If At First You Do Not Succeed; Relist and Hope for the Best

While I do not necessarily believe the following quote is attributable to Einstein in the context of this blog I find it most appropriate:

 Insanity: doing the same thing over and over again and expecting different results.

I use the above quote to characterize some aspects of the real estate market in Metro Denver that I am witnessing as both a broker and observer. To distill the niche of the market for which this quote is appropriate are the select listings which enter the market, do not sell, are withdrawn or expired and come back on the market at the same or higher price.

Here are just a few select examples:

100 Lafayette Street: A sprawling 2-story post-war suburban style home in the desirable Country Club neighborhood on an expansive lot.

  • 4/2/16          Listed at $1,350,000 – subsequently withdrawn or expired
  • 3/9/17          Listed at $1,300,000 – subsequently withdrawn or expired
  • 5/18/17        Listed at $1,300,000
  • 6/6/17          Price Adjustment to $1,280,000
  • 7/18/17        Price Adjustment to $1,250,000 – subsequently withdrawn or expired
  • 3/18/18        Listed at $1,250,000
  • 4/18/18        Expired
  • 4/19/18        Listed at $1,199,000

This residence will have been on and off the market for 2 calendar years. During that time, while there has been at the most recent resisting a $150,000 price reduction or approx. 9% the residence continues to search for a buyer. Yet the pricing over the past year had remained static. Yes, one may argue inventory for the neighborhood continues to be challenged and just waiting for the correct buyer. I will continue to watch as while the residence has many positives i.e. finished square feet and larger lot; much of the interior could use a cosmetic update and the residence is adjacent to 1stAvenue at a partial motion intersection; while designed correctly i.e. south garage will continue to be a challenge.

600 High Street: A large sprawling large brick potential duplex configuration sitting on a coveted 100’ x 125’ lot. Personally I have had my eye on this one for potential redevelopment HOWEVER I too cannot make the numbers work yet its pricing history continues to baffle me:

  • 8/26/14:      Listed at $1,495,000
  • 8/26/15:      Price Adjustment to $1,445,000
  • 11/20/15:    Price Adjustment to $1,395,000
  • 1/9/16:        Price Adjustment to $1,345,000 – under contract and active again
  • 4/8/16:        Relisted at $1,150,000
  • 10/8/17:      Price Adjustment to $1,250,000 (yes adjusted upward)
  • 10/27/17:    Price Adjustment to $1,150,000  (1.5 years to get back to that price)
    •                         -Goes under contract multiple times and falls through
  • 12/11/17:    Price Adjustment to $999,000 (under contract and falls through)
  • 3/23/18:      Relisted at $999,000
  • 4/15/18:      Goes Under Contract
  • 4/26/18:      Back on market at $999,000

At of April 2018 this residence has been on and off market for 3.5 years. While there had been a substantial price reduction from the original $1,495,000 to a more realistic $999,000 the home has still not sold.  I will not get into the details of Time Value of Money and Inflation. Yet I will suggest the history of this house seems to repeat itself, look at the sales history:

  • 7/13/1995:   Sold for $670,000
  • 2/20/1997:   Sold for $670,000
  • 6/15/2002:   Sold for $625,000

Thus between 1995 and 2002 the home actually lost $45,000 (more if factoring in inflation) and now with 3.5 years on the market continues to look for a buyer. While there may be a buyer willing to pay $999,000, when factoring in inflation and rising interest rates is it worth the wait not even considering maintenance and carrying costs.

140 S Claremont Street: This is a home I have watched as I walk by weekly when looking at options in Hilltop. With its coveted location within 2 blocks of Graland as well as Cranmer Park coupled with great curb appeal I have literally watched this home bounce around concerning pricing as follows:

  • 6/15/16:       Listed at $2,375,000
  • 8/30/17:       Price Adjustment to $2,275,000 – Subsequently withdrawn
  • 1/12/17:       Listed at $2,275,000
  • 4/10/17:       Price Adjustment to $2,175,000
  • 6/14/17:       Price Adjustment to $2,075,000 – Subsequently withdrawn
  • 8/7/17:         Price Adjustment to $1,999,000
  • 10/4/17:       Price Adjustment to $1,900,000 – Subsequently withdrawn
  • 4/1/18:         Relisted at $1,950,000
  • 4/27/18:       Goes Under Contract

During its almost 2 years on the market there were multiple price adjustments coming down to $1,900,000 in October 2017 only to be placed back on the market in April 2018 at $50,000 more. Again, I understand spring selling season yet I guarantee you any good broker representing a buyer will review the history of the listing and share with their client. As of last week, went under contract; I assume the broker representing the buyer has shared the pricing history.

