The market in the central Denver are has been going gangbusters through the end of the year – there continues to be a shortage of available resale homes in the highly desirable neighborhood like Washington Park, Bonnie Brae, HIlltop, Crestmoor, Park Hill, Congress Park, Southern Hills Cherry Point and others.
Is the market recovery real – or just an odd combination of supply and demand which will quickly get corrected? When trying to understand real estate market trends like this, I always try to take a step back and see what is going on in other areas.
I recently had the opportunity to see what is happening north of the Metro area in the towns of Frederick, Firestone and Dacono – it was quite surprising. These areas, which had been a poster child for the real estate bust in Colorado, where partially finished subdivisions dotted the plains and foreclosures were rampant – have transformed into a thriving new home markets. Builders cant build houses fast enough to meet the demand and are writing contracts as quickly as they can acquire lots and get the homes started.
What is driving this activity? The product is new, the land is cheap and the home price-points are low – along with low interest rates. Builders report the buyers are former renters from Denver and Boulder, oil industry workers who have arrived with oil boom, tech workers looking for inexpensive new homes – very few are existing homeowners!
To me, this means a couple of things:
1. Job creation – there are new jobs being created which are driving home sales – new home building will drive even more job creation and the cycle of growth begins.
2. Pent up demand – these buyers are not existing homeowners – they are in many cases new buyers.
3. Harbinger of things to come – Colorado has been leading the country in terms of recovery in the housing market – other states are starting to see the signs we saw a year ago. This could indicate a broad based recovery in housing – which would do wonders for our national economy.
4. Real recovery – the market we are seeing in Denver is real – it is affecting other surrounding communities positively.