DENVER | Main Development Thread #6

[TakeFive]

Originally Posted by bcp

This was a pretty good article...not too bleeding heart, and had some good facts...

I assume the article was similar to one written by Molly Armbrister in the DBJ on Dec. 8. This 5 page article was rather pointless (generally) to me though.

Colorado and metro Denver need a larger selection of diverse housing options if residents want to avoid quickly and continuously rising housing prices in the coming years, according to a study released Monday.

Okay then. /yawn


bcp

YES! but then this issue of using zoning as a carrot, rather then stick, was barely explored (see below on lot-splitting etc.)...still encouraging to see this inserted. Also, this article had ZERO mention of the HDL (housing defect liability) problem in CO....why are TX and NC able to be popular, gain jobs, and keep housing affordable? They have fixed this issue...CO must continue dropping the protectionism stance.

Good point...even though it kinda supports endless sprawl...would have been nice if the author had connected this issue to our transportation system and the VAST amounts of land available within a half-mile of our future train stations.

It's easy to confuse and conflate different issues and areas. With respect to downtown's popularity and densification it's mostly a demand supply issue which includes the value of land in any densely desired area.

If we're talking the metro area as a whole then the issues and solutions will vary from Littleton to Thornton or Adams county to Douglas County.

With respect to "condo defects" I'd suggest that's a small part of the problem although a growing one. I wouldn't want to solve affordability with "cheaply" built condos. The conversion of more modest apartments is a better solution IMO. I do agree certainly that a compromise or fix needs to be found so that new condos can be built at a variety of price points.

I can't speak to North Carolina but with Texas there's a couple of key differences. Texas has high property taxes which might be triple what Colorado property taxes are. That definitely affects the pricing of homes. In conjunction with this is that cities have been built on the sprawl model keeping land costs very reasonable. Same as with the Phoenix metro area.

I didn't know about the recent development near Watkins that EngiNerd mention's until I saw Molly Armbrister's article in the DBJ today:

"Exclusive: Sprawling community proposed east of Aurora"

A 5,144-acre master-planned community has been proposed in unincorporated Arapahoe County, bordering the eastern edge of Aurora south of I-70, according to plans submitted to the county.

The community has been dubbed "Prosper" in the planning documents, and is expected to eventually include nearly 9,000 residences and 8 million square feet of commercial space.

Like it or not this is probably the best solution to affordability as a metro area problem.

[TakeFive]

Originally Posted by Scottk

Yes the air in colorado has been salt lake city disgusting because our governor John frackenlooper is in the pockets of the oil and natural gas industry.

Don't even try to argue that it is the influx of citizens moving to Denver metro... Cafe standards and increased fuel efficiency of automobiles has negated that entirely

Originally Posted by Denver

I fail to see the correlation. With that reasoning, Colorado should also have a higher rate of alcoholism because the states is also supporting Colorado's brewing industry...

bloomberg.com

I did happen to read a quite good article on Bloomberg earlier this year. Written by Jennifer Oldham on Feb. 23 it's right HERE.

"Colorado First State to Clamp Down on Fracking Methane Pollution" -Thanks to bloomberg.com

Colorado regulators approved groundbreaking controls on emissions from oil and natural gas operations after an unusual coalition of energy companies and environmentalists agreed on measures to counter worsening smog.

Emissions from oil and gas operations contribute to thickening smog that exceeds federal ozone guidelines along Denver’s picturesque backdrop of the Rocky Mountains. Such pollution includes methane, a source of climate-changing greenhouse gas. The haze prompted Governor John Hickenlooper to ask energy companies and environmentalists to come together to write the first-of-their-kind rules.

[rds70]

The parking lots at the Eviva Cherokee site have been fenced off.

[rds70]

Originally Posted by Denver

Rendering for the new apartments at 28th and Vallejo. Looks like the image is from 28th St. This development is supposed to consist of three buildings- one five story building and two three story buildings. I am a little confused because the rending shows a six and four story building. However, the image is from the developer's website so I am guessing it has to be fairly accurate.