Back to the definition of insanity. While I am not suggesting the above examples are insane. I believe it is more a function of the market or the perception of the market i.e. unabated demand, low supply and continued low interest rates. Yet the markets are a changing i.e. interest rates are ticking up, inflation is on the horizon and the equity markets are buoyant yet the charts are showing a slow downward trend from their peak on 1/28/18 of 26,616 (while composing this blog the DJI is trading at 24,288 or 9% off the high of 3 months ago.

I do not fault the brokers or their clients i.e. the sellers…..this has happened to me as a broker! This was back in 2012 when the market has just endured the Great Recession and was just beginning to show signs of a activity. I will not disclose the address as the home has since been sold and closed however the neighborhood was Cory-Merrill.

The house a pop-top first sold after renovation in October 2005 for $810,000. 2005 we were 1.5 years before the peak of the market; the buyers in retrospect over-paid for the residence. In addition to being in the house for $810,000, they added an additional $40K in cosmetic upgrades to the interior, thus their in the house for $850,000.

I am contacted in early 2012 concerning listing the residence. The sellers are retiring and moving and desire to leave Denver. I go over to the residence with a peer broker armed with comparable’s and camera. My co-broker and I confer and suggest an asking of $715,000. And now the saga begins as follows:

Per the seller the house is listed in April 2012 for $819,000! Yes, $819K

  • 4/25/12:       Listed at $819,000
    •   -3 weeks, one showing off an open-house.
  • 5/15/12:       Price Adjustment to $739,000
    • -Seller still believes this is the selling price regardless of our $715,000 suggestion a month earlier.
  • 10/4/12:       Relisted with another broker for $739,000
  • 11/2/12:       Price Adjustment to $725,000
  • 12/14/12:     Sold for $710,000

In addition to the loss between the $810,000 paid in 10/2005 to the $710,000 paid in 12/12 or $100,000 over the 7 years during my 10 months as broker the seller’s paid in excess of $40,000 in mortgage and carrying costs only to sell the residence for what my peer and I suggested 10 months earlier.

While I did not share the following with the seller; based on inflation the $810,000 paid in 2005 equaled $952,250 in 2012; thus their loss was even more severe.

 

The lessons are simple:

For sellers, even in a hot “sellers market” be realistic.

For brokers, while a listing may look attractive, if it does not sell, it is a challenge both financially and psychologically for all parties.

Finally from Wall Street we say “Do not fight the tape”…..the DJI is off 9% from its high, interest rates are going up, inflation is an actual concern and wages while ticking up are still considered stagnant for now.  My humble suggestion, price correctly and sell immediately, the Goldilocks market conditions can change to a Papa Bear in a moment’s notice. Sell like its 2016 not 2005.

 

 

 

 

 

 

 

 

 

 

 

 

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Why I believe the Housing Market is Overheated An Example with Statistics

This morning a listing alert came on my MLS advising 549 Lafayette St is on the market asking $800K. This is the exact type of home my wife and I have been looking for. Well actually a renovated version; let me explain.

In the 400 block there are three similar homes 434, 440 and 446 Lafayette all Victorian design on smaller lots i.e. 37.5’ frontage. All have been renovated with similar design criteria including enlarging the rear on the ground and upper levels including master suites with en sure bathroom and an additional 2nd bathroom. 440 Lafayette Street sold in 2015 for $825,000 and was truly turnkey condition. 446 Lafayette Street was last asking $1,150,000 (adjusted downward from $1,200,000) and is now under contract, also truly turnkey.

Thus I was intrigued with the 549 Lafayette Street listing. In my professional broker opinion; not as strong a block as the 400 Block of Lafayette Street as it is denser and is impacted by 6th Avenue traffic noise. Also the house has been a rental thus has not been updated or expanded recently. From the pictures a total renovation is needed and assuming an expansion would run $250,000 to $300,000 to replicate the design of the homes in the 400 block mentioned above.

