DENVER | Main Development Thread #7

[DenverInfill]

Originally Posted by TakeFive

Multifamily Construction Stays Strong As Activity Slows For Other Asset Classes
July 22, 2022 - Biznow


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Dude, you're way too young to use 1972 for comparison. Check this out:

• 1975 - 16,543 housing units
• 1980 - 30,129 housing units
• 1985 - 32,824 housing units
• 1990 - 11,897 housing units
• 1995 - 38,622 housing units
• 2000 - 54,596 housing units
• 2005 - 45,891 housing units
• 2010 - 11,591 housing units
• 2015 - 31,871 housing units

Source

You should be embarrassed for trying to deceive us.

Even with a population of 5.7 million people, 56,524 housing units in 2021 is a respectable amount.

You don't get it. From 2000 through 2007, Colorado averaged 44,653 new homes per year, which was meeting population growth. Then the Great Recession came and that average plummeted; meanwhile, Colorado's population kept on growing. While housing production picked back up during the 2010s, we still have not recovered from the under-production during the Great Recession, particularly since during the 2010s, Colorado's population continued to grow steadily.

Here's a table I made using the housing building permit counts from the data source you linked to above, showing annual housing permits from 2000 through 2021 for Colorado, along with the annual difference from 44,000--the average from 2000 through 2007. As you can see, we are 188,000 homes short of maintaining that average.

If you drop that average to 40,000 per year, the accumulative effect is still a 100,000 home shortage.

[laniroj]

Originally Posted by TakeFive

...Dude, you're way too young to use 1972 for comparison. Check this out:

• 1975 - 16,543 housing units
• 1980 - 30,129 housing units
• 1985 - 32,824 housing units
• 1990 - 11,897 housing units
• 1995 - 38,622 housing units
• 2000 - 54,596 housing units
• 2005 - 45,891 housing units
• 2010 - 11,591 housing units
• 2015 - 31,871 housing units

Source

You should be embarrassed for trying to deceive us.

Even with a population of 5.7 million people, 56,524 housing units in 2021 is a respectable amount.

Not trying to deceive anyone and I posted the data source so you could look into it. When I have some time, I'll pull the housing starts as a percent of population by year, for every year in which the data exists, then you will see the trend. I absolutely am guilty of picking the highest TWO production years - 1972 AND 2021, so I'm consistent there and no, I'm not too young (though it's something millennials hear a lot).

We would need to produce roughly 100,000 units per year to keep up with population growth (unadjusted for household size).

[laniroj]

Originally Posted by laniroj

...We would need to produce roughly 100,000 units per year to keep up with population growth (unadjusted for household size).

Just so I'm clear, if we produced 100,000 housing units and sustained that pace, home prices would fall meaningfully in Colorado - and that's the point. It's a needed correction, IMO, so that current/future generations can enjoy the same level of housing access that generations prior have. It's also an unknown gamble that has a TON of serious potential downsides. We've never had long term decline in housing prices in the United States, only short term corrections typically less than 5 years. IMO opinion, housing access for millions of American households outweighs the potential downsides.

[COtoOC]

Originally Posted by TakeFive

The craziness comes from primarily two states at this point: Florida and Texas. Enabling private citizens to sue for this or that is questionable constitutionally but if they're state laws... and who knows with this SCOTUS.

Just out of curiosity, I checked AZ yesterday which is trending purple but is narrowly controlled by Republicans. They passed a 'trans' law about no surgery before 18 years old and sports participation but nothing otherwise except they specifically enabled doctors to treat gender issues. They did pass the most aggressive education law allowing vouchers to anybody that wants them. Not sure that changes much at the end of the day.

Phoenix, itself, is gay-friendly and with the continued population growth and growth in diversity I don't sense any appetite to 'discriminate' in the metro area.



I suspect this is misleading. From what I recall this info is 'industry' generated (NAR) data that reflects single family homes (or maybe 4 units or less) built "For Sale." Afaik this data does NOT include multifamily rental units and since we have become more of a 'rental nation' it's not all that surprising.

Yeah, so far it just seems like TX and FL that have gone off the deep end. We have family in Miami and while I enjoy visiting, I could never live there.

