Colorado’s population growth slowing, and that could spell economic trouble down the road
Source: Aldo Svaldi of the Denver Post
Say what??
Colorado residents are more than familiar with our state’s population surge in recent years. In fact, the state has grown nearly twice as fast as the U.S. population in the past decade.
Several factors are changing this:
- a slowing rate of state immigration,
- an aging population, and
- a birth rate below that of the 2.1 replacement rate
This leads to an uncertain future for Colorado’s economic and population growth. State demographer Elizabeth Garner offers further analysis and potential solutions in the full article.
So Much for the Starter House
Source: Ronda Kaysen of the New York Times
Imagine yourself a couple years into a solid career. With a few dollars saved up and a strong sense of belonging in your city, you decide it’s time to become a homeowner. Many of you reading are likely in this exact situation; with your dream home, a few kids, and several pay raises away, you’re looking for a starter home. Fit for your current lifestyle, this is a home where you plan to live for 5-10 years before moving into something “better.” It’s a reasonable plan, and even likely what your parents did.
However, this plan may not work out quiet the way you envision. With a rising interest rates, limited properties for sale, and rising sale prices, Americans are staying in their starter homes for longer. Are you are in the market for your first home? Are you trying to decide between a move or a renovation? Check out the full article to get versed in this trend.
Housing Market Slows, as Rising Prices Outpace Wages
Source: Ben Casselman of the New York Times
Denver residents are familiar with soaring housing prices and construction visible in almost every corner of our city. While the economy is in great shape, analysts believe the housing market is experiencing a plateau because the prices are finally at a level higher than most middle class buyers are willing to pay. Housing prices are up roughly 8% over the past year, showing growth at a declining pace. With average hourly wages up 6% over the past year, this trend makes sense. Economics writer Ben Casselman delivers further insight and figures in the full article.
Dark Clouds Gather over the US Housing Market
Source:Rana Foroohar of the Financial Times
The analytics team at Love Your Hood has recorded stagnant growth in the Denver housing market in the past few months — a trend that is apparent across the country. This is especially the case in the United States’ hubs of economic growth. But why, with a roaring economy and unemployment at its lowest level in over 45 years is the real estate sales and construction beginning to slow? The housing market growth over the past few years has been so strong that it is now beginning to outpace most consumers’ ability to afford housing.
Nearly two years in the making, Brighton Boulevard makeover expected to supercharge RiNo growth
Source: Joe Rubino of the Denver Post
In the late 1940’s, Harold Hill opened his farm machinery business at 3100 Brighton Boulevard. At this time, the street was a dusty two-lane strip with warehouses and a foundry. The business is now Do-It-Ur-Self Plumbing & Heating Supply, owned by Harold’s grandson, Rick Hill. Over that time, Rick has seen the neighborhood transform from an industrial park to a vibrant hub of business, culture, and art.
On Brighton between 30th and 38th streets more than $55.8 million in commercial construction has been permitted. Hill calls Brighton: “one huge craps table.” While the city boasts the public infrastructure investment as kickstarting the surge of private investment, local developers Mickey and Kyle Zeppelin mention it was actually the private investment and the formation of the RiNo Arts District that attracted visitors to the district. Eventually, backing from the City of Denver followed. Overall, this largely collaborative effort between the City and local business owners has created a corridor that is easily accessible while holding true to it’s uniquely industrial roots.
A brief timeline:
Late 1940’s: Harold Hill opened farm machinery business at 3100 Brighton Boulevard
2000: Zeppelin Development company buys the former cab company hub just off Brighton and begins to lobby the city for Brighton Boulevard improvements. The Taxi Community has been growing constantly since
2003: The City of Denver creates its River North Plan, a vision for the RiNo Art District
2013: The Source market hall, the first business of its kind, opens at 3550 Brighton Blvd. in the aforementioned foundry
2016: Brighton Boulevard is still a two lane street with no curbs, drainage, limited sidewalks
October 2016: Brighton Boulevard construction begins
Spring 2018: Phase 1 of construction, between 29th and 40th Street to be completed. The cost of the redevelopment is $41 million. The RiNo Art District neighborhood advocacy organization estimates at least $85 million in private projects have gone up in the surrounding area
The three years of road construction have come with several challenges. The largest of which being reduced accessibility due to construction, which has driven traffic away from RiNo. Rebel Restaurant, a block from Brighton and 38th Street has announced it will close. Comida, a beloved tenant of The Source and Love Your Hood, has seen its business fall by $800,000 from October 2016-2017.
Josh Peebles, President of RiNo branch of Collegiate Peaks Bank, believes the public improvements will open the door to larger entities bringing their business to the neighborhood. Collegiate Peaks has financed more than $100 million in RiNo projects.
With the combination of local government and business support, Hill’s “craps table” has become one of the most promising of Denver’s many growing neighborhoods.
U.S. New Home Construction Expected to Fall 300,000 Units Short of Demand This Year, More Pressure for Home-starved Markets Like Denver
Source: Joe Rubino of the Denver Post
The National Association of Home Builders forecast new construction at 909,000 homes in the U.S. — a whopping 300,000 homes short of their projected demand, based on data gathered from Redfin. In Denver, median home prices have been hovering around $500K, with homes still flying off the market soon after being listed. Labeling Denver as a “seller’s market” in today’s environment is quite the understatement.