Now let me compare sizes and condition:

549 Lafayette: 1,587 SF Above Grade / 846 SF Basement – Condition – Good (Asking $504.10 PSF Above Grade)

440 Lafayette: 2,084 SF Above Grade/ 329 SF Basement – Condition – Excellent (Sold for $395.87 PSF Above Grade)

446 Lafayette: 2,306 SF Above Grade/ 380 SF Basement – Condition Excellent (Asking $498.70 PSF Above Grade)

Thus as per my usual research I decided to look at the sales history of 549 Lafayette Street as follows:

In January 2011 the home seems to have been inherited, as the conveyance was a Personal Representative Deed, usually associated with an estate.

In February 2015 the home sells I believe through an arms length transaction for $225,000

Two months later in April 2015 the home sells again to an LLC for $456,000. Almost double in two months, which usually suggests either, not an arms length transaction OR someone just hit the market just at the right time.

Now 3 years later almost to the date, the home is asking $800,000 or a gain of $344,000 or basically a $10,000/month increase in valuation since the last sale.

Now back to 440 and 446 Lafayette St. Both of these homes are on a stronger block, have been gut renovated, expanded, offer 25% – 40% additional above grade square footage when compared to 549 Lafayette and are in excellent condition.

The following is their sales history:

440 Lafayette, which I believe mirrors market conditions:

  • 11/98:           Sold for $425,000
  • 5/04:              Sold for $665,000 (close to the pinnacle of the market cycle)
  • 12/11:            Sold for $675,000 (just coming out of the Great Recession)
  • 9/15:              Sold for $825,000 (Just as the market started to its ascent)
  • -Of note, between 2004 and 2011 the house gained just $10,000 in value or based on inflation the house actually lost $130,000 in value.

446 Lafayette:

  • 9/98:              Sold for $287,500
  • 10/05:            Sold for $530,000 (a few months shy of the pinnacle of the cycle)
  • 7/13:              Sold for $875,000 (market starting to begin to overheat)
  • 2/18:              Asking $1,150,000 under contract

Now granted someone may purchase 549 Lafayette for the asking at $800K. And in this market such a price may look attractive (yet on the 400 Block of Lafayette St a superior home and renovation asking $5 PSF less) .

However while I am not suggestion history repeats itself I would be remiss if they were my client not to mention one block south, larger homes in excellent renovated/upgraded condition sold for similar pricing just a few years back yet offering more above grade square feet and overall condition. Even in the present when comparing 446 Lafayette Street and 549 Lafayette Street within $5 PSF above grade, serious differences.

Personally I would take a pass. At $600K I am a cautious buyer, maybe even $625K knowing I am in it for another $200K and 6 months of construction to convert from its existing condition to my primary home. However at $800K I will pass and I hope the purchaser at that price does not see this blog posting.

Happy House Hunting.

Home Prices in Metro Denver Continue to Rise but…..

As a real estate broker and subscriber to our local Multilist service in Denver known as www.REColorado.com (and the site with the most accurate and up-to-date real-estate information) I am provided with information and overviews of the markets on a monthly and annual basis. Thus a year in review and a look back.

In 2017 the average home price in the 12-county metro area rose to $433,000.

For comparison, the average home price in the same area in 2015 was $362,000 and in 2016 was $400,000 or $61,000 and $33,000 gains respectively. Considering inflation has been marginal and barely measurable i.e. below the Federal Reserves target of 2%, the real-dollar gains continue to impress.

Home Sales Volumes: 2017 witnessed the highest number of actual home sales totaling 53,739 totaling $23.3B. In 2016 sales totaled 51,617 units at $20.6B and in 2015 51,510 units sold at $18.6B. Thus a small year over year increase coupled with limited new construction the trend could be considered steady with underlying values exceeding inflation. Of note historically until this past generation home prices nationally usually mirrored inflation with obvious regional anomalies.

As a broker based in Denver’s Cherry Creek Neighborhood and educated as an Urban Planner (graduate of CU Denver) I view the market activity within the City and County of Denver as the overall indicator of the metro area market as the City is the center of commerce, the largest most dense in the metro area, limited land for additional sprawl/growth and other factors.

