Its ideal climate, world-class outdoors scene, and strong Denver tech economy lure transplants from all over the country. And, despite slim housing inventory to accommodate its rising population, the Mile High City remains an attractive option for home buyers.
People are following the job market wherever it may be
Denver led the way in the housing rebound of 2012 when a majority of the national housing market was still recovering from the Great Recession. As a result of mass migration, the city is now experiencing unprecedented population growth, climbing real estate values, and job creation.
John Rebchook, a Denver real estate agent and columnist at the Colorado Real Estate Journal, says Denver was one of the first cities in the country to be hit by the foreclosure crisis and one of the first to recover.
“Denver initially provided reasonably priced real estate, which made it a viable alternative to far more expensive markets in California,” says Rebchook. “The population surge resulted in the opening of more trendy restaurants and retailers, making Denver increasingly appealing, especially to well-educated millennials.”
The population in Denver increased by 9.7% from 2011 to 2016, whereas the United States population only grew by 3.7% over the same time period. At the same time, Denver real estate values skyrocketed. Since the rebound, the median starter home list price in Denver increased by 94.4%, trade-up homes by 68%, and premium homes by 53%.
As the total head count grows to nearly 3 million in Colorado’s capital, Denver tech home buyers will likely continue to enjoy major returns on their investments. But rapid growth does come with a drawback — Denver’s inventory woes can be challenging for home buyers who aren’t already in the game.
Denver had a healthy 10,938 homes on the market in January 2012. In January 2016, total inventory was less than half that at 3,996. However, there appears to be some relief: in January 2017 there were 4,254 homes on the market.
“No one knows for sure how long this will go on, of course,” says Rebchook. “Unless there is some kind of ‘black swan’ event (something unpredictable or deviates from the norm) that cripples the economy nationwide, home prices will remain expensive in the metro area.”
While some locals are experiencing affordability issues, many skilled and highly educated workers moving to Denver find the prices fairly reasonable. John Stegner, owner of New Era Group says firemen and trade workers are also experiencing affordability issues, but the growing real estate values are bringing more good than harm to the market.
“Previously dangerous neighborhoods surrounding Downtown Denver are completely gentrified, new luxury condos and luxury sectors are opening up, and businesses are thriving everywhere,” says Stegner.
Locals like John Skrabec, owner of Live Urban Real Estate, are excited about what is changing in Denver. “It’s becoming the city that we’ve always wanted it to be,” he says. Affordability and tech jobs brought a number of entrepreneurs to Denver, but other on-the-rise industries have attracted the creative business types.
Beyond Tech: Legal Pot and Craft Beer
“You can’t ignore legal pot,” says Skrabec. “It’s driven our economy here, not only because you can use marijuana legally, but because the industry is taking over old warehouses for grow houses and the tech supports systems that go along with it.”
Colorado was the first state in the nation where recreational marijuana could be sold legally. Last year, more than $1 billion in legal marijuana was sold in Denver, according to Fortune Magazine. “There are now more “pot shops” in Denver than Starbucks and McDonalds combined,” says Rebchook.
Craft beer is also a thriving market in Denver. Colorado ranks third in the nation for number of breweries. The nearly 300 in operation added $1.15 billion to Colorado’s economy in 2014, according to Business Insider. Bryce Zimmerman at Micro Brew Tours says beer goes hand in hand with an active lifestyle.
“Breweries bring together the community,” says Zimmerman. “Beer represents community, relaxation, and our active lifestyle where new people can explore new interests.”
The Big Question: Could increasingly expensive housing drive people away from Denver?
Rebchook does not think so. He believes that prices will continue to rise, but won’t threaten to drive people out. “Historically expensive markets such as San Francisco and New York City have continued to grow despite soaring real estate prices. In those cities, it seems almost impossible to buy a home, unless you are ‘already in the game,’ and can use the equity in your current home to trade up.”