The biggest factors behind the housing shortage:
Lumbar costs
The cost of lumbar has risen 62% since the start of last year. Why? Tariffs on Canadian softwood lumber have driven the costs of new construction up by roughly $9,000.
Local Regulations
Another factor behind the supply/demand gap are local regulations, such as the banning of slot-homes in Denver. These types of structures previously allowed developers to maximize the number of units on a lot by turning them sideways.
Migration
People, especially Millennials, love Denver. And they’re coming here in droves. Although there are signs that Denver’s popularity is waning, is it enough to ease the demand and close the gap in the housing shortage?
In the meantime, developers are focusing on attached developments, namely town homes. Last August in Denver, around 30% of new residential construction on the market were attached homes. With a changing demographic, economic, and regulatory environment in Denver, it appears that town homes and new urbanism will increasingly become the norm.
The Hottest Denver Neighborhoods for Millennials
Source: Niche
Niche scoured through heaps of data to rank the best places for Millennials in Denver (and across the country). They looked for neighborhoods with a high percentage of young adults, college grads, access to coffee shops, bars, and restaurants, cost of living, and more.
Here are their rankings of the 10 hottest Denver neighborhoods for Millennials, a ballpark of what it’s going to cost you to live there, and the ease of getting around:
Median monthly rent: $1,548
Median home price: $281,500
Walk score: 92 | Bike Score: 95
Median monthly rent: $2,067
Median home price: $419,500
Walk score: 91 | Bike Score: 95
Median monthly rent: $2,044
Median home price: $407,700
Walk score: 92 | Bike Score: 98
Median monthly rent: $1,814
Median home price: $310,000
Walk score: 82 | Bike Score: 90
Median monthly rent: $2,044
Median home price: $535,000
Walk score: 77 | Bike Score: 88
Median monthly rent: $2,218
Median home price: $430,000
Walk score: 92 | Bike Score: 96
Median monthly rent: $2,360
Median home price: $550,000
Walk score: 92 | Bike Score: 86
Median monthly rent: $2,167
Median home price: $465,468
Walk score: 85 | Bike Score: 97
Median monthly rent: $2,211
Median home price: $463,000
Walk score: 77 | Bike Score: 95
Median monthly rent: $2,449
Median home price: $565,000
Walk score: 82 | Bike Score: 87
As people migrate back to city centers, it’s no surprise that all top 10 neighborhoods for Millennials on Niche’s list have an urban feel with high walk scores. The bigger question is: are these neighborhoods still affordable for the majority of Millennials or will many of them be priced out of the market?
Check out Niche’s site for a complete list of rankings and the details on their methodology.
Rental rates based on March 2018 numbers detailed in our first quarter rental market breakdown. Medial home prices based on 2017 prices complied in our semi-annual neighborhood stats.
Getting down payment help now. Sharing home’s gain (or loss) later.
Source: Tara Siegel Bernard of the New York Times
Throughout the US there are countless people who would love to buy a home, but continue to pay that rent check to their landlord every month instead. Why is this?
For the average aspiring homeowner, the largest obstacle to overcome is the down payment. Several companies, including San Francisco-based Unison, have found an opportunity in this challenge: shared equity.
Shared equity allows homeowners to split their down payment with an investor in exchange for a piece of the appreciation when the home sells.
How shared equity benefits homeowners:
- Increase buying power
- Retain some of your savings and buy a home
- Avoid costly private mortgage insurance and high interest rates
The average loan to value (the percentage borrowed to purchase a home) for a first-time homeowner is 92.6%. Homebuyers who borrow more than 80% of a home’s value upfront are seen as risky by lenders. Traditionally, they overcome this with unfavorable interest rates and mortgage insurance. Shared equity allows for buyers to afford a large enough downpayment to avoid these costs.
The downside? By sharing equity with a firm like Unison, a home buyer saves upfront but ends up giving up a cut of their proceeds from sale if their home has increased in value.
Regardless of whether you are the type to give up some of your equity to allow an outside investor to alleviate some of the capital-intensiveness of home buying, shared equity is catching on. Unison invested alongside 450 homebuyers last year, and they project to invest with roughly 2,500-3,000 more people in 2018.
Check out the full article to dig deeper into the mechanics of shared equity.
Denver council outlaws slot homes after years of neighborhood outcry
Source: Jon Murray of the Denver Post
Denver City Council unanimously approved zoning code changes preventing future development of sideways facing slot homes. The change has been a long time coming for some Denver residents but it will only affect future building permit approvals. There are several projects still in the pipeline that will be grandfathered in before the new zoning takes place. The change would require new developments to orient the building toward the street connecting it to the neighborhood better. Berkley, Jefferson Park, and West Colfax have the highest concentration of slot homes in Denver. They say a picture is worth a thousand words, in this article there are great before and after satellite views showing how the neighborhood has changed.
Is Denver’s Popularity Fading? More People Looking to Move out Than in
Source: Aldo Svaldi of the Denver Post
Denver’s popularity is in question for the first time in many years. After waves of people moved to the metro area in the last decade, the spark is starting to sizzle. Why? For many, it’s becoming too expensive and too crowded. Denver lead the way as the country rebounded from the Great Recession. Young workers flocked to Denver for job opportunities and recreation heaven. As the unemployment rate in the rest of the country has dropped, Denver’s luster is starting to fade. Median home prices are becoming out of reach, leaving natives and newcomers with thoughts of ditching Denver for greener pastures.