market. An exodus would be great.

It's possible the 'hot' will go out of the market moving forward. Should rentals become poor returns on investment then developers could change to building condos. Unfortunately that's likely a few years out should it even happen.

[COtoOC]

Originally Posted by Sam Hill

You and I may have opposite ideas of what constitutes a negative and positive number in this regard.

IMO, either demand needs to plummet, or inventory needs to skyrocket. Anything else is a continuation of this crisis.

When I see a headline about the Denver market cooling, I think, “oh, good news!”

I’m done with Denver being a “hot” market. An exodus would be great.

I'd be happy for prices to drop considerably. I bought 18 years ago and as of last spring, I could have sold for around $1.1M. I already coughed up an extra $2500 for property tax last August, and from the sounds of it, I'm going to get an even bigger bill this year.

I always thought a million dollar house would have a 4 car garage, circle drive, grand foyer and pool. I have none of that lol!

[laniroj]

Originally Posted by TakeFive

...Years ago I thought that light rail stations might become a popular place for condos but that hasn't happened either...

A surprising number of condos snuck in before the Great Recession and during along the SE line (E). Arapahoe County, Centennial, and Greenwood Village all got a pretty good amount of condos in transit walkable locations. They're dense too. At least we have one of the transit lines with condos!

[bunt_q]

Originally Posted by COtoOC

I'd be happy for prices to drop considerably. I bought 18 years ago and as of last spring, I could have sold for around $1.1M. I already coughed up an extra $2500 for property tax last August, and from the sounds of it, I'm going to get an even bigger bill this year.

I always thought a million dollar house would have a 4 car garage, circle drive, grand foyer and pool. I have none of that lol!

My inner nihilist is kind of looking forward to 26% property tax increases. Everybody was so happy to get rid of Gallagher with almost zero understanding of what that meant for them. Colorado voters used to be deliberate and nuanced, now we just parrot whatever the "correct" liberal thing to do is, like California voters. I am willing to bet the 50,000 people who will lose their homes if that happens almost uniformly voted for their own demise. Fingers crossed our ever-wise legislature can avert our self-imposed doom.

[COtoOC]

Originally Posted by bunt_q

My inner nihilist is kind of looking forward to 26% property tax increases. Everybody was so happy to get rid of Gallagher with almost zero understanding of what that meant for them. Colorado voters used to be deliberate and nuanced, now we just parrot whatever the "correct" liberal thing to do is, like California voters. I am willing to bet the 50,000 people who will lose their homes if that happens almost uniformly voted for their own demise. Fingers crossed our ever-wise legislature can avert our self-imposed doom.

Yeah, I wonder if voters actually understood the impacts.
I've lived in California and they already have a law to keep property tax increases low.

[laniroj]

Originally Posted by bunt_q

My inner nihilist is kind of looking forward to 26% property tax increases. Everybody was so happy to get rid of Gallagher with almost zero understanding of what that meant for them. Colorado voters used to be deliberate and nuanced, now we just parrot whatever the "correct" liberal thing to do is, like California voters. I am willing to bet the 50,000 people who will lose their homes if that happens almost uniformly voted for their own demise. Fingers crossed our ever-wise legislature can avert our self-imposed doom.

^This exact argument could be applied to the rent control bill talk at the legislature. It will crush those it intends to protect because...economics...math...the real world - things politicians don't understand.

[TakeFive]

Wasn't the reason for wanting to repeal Gallagher substantially because commercial property was bearing an outsized property tax burden?

So far as the amount of property taxes they can be easily lowered if desired. Normally in Colorado more is better from the Gubment's POV.

[ams5280]

Is the issue the property tax?

You have a home built in the 1970s. The value of the land is increasing, but it’s still a single family home. So there is incentive to redevelop to a higher use that is better able to offset the increase in value and the increase in costs. But you can’t because zoning doesn’t allow for it.

So you want to have your cake and eat it to, high home values that you as a homeowner benefit from (increased equity) and that are artificially protected by local zoning laws, and at the same time you don‘t want to be impacted by property tax increases.

