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Denvers Redhot Housing Market May Be Cooling But Challenges Remain
The Denver metro area must tackle housing affordability or risk losing millennials to less costly cities, Gov. John Hickenlooper said Wednesday at a local housing forum hosted by Zillow.
A good place to start, the governor said, is reforming Colorado’s much-debated construction-defects law, which developers say has stymied for-sale condominium projects statewide.
“Long term, if we can’t figure out how to get more affordable housing — and especially more condos — available, people will come here, they’ll work for a few years, they’ll begin their career here and then when they decide they want to make that investment, they’ll end up moving back to Indianapolis or Austin,” Hickenlooper said.
Metro Denver’s median home value was $326,300 in February — more than $141,000 above the national figure, according to Zillow data. That marks a 14.4 percent increase year-over-year, and growth is expected to continue over the next 12 months, albeit at a slower 4.2 percent.
Median rents, according to Zillow, were also up 7.2 percent year-over-year, to $1,959, and projected to grow another 3.8 percent this year.
“Do we see relief in sight? I think we do,” Zillow chief economist Svenja Gudell said. “Rental appreciation will continue to slow and home value appreciation will continue to slow. …
“However, you’re still growing at twice the rate of what the rest of the U.S. is doing and you’re still growing faster than incomes,” she said. “It’s still an issue for the future.”
As of fourth quarter 2015, residents were, on average, spending 34 percent of their income on rent, “a really big hike” from Denver’s pre-housing bubble average of 24 percent, Gudell said.
Denver is also now a majority renter city, with renters making up 51.9 percent of households in 2015, compared to 47.5 percent in 2010, she said.
“If you’re from Seattle, San Francisco, Los Angeles, you shrug slightly and say, ‘That doesn’t surprise me.’ A lot of cities are all-renter cities and you find a lot more homeowners in the suburbs,” Gudell said. “This is actually quite new for Denver.”
Denver has seen its population grow more than 10 percent since 2010. More than third of that growth was driven by 18- to 34-year-olds.
“While growth is fantastic, you have to have enough housing for everyone who is moving here and also for people who are currently renters and want to become homeowners,” Gudell said. “One of the big things we’ve found in our research is the fact that we don’t really have that homes available to be bought. “
My name is RaNae Urso and I specialize in residential sales and buyer representation in the Denver Metro area. I have been in the real estate business over 14 years of my 30 years in Colorado. I enjo....