Anyone who lives in Colorado or has visited knows “Colorado has been discovered”. This has led to massive population gains and increased population going forward. What does all this mean for real estate. Could a small suburb of Denver, Lakewood, CO derail the growth trajectory via a new initiative? What is the initiative and how will it impact real estate owners (both residential and commercial)?
The Denver post did a great article with a tool that allows you to look at the predicted growth by county to see how it would impact your local real estate market (http://www.denverpost.com/2017/07/28/colorado-population-forecast/) It is pretty interesting to see which counties are predicted to see the breakneck growth. It is not surprising that some of the biggest growth areas are going to be North and South of the Denver metro area. This data is originally from the Colorado state demographers office (link below)
We all know Colorado is growing, but what is driving the growth:
- Cost of Living: although increasing in price, the front range is still considerably cheaper than many coastal markets. Also the tax burden on property owners is substantially less than many other cities
- Quality of life: Colorado, on the whole, has an excellent quality of life. There are recreational opportunities, clean air/water, low crime, good schools, etc….
- Business attraction: Colorado has a young population and has attracted a well educated work force that is highly desired, with the cost of living and quality of life Colorado offers many employers have relocated to the area
What does Lakewood have to do with growth?
Lakewood recently gathered enough signatures to put a proposal before the city council that would cap new construction at 1% of existing units/year. This would effectively bring to a halt the majority of new construction in the area. If this ordinance passes it will radically change the growth game. I could see other communities following suit.
If the Lakewood housing cap goes into effect it would substantially drive up the prices of real estate in the area since supply of new homes would become almost nonexistent.
Will Lakewood set precedent and stunt growth in the front range?
If the residents of Lakewood are successful in their initiative and other cities follow suit this could drastically alter the growth targets for the state. One of the primary drivers of Colorado’s success is its lower cost of living than the coasts. If growth restrictions are placed, the prices will increase. A good example is Boulder that limited growth substantially, the median price is now $1m. As prices rise growth will surely subside
There is no doubt that Colorado is poised to grow. The primary driver of growth hinges on cost of living. Quality of life and business attraction are both closely intertwined with affordability. If people are priced out of desirable areas and forced to go into tertiary markets quality of life will decline. For example, if due to prices workers have to commute an hour to get to work in traffic they aren’t going to give high marks for quality of life. Businesses will take note as well. As prices increase Colorado becomes less attractive to employers. The million-dollar question is will initiatives like Lakewood and Boulder derail growth by increasing prices?