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A record 32.6% of Redfin.com users nationwide looked to move from one metro to another in the second quarter, up slightly from 32.3% in the first quarter and roughly 26% before the pandemic. Denver was recently named by Redfin a top “outflow” destination with more people looking to leave Denver than Chicago. What does 47% signify for Denver and is this statistic the primary driver of Denver’s outflow migration? What does this mean for real estate prices? Is this the beginning of a trend or a blip?
A record number of potential U.S. homebuyers are seeking to relocate, according to a report published last week by real estate brokerage firm Redfin. The report ranked the cities Redfin users appeared most likely to try to leave — San Francisco, Los Angeles and New York topped the list.
Marr noted that a lack of affordability is a tougher sell for cities than ever before, with the rise of remote work across large swaths of the country. Roughly 33% of Redfin users searched for homes in new cities in the second quarter of 2022, up from 26% in 2019 before the Covid-19 pandemic hit.
Note: Denver was on the top 10 list of move out cities, but this does not mean that other front range cities will face a similar fate. For example Boulder is still desirable and Ft. Collins continues to gain residents along with many other smaller cities and suburban locations.
“I’m sorry but I would never consider putting attendees in danger by holding a convention in your city. We are staying at Embassy Suites downtown on 16th, and last night witnessed a group of about 30 teenagers attack a man walking along 16th street. I am told this is not an unusual occurrence. The homeless situation is very sad, and public streets reek of weed. The Denver police should be more alert to large groups of minors congregating on city streets attacking tourists. My feedback from this meeting will be to never locate here again; I have felt much safer in downtown NYC, Philly, Seattle and Chicago.”
Denver’s housing policies are hollowing out the middle class, crime continues to rise, and the city is not adequately addressing property owners concerns about homelessness which will lead to a continuation of the current trends of net migration out of Denver.
In the short term I don’t see huge impacts on prices as inventory in Denver is very tight with very little building. Over the longer term, the impacts could be much greater. If Denver is not able to effectively control crime, prioritize property owners, and stop hollowing out the middle-class real estate prices will fall substantially. As with any real estate it will be neighborhood specific. The areas with the highest crime and homelessness issues will fall the most with other areas not impacted nearly as much. We could see a repeat of the 80s with a flight from particular urban neighborhoods to more suburban or uniform urban areas. Basically, we will see “gentrification” work in reverse in particular submarkets throughout Denver.
Without substantial changes, the data highlighted in the redfin reports looks to be the beginning of a trend with more people looking to leave than move into Denver. It is unfortunate that the key drivers forcing many people to look to other cities were caused by the city of Denver’s policies prioritizing homelessness over property owners, not addressing crime, and creating housing policies that hollow out the middle class.
Real estate will be impacted by these long-term trends with many areas going through a” reverse gentrification” and back to the 80s with high crime and flight from these areas. The city has time to correct their past missteps, but unfortunately as of today, they look to continue the same policies that created the issues triggering the current net migration out.
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Written by Glen Weinberg, Owner 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 Bloomberg, Businessweek ,the Colorado Real Estate Journal, National Association of Realtors Magazine, The Real Deal real estate news, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.
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