Colorado Real Estate Outlook 2016
With the crash in energy prices (oil, gas, coil, etc…) will Colorado’s economy tank. In the 1980s Denver went through a substantial downturn during the last energy crisis; will this happen again?
It is interesting because Colorado has almost become two states; the front range/ I 70 corridor and then the rest of the state. This can be seen very easily in real estate appreciation. Take Denver for example where last year’s appreciation was almost 13% as opposed to Craig, CO where housing prices are declining.
So what is driving the growth in the front range and on the flip side what is causing the distress in other parts of the state? First, the growth in Denver and the front range has been driven by net migration. This migration to the front range is not your typical migration. The newcomers to Colorado are overwhelmingly well educated and younger (millennials). The millennials typically want to live in the more urban areas closer to job opportunities and various amenities. This has created a surge of growth in Denver and throughout the front range. This same trend is also spilling into the mountain corridor as people want to live close to the outdoor recreation but still have similar amenities as those found in larger cities. The cycle of net migration has reinforced itself as more educated millennials see Denver as a “hip city” with excellent quality of life.
The huge influx of well educated workers has also attracted top employers looking to hire these same well educated millennials. In all over 100k people migrated to primarily to Denver and the front range just last year, making it the second fastest growing state in the country. This in turn has made Denver the fastest appreciating metro area in the country.
So what is causing the distress in other parts of Colorado? Not all of Colorado has benefitted equally with this recovery. Many of the more remote and/or energy dependent areas have declined in value over the last recovery. A good example is Park County (think Fairplay, Guffey, etc… this is also where the creators of the hit show South Park grew up). This area is still well below it pre recession levels (much of the land is the same price it was in the 80’s). Why is this area not recovering like the rest of the state? There are no jobs? Why are there no jobs? There is not the infrastructure to attract companies or highly educated employees to the area. It is unfortunately a self-fulfilling prophecy. This same trend is happening in areas like Craig or Delta that were heavily dependent on the energy sector. As the mines closed (or the wells were shut) a number of high paying jobs were lost. As a result a number of folks migrated out of these areas to other areas with higher job prospects.
Unfortunately, this trend of the have and have nots throughout Colorado will likely continue in many areas with the front range continuing to receive the vast majority of the net migration and job growth. Well’s Fargo released an interesting market report on Colorado and various MSAs (Denver, Boulder, Etc…) which talks in depth about the trends above and others that are affecting the huge growth in Colorado.
Written by Glen Weinberg, COO/ VP Fairview Commercial Lending. Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in the Colorado Real Estate Journal, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.
Fairview is a hard money lender specializing in private money loans / non-bank real estate loans in Georgia, Colorado, Illinois, and Florida. They are recognized in the industry as the leader in hard money lending with no upfront fees or any other games. Learn more about Hard Money Lending through our free Hard Money Guide. To get started on a loan all they need is their simple one page application (no upfront fees or other games).