Rent control ordinance passed in Colorado; Cities scramble to implement, Affordable housing declines, Who pays?
It is no secret that rent in Denver and throughout the state has increased. A…
Denver historically was the leader in Colorado real estate. The tides have turned with the pandemic. Year to date, sales in Denver are up around 5%, while Jefferson county, a suburban county of Denver is up 9%. Furthermore, the appreciation in Summit county is over double Denver with the median home price increasing over 20%. What is causing these disparities? What does this mean for Denver county long term? Will Denver fall into decay as some have claimed?
When Denver rose the rest of the state rose, we would see the effects throughout the state of Colorado. Historically as Denver property values went up property owners would buy second homes in Breckenridge, Vail, Steamboat, etc… The last 30 years you could pretty much bank on real estate throughout the state going up when Denver went up. The inverse was also true when property values struggled in Denver values also fell throughout most of the state which occurred during the last recession.
It appears the correlation is now broken as markets throughout Colorado are outperforming Denver. For example, suburban and exurban communities are doing better than the Denver metro and even areas on the western slope like Montrose are performing well.
The pandemic has hit cities throughout the country causing a flight to suburbia and resort communities. There are five main drivers spurring this “flight” to alternative locations.
There was an hour long documentary with the premise that Denver is set for a long term decline. No doubt there will be some substantial challenges for the city, but I don’t think the sky is falling in Denver for four reasons.
We are in an interesting time in real estate. It reminds me a little bit of the 80s where crime rose substantially in cities and there was an urban exodus. In the 90’s and 00’s cities came roaring back into vogue as the suburban migration reversed course. The pandemic has caused a rapid reversal from city living back to suburban or exurban locations. Fortunately, I’m not convinced this transition to suburban locations will be a repeat of the 80’s where there was a long term shift out of the city core, this pandemic cycle should be much shorter once the vaccine is distributed with people migrating slowly back into cities like Denver.
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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 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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