Image from:http://www.therichmangroup.com/public/property_images/profile_thumb_lohirendering.jpg

Building permit applications for this project were submitted to the city yesterday.

[TakeFive]

Originally Posted by rds70

The parking lots at the Eviva Cherokee site have been fenced off.

reddit.com

[DenverPoke]

Originally Posted by rds70

The parking lots at the Eviva Cherokee site have been fenced off.

Excellent, thanks for the update!! Drove by the other day and was imagining how great of an addition this will be for Golden Triangle. While I was over there I was also saddened to see 8th and Lincoln has turned into another stick monster.

[TakeFive]

Originally Posted by DenverPoke

While I was over there I was also saddened to see 8th and Lincoln has turned into another stick monster.

The rendering showing the Broadway side looks decent enough.


Thanks to KEPHART via DenverInfill.com

[bcp]

^^^^^ Take5 comments on housing...

Rest assured, I am not confused or conflating in any way Apologies if I was not clear...I'm really referring to urban- and transit-denver. I think you are way, way underestimating the impact of the condo defect liability issue....it's around a 25% reduction in the number of available homes - there's your major pinch on pricing.

As for succumbing to the belief that suburban sprawl developments are "the ansewr"...shame shame! it's easier yes...but it's bad in many other ways...then again - maybe that one is near some transit?

[DenverPoke]

Originally Posted by bcp

^^^^^ Take5 comments on housing...

Rest assured, I am not confused or conflating in any way Apologies if I was not clear...I'm really referring to urban- and transit-denver. I think you are way, way underestimating the impact of the condo defect liability issue....it's around a 25% reduction in the number of available homes - there's your major pinch on pricing.

As for succumbing to the belief that suburban sprawl developments are "the ansewr"...shame shame! it's easier yes...but it's bad in many other ways...then again - maybe that one is near some transit?

Just asking as someone pretty naive on construction costs, but how much in increased insurance costs are we talking when dealing with these issues? $10k per unit? $50k? If it's closer to the former it seems like someone could build a decent project with entry level condos in the high $200s and moving up from there. No? Or am I missing the issue?

[EngiNerd]

Originally Posted by bcp

^^^^^ Take5 comments on housing...

Rest assured, I am not confused or conflating in any way Apologies if I was not clear...I'm really referring to urban- and transit-denver. I think you are way, way underestimating the impact of the condo defect liability issue....it's around a 25% reduction in the number of available homes - there's your major pinch on pricing.

As for succumbing to the belief that suburban sprawl developments are "the ansewr"...shame shame! it's easier yes...but it's bad in many other ways...then again - maybe that one is near some transit?

Not only is the 25% reduction a pinch in overall availability of housing units, it is also a pinch specifically on Townhomes and Condos, which in Colorado are truly our "starter" homes. This makes affordability really crappy. For a multitude of reasons, Colorado doesn't have "starter" single family homes like typical other large Cities in the interior of the US (except maybe in the far reaches of the suburbs), our starter homes are townhomes and condos.

[Stonemans_rowJ]

Originally Posted by EngiNerd

Not only is the 25% reduction a pinch in overall availability of housing units, it is also a pinch specifically on Townhomes and Condos, which in Colorado are truly our "starter" homes. This makes affordability really crappy. For a multitude of reasons, Colorado doesn't have "starter" single family homes like typical other large Cities in the interior of the US (except maybe in the far reaches of the suburbs), our starter homes are townhomes and condos.

It's effect is so far-reaching in all price points really, and it has also helped create this rental bubble. Yes, many younger people prefer to rent, but there are also tons of people paying through the nose for a "downtown" or close-in rental who would buy if a decent condo project was available, especially with the low rates and relaxed down payment requirements.

[TakeFive]

Originally Posted by bcp

^^^^^ Take5 comments on housing...

Rest assured, I am not confused or conflating in any way Apologies if I was not clear...I'm really referring to urban- and transit-denver. I think you are way, way underestimating the impact of the condo defect liability issue....it's around a 25% reduction in the number of available homes - there's your major pinch on pricing.

As for succumbing to the belief that suburban sprawl developments are "the ansewr"...shame shame! it's easier yes...but it's bad in many other ways...then again - maybe that one is near some transit?