Interestingly sales volume in Denver did not follow the trend of the overall metro area.

  • In 2017 13,043 homes sold in Denver for $6B. (- over previous two years)
  • In 2016, 13,265 homes sold for $5.6B (+ over previous year)
  • In 2015, 13,053 homes sold for $5.1B

While one may view the reduction in home sales year over year as troubling, I would suggest looking a little deeper. First statistically the actual physical number of homes sales year over year has been steady with almost no statistical variation. During the 3 years the amount of closed volume based on dollars went from $5.1B to $6B this is a major increase in both real dollars and by percentage.

Or in more simplistic terms, the number of homes sold in 2015 and 2017 was about even, a difference of 10 homes less in 2017 versus 2015 HOWEVER the difference in sales dollars during the two-year period went from $5.1B to $6B, a difference of $900M.

Thus, one could surmise values within the City and County of Denver continue to outpace the metro area and demand is outstripping supply. Yet there is an additional variable; Denver in general has more percentage of sales from non-traditional single-family homes i.e. condos and townhomes. Through November of 2017 within Denver 12,168 residential properties sold with 7,602 of transactions recorded in MLS as single-family homes and 4,566 belonging to condos or townhomes.

Over 1/3 of properties sold were in the multifamily space usually a less costly product versus the single-family home (and yes I am aware of multimillion dollar condos in downtown and Cherry Creek yet their volume is somewhat insignificant against the overall sales volume i.e. limited impact on actual sales dollar numbers).

The question or the BUT… in the title is? Can the City and County of Denver sustain this valuation increase or are we looking at a market that may in fact be over-heated and not-sustainable? I do not know the answer as only future activity can answer this question.

HOWEVER 1) If I were considering selling a residence, I would place it on the market sooner than later. 2) Interest rates are forecast to increase due to the stronger national economy thus placing potential pressure on sale prices and 3) reports of decreased in-migration and increased outmigration are troubling yet not surprising as the State has witnessed this in past business cycles i.e. late 1980’s energy bust, mid 1990’s expansion, late 1990’s plateau, mid 2000’s boom and later 2000’s Great Recession.

While I do not believe we are headed into a recession anytime in the immediate future, the growth in real-dollar values coupled with low-inflation is just not sustainable within traditional economic theory (coupled we have very short memories). While some suggest low interest rates have fueled the housing market as it has the equity market; unlike stocks, housing is not liquid. My advice and the future may prove me incorrect however I would suggest a “Yellow Light” proceed with caution and keep looking ahead for potential issues.

 

Does the Record Sale of Steele Creek Apartments Cherry Creek Signal a Top

I remember when Steele Creek Apartments were proposed for the Southeast corner of Steele Street and 1st Avenue, at the time occupied by a few Class C buildings and a discount dry cleaner.

With the news hitting that the building set a new record on a per-unit basis for the sale of an apartment building of $570,000 per unit does the valuation make sense even considering future equity appreciation?

Working in both New York and Denver such numbers are not surprising as in NYC such a deal would be a steal especially for a newer construction building minus any rental controls, statutory affordable housing or long-term leases. Yet Denver is not New York.

Granted we have seen other close to blockbuster deals in Central Denver concerning rental properties as excerpted below from my morning daily read BusinessDen including but not limited to:

However are these deals good money-chasing returns, which are far from guaranteed? One could argue Denver at present is in an up cycle with record high rents (even though some buildings are offering rental incentives). Yet I am concerned as follows:

The New Rental buildings are oriented to deluxe and luxury tenants offering studio to 2-bedroom configurations limiting marketability to affluent singles and couples. In New York and San Fracisco the highest prices on bith a per-unit and PSF basis are “family-oriented” apartments considering of usually 2-4 bedrooms and minimum 2 bathrooms where a family can be reside comfortably.

Is there a glut on the horizon in the marketplace? Between Lower Downtown and Cherry Creek along the Speer Boulevard/1st Ave. corridor we are witnessing new buildings sprouting up like weeds with the assumption that demand for luxury rental apartments will continue unabated.

