Denver Housing Market: A Tale of Two Cities
How will our conflicted, unbalanced landscape – that happens to be booming – shake out?
Like Charles Dickens’ fabled tale, Denver’s housing market remains conflicted in its ‘Tale of Two Cities,’ a lopsided story of condos and single-family homes. It would seem that with every dollar the single-family home’s median price rises, the demand for the condo market – tantamount to “entry-level” – rises as well. Recent legislative changes benefiting the development of condos will certainly alleviate the demand, but how soon and to what degree?
While many predictions have circulated that apartment communities now under construction will suddenly turn to condos, the actuality is that most, if not all of these megaplexes have deed restrictions placed on them by the developers, preventing their conversion until after any defects’ statute of limitations has passed.
That means the 2025-2028 markets are likely to see this flood of condos if demand and lower rent rates warrant the shift. Due to previously undesirable development legislation, these projects simply weren’t affordable to build as condos and demand continued to rise during their stagnation, causing the traffic jam we see today.
Today, on the other side of the changes, current data provided by the Colorado Association of REALTORS® shows that immediate demand could stretch many more years in its ability to fulfill those demands to the scale in which we need. With a decline of available inventory of 13 percent between August 2016 and August 2017, the first developers have begun dipping their toes into the market water and have established precedent for lower bankrolled – and therefore more risk-adverse – projects to proceed.
One of the first major toe-dippers is East West Partners’ Union Station Development, The Coloradan. Touting sales Wednesday morning on its Facebook page, the project has reached the 50 percent sold milestone just three weeks into regular sales. An impressive number when we consider both their fall 2018 delivery and its yet-to-be-proven and conversation-inducing parking solution. This modern product has clearly demonstrated it’s demand in our city and many more are likely to follow its success.
Also, between August 2016 and August 2017, the number of sold listings for single-family homes dropped a sharp 17 percent in Denver County while the condominium market has actually increased by 12.1 percent. A 29.1 percent gap, which we can attribute to both the lower inventory supplying the single-family craving and what appears to be a rapidly-growing appetite for the beast that is Denver’s condominium demand.
Denver does, however, seem to be showing some progressive cooling, explained by a 11.1 percent increase in Days on Market Until Sale numbers over the last year in the single-family arena, 8 percent for condos.
Our best explanation of ‘how the market is’ today is not so much a revolution like in Dickens’ tale, but that it would appear some buyers and sellers alike are beginning to assume a spectator position in our rapidly-changing landscape despite the high and rising demand for both housing types.