Denver ranks near the top of the 70 housing markets we rate each quarter. Prices have risen 12% in the last year, finally reaching historical averages. We are including some highlights from our monthly subscription reports as well as some anecdotes we have picked up on some recent feasibility studies.
- Demand fueled by strong job growth. Despite concerns over oil industry dependence, Denver employers created 56,000 jobs in the last year, and employment now stands 10% higher than the 2008 pre-recession peak. Higher-paying office jobs have increased from one year ago in every submarket except one. Also, the market value of the 85 publicly traded companies in Denver has risen 8% in the last year.
- A year’s wait for delivery. By the end of April, many Denver builders had already sold 70–90% of their 2015 sales goals, compared to a 43% national average in our independent survey. Some builders are quoting up to a one-year wait for home deliveries and are intentionally slowing sales now.
- Tight home supply. The supply of resale homes has plunged to 5,100 listings, only a 1.1 month supply, and bidding wars are everywhere. New home sales have increased 9%, but we expect sales to decline, as permits have recently been trending down as builders run out of supply. Some of the large master-planned communities are winding down, which is adding to the lot price pressure.
- Denver attracts investment. As evidence of Denver’s appeal, consider that North America Sekisui House, LLC (NASH), just entered Denver with the acquisition of two master-planned communities: Anthem Colorado in Broomfield and Inspiration Colorado in northern Douglas County. Newland Communities, one of the country’s largest land developers will be the development manager of these two masterplans.
- Waning affordability. Housing has become pricey, as payments as a % of incomes have reached historical norms despite historically low rates. Millennials are taking advantage of the many government programs, and more than 40% of the homes sold have mortgages of 90% or more of the home price. The search for more affordable housing alternatives is pushing buyers into the northern Colorado Springs submarkets of Monument and Black Forest from southern Denver and Castle Rock.
- Rising urban demand. It is not just suburban product that is selling well. Townhome product targeting young singles and couples in and around downtown Denver is selling rapidly in newly evolving neighborhoods like Jefferson Park, where prices are rising and some developments are selling out before the units are even constructed.
Life is not that easy for Denver home builders, however. Finished lot prices have hit an all-time high, construction labor remains very difficult to find, and construction defect litigation risk has deterred condominium development. For more information on our research and consulting services in Denver, please fill out this form.