The Millennial Generation Will Age: I am witnessing it in my real estate practice; millennial’s are pairing up, starting families and due to price pressure are looking at homes to purchase in outlying Denver and suburban neighborhoods; not much different how Brooklyn became chic when Manhattan rents became unaffordable (with some help from Michelle Williams and Maggie Gyllenhaal and for us old timers, Patty Duke lived in Brooklyn Heights).

If the Influx Slows Who Will Rent these Apartments? While certain buildings have a reputation for attracting empty nesters (25 Downing Street) and those whose change in lifestyle may necessitate move to an apartment from a home (The Seasons at Cherry Creek), while renting is an option, many opt to purchase. Again anecdotally I know two empty-nest couples who moved from Country Club to condos, one in downtown, one in Cherry Creek.

What is Trendy Today is a Maintenance Headache Tomorrow: We see this in buildings throughout Capitol Hill, the party rooms with the naugahyde chairs on brass wheels and the pool table that has seen better days or the pool which requires constant expensive maintenance and upkeep.

While I understand the attractiveness of the cost on a per unit basis when compared to other in-demand cities including San Francisco, The Northeast Corridor (from Boston to Washington DC), Los Angeles and so forth those cities have physical geographic constraints and draconian rent-control laws which circumvents true market supply and demand laws thus raising rents on the free-market inventory.

Thus I do not see how the numbers work based on existing rental rates even when factoring in equity appreciation and nominal inflation. Granted there is always the option of conversion from rental to condo. The process includes upgrading the common areas and interiors of unitsoriented to the for-sale market AND developing a legal condominium, HOA and so forth. Not unheard of in Denver i.e. The Barclay (which when first converted were offered with developer backed below-market financing), Brooks Towers and other buildings have experienced such conversion.

However at present transaction cost per unit, is there really the demand for the $600K one bedroom condominium? We have seen such sales in smaller boutique developments including 250 Columbine (which does have a Starbucks on the retail level), but it is rare and definitely a niche market.

From experience such condos sell to those looking for a pied-a-terre in which their primary residence is NOT Denver or potential investment however for a decent cash-on-cash return the rents do not justify the selling price.

In New York City developers take the opposite approach developing condos and if the plan if sales do not meet the pro-forma then re-branded as a rental with the option to sell individual units when the market strengthens.

At present looking at prices coupled with construction activity I would be “short-selling” the apartment market if such a vehicle existed. Long-term I may be proven wrong, however within the three-five year time horizon and even in the present as leasing entities/developers are offering rent concessions, I would be more concerned versus excited at the blockbuster record prices being recorded.

 

 

 

 

Why Continued Positive Comments About the Housing Market Scare Me

As a broker I make my living assisting clients purchasing and divesting of their real estate holdings. In this market of ever seemingly positive news I should be thrilled. Yet as a 20+-year broker licensed in two states I have some serious concerns on the macro level, which truly reverberates beyond home sale statistics.

At present the Denver market as well as the US market looks very healthy. Demand is high, employment and wages are growing, and mortgage rates are low.

However based on reports out this past week, if one reads between the numbers and taking into account history and growth trends, the market is quite challenged. Not at present but longer term we may be setting ourselves up for a dramatic shift in the economy and wealth accumulation.

There is continued strength in the overall national housing market with prices 6% higher than the same period one year ago. Some local markets continue to show double-digit growth in prices. Metro Denver’s year over year was 7.9%. Such numbers are driven by the simple law of supply and demand and specifically the limited supply at the lower end of the market. Thus lower end homes are witnessing significant price appreciation due to more competition while higher end listings are languishing or having price reductions (see my last blog).

While I have mixed feelings on Zillow and similar sites, their insights and digesting of data is always an interesting read: “It sets up a situation in which the housing market looks largely healthy from a 50,000-foot view, but on the ground, the situation is much different, especially for younger, first-time buyers and/or buyers of more modest means,” wrote Svenja Gudell, chief economist at Zillow in a response to the latest home-price data. “Supply is low in general, but half of what is available to buy is priced in the top one-third of the market.”