The whole trans thing just seems like political overreaction to score points to me. If one of my kids were trans, I wouldn't allow any surgeries until they were at least 18, but other treatments that aren't permanent seem fine. I've heard some families w/trans kids have fled TX to CO for safety. Very sad.

[laniroj]

Originally Posted by DenverInfill

...

To add onto Ken's post with data. From the US Census...as a disclaimer, I took the per decade population numbers from the Census and then annualized for the in-between years for the sake of time. if I knew how to post an image on here I would. Here's the link if you're interested. If someone knows how to grab the image and post, please do.

https://imgur.com/a/c3SiL6g

[mojiferous]

Originally Posted by TakeFive

Dude, you're way too young to use 1972 for comparison. Check this out:

• 1975 - 16,543 housing units
• 1980 - 30,129 housing units
• 1985 - 32,824 housing units
• 1990 - 11,897 housing units
• 1995 - 38,622 housing units
• 2000 - 54,596 housing units
• 2005 - 45,891 housing units
• 2010 - 11,591 housing units
• 2015 - 31,871 housing units

Source

You should be embarrassed for trying to deceive us.

Even with a population of 5.7 million people, 56,524 housing units in 2021 is a respectable amount.

Agent Orange - I was using the census data, it's the only source with a reliable methodology and 40+ years of data. I would lean towards industry data never being reliable and based on feels and marketing, whereas the census data is at least based on a proven methodology of manually calling permitting offices and getting the total number of permits issued for new housing. Unfortunately over the last few years they have removed a lot of the available raw data and tried to make things more user-friendly, but the data points change from resource to resource which makes it harder to find apples-to-apples comparisons. One big problem with their new system is the removal of a lot of the historical metro-level data before 1995, but we can certainly look at the state data and get a good idea of the trends, because Denver has historically made up 50-70% of the construction totals.

TakeFive - 1972 IS a good point to compare data for housing and housing prices because housing prices were increasing but a lower rates through the late 70s https://fred.stlouisfed.org/series/MSPUS Recent analysis has focused at the 1976 change in HUD policy regarding mobile homes with a lot of cost pain in the lower end of the housing market, but either way the fact that there was SOOOO much housing built in 1972 should make it clear that we're still not building enough. With a higher population we should be building more, even if the increase is the same or lower, because older stock needs to be replenished.

And just looking at raw numbers is fine, but really what you want to look at is the number of housing units built compared to population increase and the number of housing units built per total population. I took all these numbers from the historical state data PDF and the population according to the census


Looking at the numbers this way, you can see that we're not building housing at anything close to the pace we used to. In the 70s we built a house for every 2 new people and even more in the 80s, but ever since it has been closer to one for every 3 new people. Considering average family size has also decreased as well makes this even worse. And for total population we're now building a house for every 20 persons, whereas in the 70s it was closer to one for every 8. Even in raw total numbers we built almost as much housing in the 1970s as we did in the 2000s! And that was with 2 million LESS people. The numbers for the last couple of years is promising, but any and all sociological data from 2020-2022 will also always have giant asterisks.

Either way, 50 years ago we were building housing at a much more robust level than we are now, and houses were affordable and attainable by a lot larger chunk of the population.

And the point here is (once again) to do a deeper dive into statistics presented and try to understand what the numbers are telling us. Just looking at the raw number of starts for a single year tells you nothing! But looking at trends and statistics that allow for more relative comparison is really helpful. Not that it will make a single bit of difference to convince everyone out there who has already determined that the biggest issues with our cities are density-driven crime and that housing prices are determined by the prices of new apartments, but

[mhays]

"Density-driven crime"...I remember that notion from the 80s when inner-city neighborhoods tended to be poorer. Also it's from the days when core commercial districts had few residents, so a visiting bar crowd for example could skew the stats.

As for boomers, yes that demographic tends to fight needed change on zoning and other housing policy. And of course they correlate with high home-ownership rates, attendance at public meetings, and voting rates.

[Fritzdude]

Originally Posted by rds70

RINO/Brighton corridor from yesterday:

If I were the Rockies - I'd take a serious look at replacing this lengthy parking lot with several layers of underground parking and then selling the land for development. Baseball ticket holders could still park in a more secure environment while a 1,000 more units could be built in this area. Win, win, win.

