Denver Tops Case-Schiller Index for May 2015 but….

The S&P/Case-Shiller Index for May 2015 (released earlier today) indicted a rise in prices for single-family homes at the same pace for April 2015 (year-over-year) but fell short of forecasts. The gain was 4.9% yet forecasts predicted a 5.6% increase. Of note, home ownership across the nation is at its lowest point since 1967, a period when interest rates were hovering around 5.44% (1% higher than today and credit was more challenging to obtain).

Of note for our local market of Denver the year-over-year increase was the highest of the 20-city index at 10% exceeding San Francisco at 9.7% and Dallas at 8.4%. Of note, San Francisco with its average price exceeding $1,000,000 and Dallas in the $200,000 range, both in real dollars are impressive gains.

Interestingly Denver while far from recession-proof did not experience the significant downturn in values during the 2008-11 downturn unlike Phoenix and Las Vegas. Yet Denver is also a market that did not experience exponential value rises as those markets did.

While I do not read “tea-leaves” I am a bit concerned about the local Denver market and the recent run-up. Based on my review of the MLS, pricing patterns and in conversation with peer brokers, I am actually seeing a sense of fatigue in the marketplace concerning buyers and sellers.

On the buyer-side I have had clients ask “is 30% increase in 2 years normal” and my response has been “If you plan to live in the place for more than 3-5 years, you should be OK concerning retention of value”. For sellers who assume 30% appreciation is normal in 2 years, I have advised if not under-contract within a few weeks there may be buyer hesitation concerning pricing as interest rates continue to be attractive and lenders are increasingly more flexible.

I am seeing houses that would have sold in days just a few months ago now sitting on the market. However I am not overly worried. Prices in my humble opinion have risen too quickly especially within certain “in-demand” neighborhoods. On my street there is a small residence which is asking $600K and has had many showings. The sellers paid approximately $420K within the last 24 months. Sans any meaningful value-adding improvements coupled with a somewhat challenged location and other physical aspects i.e. smaller lot, traffic impacts, the underlying equity appreciation in my humble opinion is quite steep if the residence does in fact sell at asking.

I believe it will sell i.e. one of the cheapest options in the neighborhood HOWEVER I would hope any buyer represented by a broker would be doing their due diligence and looking at the sales price history of the residence and then justify their offer based on their specific desires. If the buyer is obtaining financing, the appraisal may be an issue as well.

Personally I am not a fan of monthly statistics; I look at the overall trend line coupled with other factors concerning the overall economic health of a regional economy. While my income is based on transactions I for one while continually looking for myself am taking a breather.

Update on The Tavern Uptown

Last week I wrote a blog post about the future of The Tavern Uptown, a fixture on the 17th Avenue corridor in the Uptown neighborhood just east of downtown Denver. The plan was to raze the building and redevelop the parcel to include a new Tavern Uptown and proposed 315 apartment units.

Recently¬†Historic Denver, a NGO preservation group has launched an online petition campaign to save The Tavern Building which has a physical address of 538 East 17th Avenue. For more history about the Tavern Building, here is the link to Historic Denver’s “Historic Tavern Building” page.

While I will refrain from providing an opinion concerning The Tavern Uptown from my experience (both academic and professional) I am in general a fan of historic preservation. In many respects Denver has come to the game late concerning the preservation of our historic buildings. And I do not just reference pre WWII structures including the destruction of many gems within Downtown Denver under the guise of Urban Renewal; Denver has lost a few gems of mid-century modern architecture as well.

Yet I can also understand the owner of such a buildings position. While not technically a “taking”, placing Historic Designation” status on a building or neighborhood does place certain restrictions on future structural revisions. Yet I believe overall Historic Designations for buildings and neighborhoods overall retains and increases values when compared to the overall market.

While Denver has embarked on recognizing certain neighborhoods as historic i.e. Country Club and others, some would argue we are woefully behind versus cities such as New York, Boston and Philadelphia yet beyond the infancy of Los Angeles.

Concerning The Tavern Uptown (and again I have not reviewed the merits of the argument for historic preservation) I do hope the out-of-state developers are sensitive to the unique design of the building, its history in Denver and the overall urban fabric of the 17th Avenue corridor. A sensible solution may be the preservation of the facade or similar i.e. wrap the new development around and above the existing building.

For more information in addition to the link to Historic Denver above, check out the article in the Denver Business Journal.

Curb Appeal Beyond Paint and Clean Windows

Curb appeal is literally your home’s calling card. Any astute real estate broker will advise curb appeal’s importance esp. in todays connected world where the front image of your residence by way of the marketing and even Google Earth can be seen by thousands of eyeballs.

Landscaping is an important component of curb appeal especially during the spring and summer selling season. As I advise sellers, consider the visual of your residence as a 3-D magazine advertisement.

For those in single family and duplex homes, be sure rake and clear away debris off your lawn. While you may have always managed your lawn personally, if considering selling consider investing in a service to ensure your lawn is pristine. This includes seeding bare spots (including those areas of burnt grass where the dog urinates) and of course weeding.

If you have a sprinkler system consider replacing your older sprinkler heads with new, water-efficient heads for about $5 each. Replacing sprinkler heads is a pretty straightforward job and one we can promote in the marketing material. Even within Denver County where water rates are reasonable, buyers are looking for efficiency and cost savings.

Trees and shrubs should be pruned and trimmed to be attractive and showing the property has been well-maintained. Yet be aware some trees should not be pruned until they are dormant, thus before pulling out the shears, check with an tree specialist. If you have mature trees on your property, of course hire a professional who will not only trim but will shape as well. Be sure landscaping and trees do not impact the residence, always an issue in inspections.