So why is the inventory and supply on the lower end of the market so challenged? A few reasons and many can be seen in your local neighborhood:

Conversion of Inventory from Home Ownership to Rental: During the Great Recession which many of us brokers also call “a housing crash”, investors from large hedge funds to Ma and Pa purchased 100’s of thousands of foreclosed properties. While some were fix and flips, the vast majority became income-producing rentals. At present according to the U.S. Census there are 8 million more renter-occupied homes than there were in 2007.

Granted some renters may be scared off from purchasing and while the investors could cash out and after paying simple capital gains have a nice windfall, at present the cash-flow on rentals is one of the most attractive investments in the market coupled with the underlying equity appreciation of the real estate; thus the motivation to sell is limited. In turn lower end and moderate homes are not coming on the market in meaningful volume.

New Home Sales are Down: In August 2017 there was a 3.4% monthly drop concerning new home sales. If demand is so strong shouldn’t new home sales be booming? Well, it is again simple economics and in this case pricing.

In August just 2 percent of newly built homes sold were priced under $150,000, and just 14 percent priced under $200,000.

Builders advise they desire to build more affordable homes yet profit margins or the lack of is causing constraints. Builders blame the higher costs of land (exurbs with lower cost land is falling out of favor with 1st time home buyers who desire to be closer to urban centers), labor, materials and regulatory compliance i.e. building and zoning codes (and this is before the hurricanes decimated Houston, southern Florida, Puerto Rico and the US Virgin Islands which will demand laborers and materials to rebuild leading to eventual inflation in those industries and supply chains.

One could argue that market forces will eventually realign the housing market. Yet when this will happen is anyone’s guess. Considering we are still in a “Goldilocks economy for housing i.e. jobs and income continue to grow, interest rates remain at historically low levels, financing rules have become more flexible and inflation remains tame at below 2% annually. So what is the problem?

At present our inventory of new and existing homes is static with numbers similar to those found in the mid 1990’s a full 20+ years ago HOWEVER during those 20+ years the country’s population has expanded by 60M. Couple this with a mismatched market as home prices will not come down as long as there are buyers out there willing and able to spend more and more money for less and less house as we have witnessed in hot markets i.e. San Francisco Bay Area, The Northeast and other markets.

Longer term is my concern. We have witnessed locally in Denver our market moving from purchasers to renters. Good for investors not so good for individuals concerning personal wealth. Homeowners are known for making big-ticket purchases i.e. appliances and upkeep and maintenance sustains the construction sector i.e. additions, roofing and so forth.

If we move towards a renter oriented housing market fewer Americas will be able to save and grow their money associated with the ownership and upkeep of a personal owner-occupied residence. Due to demand rents may continue to rise (as less inventory on the market) and thus renters will have less disposable income to spend which will ripple through the economy beyond housing.

Yet Denver may be the litmus test for the national economy as follows:

Upper-End of the Market: is slowing dramatically as prices rose to fast and thus not sustainable. Upper-end buyers are usually market savvy and thus will be more cautious entering the market. Even in the Country Club neighborhood I have witnessed price-drops and re-listings at lower prices all in an effort to generate activity; would have been rare one year ago

Lower-End of the Market: Supply is outstripping demand with the average home in Metro Denver over $410K; yet incomes/wages have not kept up as the average worker is slowly being shut out of the market and thus will be a perpetual renter,

Rentals: The vast majority of new rental buildings are priced at luxury levels (just look at the cranes in Cherry Creek North). Yet that market is slowing and many of the existing buildings are struggling to attract tenants and now offering rental incentives. Yet additional buildings continue to come out of the ground.

Zoning and Entitlements: In Denver while zoning has allowed additional density and not without controversy i.e. slot homes in Cherry Creek, while beneficial to rental development, most rentals are oriented to single and couple households, with few exceptions most new multi-family buildings are not designed for families or larger households.

The above is just some food for thought. Add an existential crisis and this housing “House of Cards” may come to an ugly resolution. While I am not predicting another housing crash, the off-balance market is not sustainable and the overall repercussions to the overall economy have not been considered, quite dangerous.

Millennials Understand Opportunity Truly Knocks Beyond Central Denver

We seem to be in a unique environment concerning the national housing market as both buyers and sellers are excited. For sellers, record high prices are becoming the norm even in the rising interest rate environment. Buyers even though confronted with the challenging lack of inventory are strengthening the market due to confidence and the desire to lock in still historically attractive interest rates.