[TakeFive]

You guys are playing in my Wheelhouse

How many times have I said I hate statistics
There's no context; they don't talk. It's too easy to cherry pick for political purposes.

Originally Posted by DenverInfill

You don't get it. From 2000 through 2007, Colorado averaged 44,653 new homes per year, which was meeting population growth. Then the Great Recession came and that average plummeted; meanwhile, Colorado's population kept on growing. While housing production picked back up during the 2010s, we still have not recovered from the under-production during the Great Recession, particularly since during the 2010s, Colorado's population continued to grow steadily.

I think I understand RE and it's lot more than numbers.

What caused the Great Recession was lenders gave loans to anybody that had a heartbeat. Mostly LIAR Loans.

Thanks to wong for previously reminding us how this went down.

A) Following the Great Recession lenders were required to get real when qualifying people for loans which impacted young buyers the most. That's when we moved to being more of a rental nation.

B) Then the great Millennial Migration to urban centers happened. As a result they built lot of apartments but fewer single family starter homes since Millennials didn't want to live way out and couldn't qualify for loans anyway.

C) Specific only to Denver nobody would build condos due to risk... I assume everybody is familiar with that mess.

Context is Critical

A) Following the Great Recession, Denver blinked but briefly as they didn't have the huge excess of housing units like other places ie Phoenix, Las Vegas, Florida and Inland Valley CA.

B) Denver was blessed to have National Builders who had the capacity to build (in downtown) Denver where the demand was. They started with 4-story, 5-story and 6-story buildings.

C) Millennials were migrating to Denver faster than units were being built so more and more developers came in and started building more vertically.

If in-migration was stronger than builders were able to build then Okay I acknowledge that. But there were no conspiracies including blaming Boomers which is really lame. You should maybe consider running for politics.

D) It just takes developers a lot of time to entitle and build urban dense projects.

E) Roughly one full year of new starts was lost when the Pandemic hit.

[TakeFive]

Mea Culpa

Originally Posted by mojiferous

Agent Orange - I was using the census data, it's the only source with a reliable methodology and 40+ years of data. I would lean towards industry data never being reliable and based on feels and marketing,

I knew the data as presented didn't make any sense so I assumed that it may be industry data; I just had never figured our where the kink was.

Originally Posted by mojiferous

TakeFive - 1972 IS a good point to compare data for housing and housing prices because housing prices were increasing but a lower rates through the late 70s

Only if you have an (political) agenda do you pick out the one data point that is a TOTAL outlier. But if you can understand this then you can easily pick out the craziness with political propaganda.

[TakeFive]

Originally Posted by twalm

Bashin' boomers is a popular pastime for millennials who have to deal with the cards they've been dealt. Spend some more time arounds millennials and the above comment will seem pretty tame.

I think people get rightfully annoyed by a generation who is still dictating policy that is out of touch.

So much has changed over the years and crazy changes just keep on happening. I emphasize with the younger among us but inflation and stagflation is also poison for Boomers.

Today, it's all about algorithms and software for the purpose of maximizing investments. Then consider the huge money flows through financial centers that make their decision based strictly on ROI or return on investments. They may not even know Denver or any of its neighborhoods. But at least Denver is well-thought of so that investment money keeps coming. That could change.

[TakeFive]

Originally Posted by mojiferous

And just looking at raw numbers is fine, but really what you want to look at is the number of housing units built compared to population increase and the number of housing units built per total population.

And the point here is (once again) to do a deeper dive into statistics presented and try to understand what the numbers are telling us.

mojiferous - I don't recall how long you've lived in Denver?

In the mid to late 1980's there were thousands and thousands and thousands of empty houses all over the metro are with nobody to live in them. That is what followed the O&G boom that went bust. For the City Center it was also about "see-through" office buildings - that were vacant.

Tell me how your statistics tell this story? This is a perfect example for how statistics don't talk; there's no context.

It took the metro area the better part of a decade to come back closer to equilibrium. I can recall selling a house in West Highlands in ~1992 and you could sense the increased selling activity with values finally starting to tick up (they had dropped by as much as 50%). The house I sold, which was quite nice, sold for ~$93,000.