I realize I responded to your comments but my response wasn't really directed at you personally (think impersonal pronoun) but rather were more whole market oriented as that is what the study addressed. Housing variety and affordability is really a metro area problem as the great majority of the metro population lives outside of the urban center.

With regard to the condo protection issue, I could be mistaken, but I don't sense that there was any financing or investment appetite to build condos regardless.That's been generally true across the whole country (Miami excepted). Furthermore I can't think of any apartments that were converted to condos since the Great Recession hit. Given the lack of new condo construction that would have been the easiest thing to do if it could have penciled out.

But context is everything. Looking back 5 years is a whole lot different than looking ahead to the next 5 years. If we get a condo fix this year then I'm sure it will kick start some condo construction. Exactly how much and at what price points I wouldn't know.

The "Prosper" proposed development will be along and just south of I-70. If the metro area is to grow by a million people (or more) it would be very difficult to achieve that through densification alone. I assume we don't want to build new modern day ghettos.

[TakeFive]

Originally Posted by EngiNerd

Not only is the 25% reduction a pinch in overall availability of housing units, it is also a pinch specifically on Townhomes and Condos, which in Colorado are truly our "starter" homes. This makes affordability really crappy. For a multitude of reasons, Colorado doesn't have "starter" single family homes like typical other large Cities in the interior of the US (except maybe in the far reaches of the suburbs), our starter homes are townhomes and condos.

Originally Posted by Stonemans_rowJ

It's effect is so far-reaching in all price points really, and it has also helped create this rental bubble. Yes, many younger people prefer to rent, but there are also tons of people paying through the nose for a "downtown" or close-in rental who would buy if a decent condo project was available, especially with the low rates and relaxed down payment requirements.

Denver used to have plenty of starter homes.

If you're referencing the city center and Millennials who are college graduates with good paying jobs then that's one thing. But I'd guess that's a rather small percentage of the next million people who join Denver.

The referenced study does rightly address the metro wide challenge of needing to accommodate varying demographics and income levels. I assume that largely the answer will have to be a market function although cities can certainly make a difference at the margin. Certainly TOD's can play an important part as well.

[TakeFive]

What timing, lol. Speaking of helping at the margin and TOD's.

"Fund for affordable housing in transit-oriented developments to expand beyond Denver"
Molly Armbrister has the DBJ story HERE.

Denver Mayor Michael Hancock and other dignitaries gathered Tuesday to launch an expansion of the Denver Transit-Oriented Development Fund for affordable homes...

The $24 million fund will be used to finance property acquisition and pre-development loans for developers creating and preserving affordable homes along transit corridors in Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas and Jefferson counties.

There goal is to build 2,000 new affordable homes by 2024. Not exactly a deluge spread over 7 counties but every little bit helps.

[bcp]

295 homes per year............wow, setting the bar low - but yes, it's a start in addressing the supply issue totally agree that it's a regional issue, but the bulks of new homes SHOULD be going into denver by a large margin. Buntie has some stats..pretty sure it's going in the wrong direction, and that's because it's mainly SFH going in right now in the for-sale market. i'm not sure i'd call townhomes starters...at least not in the city.

insurance costs are astounding for condos...in many cases now, insurers simply won't even write the paper at all in CO, which means no bank will finance it...leaving 100% cash-only developers....essentially, this leaves nobody willing to develop condos. banks right now would absolutely lend on condos - that end of the market price-wise is super hot and funds are available. it gets back to the insurance.

as for condos..why no apt. conversions? great question....a few reasons:

- developers don't hold apt buildings...heck no...you finish, start leasing, and sell to apt owners / institutional investors ASAP
- the goal of institutional investors is long-term yields...nothing else. they don't flip, they don't convert, they sell it lock-stock-and-barrel years down the road
- their returns are FAT right now...no incentive to convert to condos (maybe we need legislation to require apartment building owners to flip 10% of their apt. to for-sale, moderately priced condos?.....HELL NO...just seeing if anybody is reading )
- renovations, cleaning, lease-buyouts...it's all very, very ugly and expensive work
- also, you still need to pull insurance policies if you convert to condos...and that gets us right back to the defect liability insurance issue...