The above is based on the monthly Fannie Mae Home Purchase Sentiment Index® (HPSI)increased by 2 percentage points in January to 82.7, ending a five-month decline. Some of the highlights from the report include:

  • The net share of Americans who say it is a good time to buy a house fell by 3 percentage points to 29%, matching the survey low from May and September 2016.
  • The net percentage of those who say it is a good time to sell rose by 2 percentage points to 15%.
  • The net share of Americans who say that home prices will go up increased by 7 percentage points in January to 42%.
  • The net share of those who say mortgage rates will go down over the next 12 months remained constant this month at -55%.
  • The net share of Americans who say they are not concerned about losing their job rose 1 percentage point to 69%.
  • The net share of Americans who say their household income is significantly higher than it was 12 months ago rose 5 percentage points to 15% in January, reversing the drop in December.

Now concerning millennials, according to Fannie Mae research, more are purchasing and starting new households. While the Great Recession may have delayed purchases; millennials are now more confident concerning job security translating to an increased in marriages and parenthood (common during stronger economic cycles, nothing new there).

Yet of interest due to the expensive reality of city-centric residences some millennials are exploring and purchasing in the suburbs where values are generally more affordable. I have witnessed this myself concerning millennial clients looking beyond central Denver. Neighborhoods of interest include:

Southmoor Park: Lots of home and land for the spend. Also close enough to Light Rail Station at Hampden and I-25 allowing easy access to downtown and easy drive to DTC. With Whole Foods and new restaurants options on the Hampden Corridor, becoming popular.

North Englewood: Just south of the Denver border clients are looking at Englewood (north of Hampden Avenue) as a substitute for Platte Park especially adjacent to S. Broadway which continues to diversity businesses now catering to clients within their immediate neighborhood versus the traditional commuter traffic. Also a few good options for fans of Mid Century Modern who may not wish to pay the prices associated with Krisana Park.

Arvada: With neighborhoods close to the light rail line and with a new urbanism orientation, millennials are finding Olde Town Arvada has urban qualities found in areas such as Old SouthPearl, Old South Gaylord and other urban enclaves. With the easy commute to Denver via rail or car and lower prices, demand will soon outstrip supply.

Westminster: As with Arvada, the new rail line is opening up opportunities for those who desire more affordable housing, an ongoing renovation/development of a town center and easy access to the Broomfield office parks.

Edgewater: For those who have been priced out of Sloans Lake, Edgewater offers a respite within a stone’s throw geographically. With a charming commercial street, small town feel yet within easy viewing distance of the downtown skyline and a nice diverse housing stock, do not be surprised if this hidden enclaves demographics see a dramatic shift in years to come skewing towards younger buyers and families.

With this millennial flight to the suburbs what is going to happen to the inner-city? In essence the millennials are basically skipping a step i.e. usually starting in the inner-city and then moving to the suburbs for access to additional square footage, suburban schools and so forth. While these areas were once car-dependent, the expansion of RTD’s rail lines are making these suburbs once considered commuter oriented into their own attractive and thriving towns.

Yet I am far from concerned about the City of Denver. While I have some personal issues with the desire to increase density in some neighborhoods; Denver will always remain in demand due to geography, diversity of housing stock and varied amenities from cultural to financial i.e. lower water bills, low-taxes, municipal services and so forth.

My one concern for Denver is this rush to increase density. Full disclosure I am a native New Yorker thus I understand density having been raised in within an apartment building on the 20th floor and taking the subway to and from school. I am also educated as an urban planner. I view the cranes on the skyline of Cherry Creek, west of the Denver Country Club and other areas and I have three questions:

1) Is there truly longer-term demand for all the new multi-family buildings?

2) If in fact there is demand and zoning is keeping up with this demand, will our infrastructure follow suit i.e. roads, mass-transit, pedestrian corridors, dedicated bike lanes?

3) Are we remaking the inner-city of Denver unaffordable akin to San Francisco, New York, Paris, London and other cities in which the income gap is severely pronounced. These were cities which used to have a true diversity of cultures, incomes and employment and now have become playgrounds of the wealthy or long-time owners.