I recognize that it’s not politically palatable, but if we want lower property taxes, we need to address the housing affordability issue first rather than sidestepping it.

Now I know that’s not feasible when we‘re talking about gentrifying neighborhoods that are seeing a huge increase in value due to folks moving in, but there’s definitely an overlap in the loudest voices supporting lowering property taxes and the “I’ve-got-mine” folks, and the fact remains that there are market incentives to redevelop a la Strong Towns gentle density increases.

[TakeFive]

........

Originally Posted by ams5280

Is the issue the property tax?

You have a home built in the 1970s. The value of the land is increasing, but it’s still a single family home. So there is incentive to redevelop to a higher use that is better able to offset the increase in value and the increase in costs. But you can’t because zoning doesn’t allow for it.

So you want to have your cake and eat it to, high home values that you as a homeowner benefit from (increased equity) and that are artificially protected by local zoning laws, and at the same time you don‘t want to be impacted by property tax increases.

I recognize that it’s not politically palatable, but if we want lower property taxes, we need to address the housing affordability issue first rather than sidestepping it.

Now I know that’s not feasible when we‘re talking about gentrifying neighborhoods that are seeing a huge increase in value due to folks moving in, but there’s definitely an overlap in the loudest voices supporting lowering property taxes and the “I’ve-got-mine” folks, and the fact remains that there are market incentives to redevelop a la Strong Towns gentle density increases.

Just out of curiosity how long have you lived in Denver? In case you missed it, density in the central city has exploded over the last dozen years; yet the cost of housing especially single family homes has also exploded. Go figure.

Pandemic Times

For years Millennials (generally) were content to rent. When the pandemic hit there was a mad dash to buy single family homes. Guess what happened?

Per capita income

Does Strong Towns talk about the correlation with per capita income?
NOTE: I previously looked up the data but I'll use 50% as a placeholder here.

Seattle, especially the central city has 50% more density than Denver yet their cost of homes is 50% higher. It turns out their per capita income is also 50% higher.

Sweet Dreams

You can chase your density dreams for decades and find it won't solve the problem. You want a Quick Fix? Start dumping toxic waste all over town.
Partly it's a lack of sprawl but desirability is even more important and hard to fix. For example, there's plenty of affordable housing in Phoenix but not in Scottsdale. The difference is desirability.

If the biggest shortage is in single family homes how do you solve that with density?

[rds70]

Initial massing study for the project planned along Stout between 22nd and Park Avenue West. Each of the three towers will be 25 stories (268 feet) with a total of 848 units. The architect is Perkins + Will. The developer is CMK:

[TakeFive]

Which would complete the Trifecta

Originally Posted by rds70

Initial massing study for the project planned along Stout between 22nd and Park Avenue West. Each of the three towers will be 25 stories (268 feet) with a total of 848 units. The architect is Perkins + Will. The developer is CMK:

I'm going to take a wild guess that the value of the $ falling back towards earth from high altitude may be more important to this specific developer than rising interest rates.

[wong21fr]

Originally Posted by rds70

Initial massing study for the project planned along Stout between 22nd and Park Avenue West. Each of the three towers will be 25 stories (268 feet) with a total of 848 units. The architect is Perkins + Will. The developer is CMK:

Wait a second. So there’s this project at Stout, the Evolve towers proposal at Champa, and the two-tower project at California. That’s seven towers that could be going up in a two-block area.

Wow.

[twalm]

Anyone have any information or renders on 6700 E. Union Ave in Belleview station?

Sounds like a grocery store topped by two apartment towers, one 19 stories and one 20.

[TakeFive]

Originally Posted by twalm

Anyone have any information or renders on 6700 E. Union Ave in Belleview station?

Sounds like a grocery store topped by two apartment towers, one 19 stories and one 20.

https://www.bizjournals.com/denver/news/...evelopment-belleview-station-denver.html

Essentially the master developer/land holder, Front Range Land and Development has submitted a 'concept' plan for what you mentioned. However their intent is to find a developer to buy the land so who knows what they will end up with or when.