Finally if you live in a condo or multifamily, yet the above applies to you as well. Make sure your HOA is on top of landscaping and maintenance. Condos too have curb appeal. While the downtown high-rise may have planters which constitute the landscaping, many condos in residential neighborhoods will have landscaping in keeping with the urban fabric and landscape design of the neighborhood. If buyers see a well-kept yard, they are more likely to have a positive impression of the overall building and HOA.

The Tavern Uptown to Redevelop and Expand

For many in the Uptown neighborhood and 17th Avenue corridor The Tavern Uptown, while a relative newcomer has become an institution. Known for its congenial atmosphere, multiple tv’s and specials thought the day, The Tavern Uptown is a true fixture of the neighborhood and its lot is quite valuable.

Earlier this week, the Southern Land Company announced plans to develop a 315-unit apartment building on the site of the Tavern Uptown at 538 East 17th Avenue. The eight-story building will occupy the Uptown block bounded by East 16th and East 17th avenues and Pearl and Pennsylvania streets.

Fans of The Tavern Uptown should not worry as the existing operation will be demolished but will return with a new 14,000 square foot bar and restaurant on the project’s ground floor. Construction is scheduled to begin in early 2016 and be completed in 2018. Nashville-based Southern Land Company is developing several other Denver and Boulder apartment communities.

At Opportunity Knocks at #1 Colorado Boulevard

For years I have walked by #1 Colorado Boulevard, a stately 2-story brick home on a corner lot. Dominating the NWC of Colorado Boulevard and Ellsworth Avenue, the stately residence dates back to 1939 when Colorado Boulevard was a prestige street. Of note directly across Colorado Blvd at 4001 East Ellsworth Avenue is the original home of one of the founders of the law firm Holland and Hart.

Before World War II the two structures must have been most impressive, located at the pinnacle of a hill moving north from Alameda Avenue. The Hilltop side home has been renovated and is presently an impressive single-family residence.

The future of 1 Colorado Boulevard is more uncertain. Presently configured as two residences with separate electrical meters it is being marketed as a redevelopment opportunity including the complete razing as the present zoning allows townhouses of 3 stories in the site.

The location would allow for phenomenal views over Cherry Creek and the greater valley to the south. While Colorado Boulevard will be a deterrent for many prospective buyers; if I had the financial means I would consider converting back to a stately single-family residence and updating to compensate for the location i.e. place triple-pane glass in the windows, build a sound wall on the east-side of the lot and so forth.

The asking is $600,000 which I believe is correct considering the size of the residence and the lot. Granted the residence is being sold “as-is” and I would assume needs a full interior renovation. Of note the last sale dates back to 1971 when the residence sold for $94,900 ($274,000 in today’s dollars).

For the astute buyer with a vision, to be able to purchase 3,900 SF with four(4) bedrooms and four(4) baths; while not necessarily a fix and flip, with a longer-term vision, a viable option at a below market valuation.

Vehicular Traffic and The Congress Park Neighborhood of Denver

As a broker on behalf of clients I have been looking at opportunities in the Congress Park neighborhood of Denver, CO. An area I define as 6th Avenue on the south, Colfax Avenue on the north, York Street on the west and Colorado Boulevard on the east. Within the boundaries are unique enclaves including the areas between 6th and 8th Avenues (both one ways) and north of 12th Avenue where higher density multi-family structures are more common.

My clients are most attracted to the streets radiating off of 7th Avenue Parkway, a majestic street dominated by a center median with mature landscaping and pre-WWII homes of some would argue estate proportions facing the avenue.

Yet one concern is the future impacts concerning the redevelopment of the former CU Health Sciences Center. The redevelopment calls for a mixed-use urban oriented project including commercial and residential development. While the former hospital and medical school did generate vehicular activity for the most part the traffic was confined to work hours. The new development will undoubtedly generate additional car-trips due to the mix of uses proposed for the site.

The concern I shared with my clients, 6th Avenue is a one-way east-bound from downtown and 8th Avenue is a one-way from Colorado Boulevard west into downtown. While traffic calming measures have been put in place within the last decade including on-street parking and other measures the reality is both Avenues will be the preferred conduit between former CU Health Sciences Center and downtown.

7th Avenue historically has traffic calming measures in place including stop signs and other impediments to dissuade cut-through traffic. Yet 6th and 8th Avenues and their one-way orientation date back to the McNichols administration which believed an efficient city was one which transported its workers in and out as efficient as possible.

Yet times and traffic patterns have changed. During the last 20+ years we have witnessed a resurgence concerning “inner-city” and “close-in” neighborhood demand. It is not uncommon in Congress Park to witness bungalows being expanded both vertically and horizontally.

Maybe it is time we collectively consider additional traffic calming on 6th and 8th Avenues (and possibly expand to 13th and 14th Avenues). The reality is we will see an increase in vehicular traffic on those avenues just by redevelopment east of Colorado Boulevard. As increased vehicular use will naturally slow traffic down, we need to consider measures to dissuade cut-through traffic AND preservation of the existing urban fabric.

Now is the time to investigate and install such measures now before the impacts are upon us and “the genie is out of the bottle”. If we collectively can be proactive versus reactive to the coming onslaught of traffic and congestion we have a better change of insuring our quality of life and preservation of the urban fabric which makes Congress Park so desirable.

Introduction to Denver Real Estate Insights

As a 20+ year veteran broker in the Denver, Colorado real-estate market I have decided after years of procrastination to share my professional expertise and insights in our marketplace. I feel both buyers and sellers should be well informed before embarking on any transaction. In this era of low interest rates where buyers are being purchases on their monthly mortgage payment and sellers are asking top-dollar; an interesting time in the marketplace to be sure. Happy Reading….