It’s true, there are fewer than 4,000 homes available for purchase in the entire state of Colorado. Just yesterday we tried to help a client who wanted to look quickly at four new homes that just went on the market. By the end of the day, two had gone under contract for more than 20% over asking price and by the time we went to see the remaining 2 homes, 1 of them was also under contract. Whether you are purchasing a home for yourself, as an investment or are even trying to do a 1031 exchange, it feels virtually impossible and possibly a bit depressing. What you are reading and experiencing is true and real.
UNLESS, you are looking at the downtown Denver market. HERE is where you will find the inventory you’ve been looking for. The reports you are reading may include this market in the inventory available, however, it’s an extremely different story downtown, but won’t be for long.
It may be a buyer’s market in parts of downtown, but not necessarily when it comes to getting the rock bottom deals one can oftentimes find in a buyer’s market. What this market is providing, is inventory. Many homes that were on the market this past year had to reduce their prices, but from what we are learning firsthand, it’s because they were overpriced to start with. A misunderstood market being lumped into the 11 county Denver Metro reports can cause misunderstood comps and pricing strategies.
So, what is actually happening in downtown Denver? Certain parts of the market look very close to pre-covid numbers which tells us the prices did not go up like homes in our suburbs this past year, but it also tells us they did not go down.
Focusing on 6 downtown zip codes (80202, 80203, 80204, 80205, 80206 and 80216) we have the following year over year comparisons to look at:
- Last January 2020, we had 181 new listings. This January reported 222.
- The average amount of days a property was on the MLS in 2020 and 2021 are the same, 63.
- The average price per foot is almost the same; $434 in 2020 and $438 in 2021.
- In January 2020, we had 54 closings. There were 62 in January 2021.
- There is the same overall amount of inventory for these 6 zip codes this year as last year. 3 months and 2.4 months.
- Last year there were 112 new listings in January. This year we had 126.
- In 2020 we had 83 pending contracts in January. This year we had 147 properties under contract.
- Last year each showing received 8.4 showings in January. This year that number was only up slightly to 9.1.
- In January 2020 it took an average of 17.6 showings for a property to go under contract. In 2021 that number increased to 21.1 showings.
If you’ve been following us this year, you’ll know that we have spent a lot of time focusing on the 80202 zip code by itself as well. That is Denver’s primary downtown zip code which includes Union Station, Coors Field, from 14th Street up to 20th Street and then most of the way down to Broadway from Union Station and Riverfront. We’ve been extremely interested in this area for several reasons. First, it’s truly the heart of downtown and where you’ll find most of the major office space, restaurants, bars, entertainment and much of the residential condos and apartments right now. It’s definitely Denver’s hot spot. Especially with the new McGregor Square development and epicenter that is preparing to deliver to its homeowners next month. We knew the demand for this area pre-covid was extremely high and wanted to watch what happened during covid. We are so glad we did! What we learned is this area has some great opportunities, but they will be very short lived. Inventory in this area was low to start with, which is why developers built the amazing Coloradan and now McGregor and there are more developers with great projects on the way. We believe this market will turn around and it will feel like it happened almost overnight. Here is what we know in comparison from this year to last year:
- Active listings for condos under $700,000 are up 61%. All other price ranges are the same from 2020 to 2021.
- Closings were down by 43% for condos under $700,000. All other price ranges are the same from 2020 to 2021.
- In 2020, there was 5.5 months of inventory for condos priced from $1,200,000 – $1,900,000 and this year that inventory is down to 3.1.
- Listings under contract are up 250% for condos priced between $1,200,000 – $1,900,000.
This, and other research we’ve done, tells us that the market for $1,200,000 – $1,900,000 condos is looking pretty good for sellers AND that there may be some great opportunity to purchase condos under $700,00 in the 80202 zip code.
Again, this won’t be long lived. With the first announcement of one of Denver’s largest tradeshows, Outdoor Retailer, taking place at the convention center this summer, and as restrictions start to lift more and more, it is believed by almost every person we interview that we will be right back where we left off in 80202, and all of downtown, by the end of summer.
The migration to Denver has not only continued as anticipated, but numbers are increasing beyond expected because of covid. We have heard many reports about people leaving the “city” to move to the “country/suburb.” It is true, in times like covid or the financial crisis of 2008, we see this. But, what is oftentimes misunderstood is, what is a “city” and what is a “country/suburb?” New York, Chicago, San Francisco, Los Angeles…those are the “cities.” Denver, Austin, Seattle, Portland…those are the “country/suburbs.” A place like Denver, that offers almost everything you can get in New York is highly desirable. We also offer an outdoor life with our mountains, a centralized international and highly rated airport as well as one of the best cities for entrepreneurs. I bet we are all here for many of these same reasons.
We started 2020 knowing the largest group of home buyers across the nation would be the millennials. The older millennials would leave the city to start families while the younger ones, along with gen Z would gravitate toward the urban lifestyle:
- Gen Y (Millennials): between 25 and 40 years old (72.1 million in the U.S.)
- Gen Y.1 = 25-29 years old (around 31 million people in the U.S.)
- Gen Y.2 = 29-39 (around 42 million people in the U.S.)
- Gen Z: Gen Z is the newest generation, born between 1997 and 2012/15. They are currently between 6 and 24 years old (nearly 68 million in the U.S.)
- Gen Y (Millennials): between 25 and 40 years old (72.1 million in the U.S.)
Then there is my age group, the Gen X group:
- Gen X: Gen X was born between 1965 and 1979/80 and is currently between 41-56 years old (65.2 million people in the U.S.)
Many of us are now empty nesters and looking forward to spending these next years outside of the suburbs, experiencing city life and simply, well, simplifying. That’s exactly what my husband and I did in January 2021 in both Denver and Austin. We love the simple flight between the two cities, the ease of the train from Union Station to the airport and that after working in downtown Denver and living in the suburbs for 30 years, we can now walk to work! We continue to meet more and more couples doing the exact same thing.
Knowing our pre-covid research showed we need 2,500 new condos a year to keep up with Denver’s growth from companies making Denver home, some of the best colleges graduating students who want stay and work in Denver, us empty nesters who want a new life experience, and all of the great plans you might be hearing about from Downtown Denver Partnership and the City Planners, it won’t be long before we are in the same situation downtown that the suburbs are in…not enough inventory, developers only being able to build so fast, and ultimately resulting in increased prices.
Founder of Denver High-Rise Living