There are some other reasons as well that have been listed before...cant think of 'em now (bunt?)

[bunt_q]

I think your bullet points covered it. There's no good reason to convert to condos right now, and there's very little comfort in the field that you'd be shielded from defect suits anyways. Now maybe a while down the road. But housing prices are not like gas prices - if anybody thinks today's $350/sf is going to come back down to $200/sf with some new supply, they're crazy. Housing is the ultimate sticky-priced good. We'd move heaven and earth to stop a 50% depreciation in home values - once they're high, they stay pretty high. We saw even tiny drops in home values during the recession, 5, 10, 15%, and it was a once-in-a-century foreclosure crisis. A part of me does think sprawl is the answer now because it can reasonably set new price points. You simply couldn't drop a $200/sf building into LoHi now even if every market and legal variable was on your side. (1) you'd be an idiot leaving that much money on the table and (2) Ken would have to fight you. But Prosper is a clean slate.

[TakeFive]

^^ Yeah, I wouldn't know how muddled the law is in covering conversions. I've seen where RedPeak has acquired a few quite nice older properties with the intention of updating them. I'd guess the option of conversion is something they considered for down the road.

With respect to prices, are you too young to have experienced the late 1980's early 90's in Denver? Denver was also a bit economically depressed after the dot.com bust which hit Denver later with the Telecom sector. That primarily held price appreciation and new construction back more than being a pullback. But it's partly why Denver didn't suffer so much with the Great Recession.

But Things Have Changed

First: I don't see lending standards getting easy peasy anytime soon, if ever. And just like the auto industry, the housing industry, especially with single family homes is no longer about producing max volume. They are now controlling their inventory much closer.

Second: With growing income disparity there will still be areas of lower priced homes; it's a matter of choosing where you wish to live and buy. I'm sure that in Denver there are neighborhoods where you could buy at an attractive price even today?

[EngiNerd]

Originally Posted by TakeFive

^^ Yeah, I wouldn't know how muddled the law is in covering conversions. I've seen where RedPeak has acquired a few quite nice older properties with the intention of updating them. I'd guess the option of conversion is something they considered for down the road.

With respect to prices, are you too young to have experienced the late 1980's early 90's in Denver? Denver was also a bit economically depressed after the dot.com bust which hit Denver late with the Telecom sector. That primarily held price appreciation and new construction back more than being a pullback. But it's partly why Denver didn't suffer so much with the Great Recession.

But Things Have Changed

First: I don't see lending standards getting easy peasy anytime soon, if ever. And just like the auto industry, the housing industry, especially with single family homes is no longer about producing max volume. They are now controlling their inventory much closer.

Second: With the growing income disparity there will still be areas of lower priced homes; it's a matter of choosing where you wish to live and buy. I'm sure that in Denver there are neighborhoods where you could buy at an attractive price even today?

I'm sure Montbello, Green Valley Ranch, and Villa Park have some cheap buys.

[TakeFive]

Originally Posted by EngiNerd

I'm sure Montbello, Green Valley Ranch, and Villa Park have some cheap buys.

Morrison Road, West Alameda etc; west of Fitz, along Leetsdale Dr.
There are actually a good number of starter home neighborhoods in SE Denver but everything is relative of course. But they'd certainly be less than say the South University corridor. Also closer to South Broadway especially towards Evans Ave.

[TakeFive]

Does Denver's success with Comic Con carry any weight?

.....
Courtesy of news.filehippo.com - didn't know File Hippo had news lol.

Iron Man, Hulk and Spider-Man, oh my! Marvel Experience coming to Scottsdale
Tickets are on sale now for the newest National Tour according to Hayley Ringle in the PBJ HERE.

The unique superhero experience encompasses seven large, air-inflated domes on nearly 3 acres outside Salt River Fields at Talking Stick.

I'm sure that Denver will be added to the tour soon. So far additional cities are only Dallas, Del Mar and San Francisco. Buy your tickets HERE.