Colorado Real Estate: Renaissance or Crisis?
A recent article in a Denver publication tells of the story of a rapidly diverging city through two personal narratives.
A recent article in 5280 Magazine, a Denver publication, tells of the story of a rapidly diverging city through two personal narratives. First is David, a 34-year-old single military veteran studying nursing at the Community College of Denver. The other is Nick, 32 years old and married, a senior associate at a commercial real estate firm. Both are recent Denver transplants, but each of them demonstrates the opposing forces at work in Colorado's capital as well as the state in general. It seems Denver may be growing at a healthy clip for those in a position to benefit, while many others feel left out.
A tale of two city-dwellers
"Colorado's population is growing faster than its housing stock."
The 5280 story explained how David works part-time jobs and relies on grants and scholarships to get him through school. Ideally, he will be able to find a much better job upon graduation - for now, though, he struggles to find an apartment. Most rental properties near his school or other convenient locations are far too expensive for him. Anything even remotely affordable gets snatched up quickly, or is in disrepair. Until he can find a place, David is forced to sleep in his car.
David's struggles put a face to one end of the housing situation that has been developing in Denver since around 2012. As the Denver Post reported in May, Colorado as a whole saw a population increase of more than 100,000 in 2015. The data from the U.S. Census Administration also showed that Denver ranked as the fastest-growing large city in the U.S., with a 2.8 percent population boom between July 2014 and 2015. Colorado Springs and Greeley also added a significant number of residents in the same period.
However, the available housing stock has not grown on pace with the population, according to Census data. At current growth rates, the state should have added 40,500 new housing units, as the Denver Post calculated. Instead, only 25,143 were built. Taking growth rates since 2012 into account, the deficit is around 55,000 units. This has created a situation where the demand for housing has far outgrown its available supply, especially in attractive areas surrounding Denver and other major cities along the Front Range.
"This is a perfect cocktail for a really bad housing outcome," economist Elliot Eisenberg said about the issue, according to The Denver Post. "There is no solution except building more houses, but no one is going to do it."
Real estate boom
Perhaps the other side of the coin is personified by Nick, who told 5280 Magazine about his experiences owning and renovating property around Denver. At the time of publication, Nick and his wife lived in a 750-square-foot house in the city of Denver, but decided to purchase a property with two attached units near downtown Boulder. The couple spent more than $400,000 on the purchase, and plan to put another $100,000 into renovations. For comparison, the house was assessed at $217,000 just a year prior. After that, at least one of the two 800-square-foot units could likely be rented out for a sizeable income, probably around $1,600 per month.
As Nick explained, the neighborhood has only recently become attractive to renters and buyers after being downtrodden for years. The property he bought was dilapidated and overrun with weeds. Nick is wary of gentrification, an economic phenomenon that often benefits property speculation but can push out low-income renters. However, he is proud to be investing into the growing community and sees his work as a noble endeavor.
"I think it's a good thing if you have someone willing to put the money into a house and then turn that house into something special," he said, according to 5280 Magazine. "It's raising the values for everyone. It's making that neighborhood attractive."
The issues between wealthy buyers and struggling renters is one that has been playing out in cities around the country since the economic recovery began several years ago. Although things may be improving, it's already become clear that easy solutions are hard to come by. For the Davids and Nicks around the U.S., it's simply a matter of doing whatever they can to make a living in a challenging economy.
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