So in 1990 we still had way too much housing inventory and somehow you think these dry numbers were relevant? To what?

[TakeFive]

You and your lousy statistics

Originally Posted by laniroj

To add onto Ken's post with data. From the US Census...as a disclaimer, I took the per decade population numbers from the Census and then annualized for the in-between years for the sake of time.

As I stated above 15 to 20 years following 1972, Denver had thousands of empty houses all over the metro area. Values dropped by an average of 50%. In more desirable areas the drop was less maybe 25% while in less desirable area the drop in values was as much as 75%. I certify that you could have bought whatever you wanted at a very affordable price.

By the year 2000, most of the housing values had recovered to what they were in 1985 and in some cases they were higher, like in nice areas or with new-builds. Then the Stock Market tech bust which started in ~1999 didn't hit Denver until ~2002 in the form of telecommunications and cable layoffs. But while that market was laying off workers other segments of the market in Denver were growing.

So from 2002 the Denver RE market did reasonably well with new-builds selling well while housing values remained quite affordable.

Then the Great Recession hit and housing values took a downward tilt but no biggie in Denver and then Denver started recovering nicely following 2010 but housing values remained affordable through at least the first half of the 2010's.

It is totally a false narrative to talk about new housing units prior to 2014.

It's rather vacuous to talk about building new units when there's thousands of empty units. Although new units did get built as the economy improved as many buyers wanted a new home and not a beat up foreclosure.

[mojiferous]

Originally Posted by TakeFive

mojiferous - I don't recall how long you've lived in Denver?

Since 1977 - and in Denver (and a bit of Lakewood)

Originally Posted by TakeFive

In the mid to late 1980's there were thousands and thousands and thousands of empty houses all over the metro are with nobody to live in them. That is what followed the O&G boom that went bust. For the City Center it was also about "see-through" office buildings - that were vacant.

Tell me how your statistics tell this story? This is a perfect example for how statistics don't talk; there's no context.

It took the metro area the better part of a decade to come back closer to equilibrium. I can recall selling a house in West Highlands in ~1992 and you could sense the increased selling activity with values finally starting to tick up (they had dropped by as much as 50%). The house I sold, which was quite nice, sold for ~$93,000.

So in 1990 we still had way too much housing inventory and somehow you think these dry numbers were relevant? To what?

It's in there - that's why the 80s have the lowest number of houses constructed and the smallest population increase. But your memories of it (and the data) also back up why we need so much more housing!

There was more housing, more office, and more industrial available than demand and it was super super cheap! Everything that made Denver attractive in the late 90s/early 2000s was because you could get warehouse space or an office or an apartment for next to nothing and it allowed breweries and art galleries and people of all economic backgrounds to thrive. Now the supply/demand curve has switched and there is so much more demand than supply. To buy a house now you have to enter a bidding war, the art galleries are moving to semi-abandoned parts of west Colfax, and breweries keep moving further and further away. And that's because of the numbers - sure the mid-80s were a hiccup, but that temporary trend in demand and slow population growth did not continue, but the housing construction never restarted - that's what you see in those dry numbers!

So with every year we move further and further away from 1983 and the oil crash and more and more people move here and we still don't build enough - sure it was great in 1990 and acceptable in 2000, but by 2010 it was getting expensive and now it is outrageous. The reason why later Gen X, Millennials, and Gen Z are so angry at boomers is because of the fact you were able to sell a house in West Highland in '92 for $93k but the same house now is probably nearing 8x as much but average wages have only gone up by a little over 2x in the same period. It's almost like the housing economy crashed in the 80s and we as a society just decided to not build aggressively again.

And the messaging and disinformation is so strong now that people blame this massive cost issue on the measly amount of new construction and want it to slow down even more. They see tent cities popping up around them and never think "oh, maybe the fact I fought against all density in my neighborhood is a factor in people not having homes". They see artists and local businesses being priced out and blame all the giant new apartment buildings, which might be the only things that are acting to lower prices! Even perfectly reasonable people like yourself are likely to go "but we are building so much already"... And for all these reasons it is important to look at the statistics and understand what is happening.

[coolmandan03]

Originally Posted by Fritzdude

If I were the Rockies - I'd take a serious look at replacing this lengthy parking lot with several layers of underground parking

I don't think you're grasping the cost of underground parking. Especially underground parking that is only used 81 games per year (and most weekdays that lot is mostly empty)

[mhays]

You're right mojiferous.

And they particularly don't get that new housing on at one price point will affect housing at all of the lower price points as well.

And that affordable housing happens without subsidy only when vacancies are high enough and plenty of faded units exist.

And that people who can't afford 600 sf with a parking space might actually benefit from 300 sf with no parking, vs. a friend's couch or the gutter.

[laniroj]

Originally Posted by mhays

You're right mojiferous.

And they particularly don't get that new housing on at one price point will affect housing at all of the lower price points as well.

And that affordable housing happens without subsidy only when vacancies are high enough and plenty of faded units exist.

And that people who can't afford 600 sf with a parking space might actually benefit from 300 sf with no parking, vs. a friend's couch or the gutter.

^THIS. Perspective is everything. Most people are emotional thinkers and see the world only from the lens of their personal experience, maybe one or two others as well. If, after folks look at the census data I linked to, they still disagree with my assessment that we are producing roughly 50% of the housing we used to, then I will concede I am an asshole. Why we are producing 50% less housing units is open debate, but it’s pretty hard to argue with static, methodologically sound census data that has been consistent for many decades - such a disagreement could even be considered ‘disinformation’ - one of those buzz words we hear so often in our country these days.

By the way, Census data absolutely does distinguish between single family and multifamily production and even distinguishes between mom/pop multifamily (5 units or less) and institutional multifamily (>5 units).

[TakeFive]

Very nicely stated!

Originally Posted by mojiferous

There was more housing, more office, and more industrial available than demand and it was super super cheap! Everything that made Denver attractive in the late 90s/early 2000s was because you could get warehouse space or an office or an apartment for next to nothing and it allowed breweries and art galleries and people of all economic backgrounds to thrive. Now the supply/demand curve has switched and there is so much more demand than supply.

And no the dry numbers didn't say a thing; rather you added the context that makes all the difference.

Prior to 2010 Denver either had too many housing units or things were in relative balance so the data is irrelevant. Even between 2010 and 2014 as we all enjoyed the increased housing construction in downtown, housing affordability remained relatively benign.

[TakeFive]

What is it you think I/we don't get?

Originally Posted by mhays

You're right mojiferous.

And they particularly don't get that new housing on at one price point will affect housing at all of the lower price points as well.

And that affordable housing happens without subsidy only when vacancies are high enough and plenty of faded units exist.

And that people who can't afford 600 sf with a parking space might actually benefit from 300 sf with no parking, vs. a friend's couch or the gutter.

When demand goes bonkers, increasing much faster than developers can keep up with then prices go up. What is surprising about this?

Also understand that since the Great Recession, developers and product result from financing from Wall Street. To a degree if they choose to not OVER build what can be done about that?
--------------------------

Most of the census data explains nothing; it's merely an historical accounting with no context

Originally Posted by laniroj

^THIS. Perspective is everything. Most people are emotional thinkers and see the world only from the lens of their personal experience, maybe one or two others as well.

[TakeFive]

It's possible things could change

Bye bye, San Francisco: The top 7 U.S. cities homebuyers are seeking to leave
Jul 24 2022 By Cheyenne DeVon via CNBC

From coast to coast, prospective homebuyers are on the hunt for affordability — even if it means leaving their city to find it.

A record number of potential U.S. homebuyers are seeking to relocate, according to a report published last week by real estate brokerage firm Redfin. The report ranked the cities Redfin users appeared most likely to try to leave — San Francisco, Los Angeles and New York topped the list.

Here are the top seven cities prospective homebuyers are seeking to leave, according to Redfin’s report:

1. San Francisco
2. Los Angeles
3. New York
4. Washington D.C.
5. Seattle
6. Boston
7. Detroit

Denver, Chicago and Minneapolis round out the list’s top 10.

Maybe some of the people who want to leave Seattle will come to Denver?