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Today's News 

 
 

Apartment Demand Stronger than Ever

 

I read a great story on the incredible demand for investing in apartments in metro Denver. The story appeared in the Colorado RE Journal and was written by Tyler Stevens and Steve Scrivener with Cushman and Wakefield. Why is demand so strong they ask this far into a Bull Run?

 

First, thousands of households are moving here to metro Denver. According to Moody's Analytics 25,000 net new people moved here last year.

 
Second, even though we think of our rents as being high, our average rents are only $1500 a month which is roughly 25% of median household income. Whereas, San Francisco, L.A., New York and Boston each have average rents that exceed 40% median household income.

 

Third, companies are still relocating here because our cost of doing business is only 4% higher than the national average and we offer a far better lifestyle due to our climate and mountains nearby. "According to the Downtown Denver Partnership, 23 companies opened or relocated their offices to the central business district in the past 2 years." 

 
Fourth, all these new employees need a place to live and 37% of Denverite's rent.

 

"You combine these 4 factors driving demand coupled with expensive land costs where people want to live, increased labor shortage, and increased construction costs have made it nearly impossible for developers to pencil out anything other than luxury Class A multifamily construction."    Consequently, that's what developers will build.

 

Finally, since entry-level or affordable new for-sale housing wasn't built from 2007-2017 due to the construction defects law that severely impacted condo development, we have a huge shortage of affordable housing for sale, which in turn creates more demand for apartments by households.

 

Investor appetite for multifamily is stronger than ever as there still is a tremendous amount of capital chasing very few deals on the market.

                       

 
Other News
 
  
 
             "Why Houses in Denver Sell Quickly or Take Forever"

 

This was the title of a great story at Westword from April 23rd (2019) written by Michael Roberts. Michael interviewed 3 agents.  Here is a sample of what each of them said.

 
Agent A-
  • She listed a historic home built in 1886 in NW Denver last spring and she said this home had incredible curb appeal and the home was on one of the best blocks in the neighborhood. Plus it was completed updated inside. She received 5 offers on this home on the first weekend and it sold for $75k over list price.
  • She listed an 1890 Victorian home this past winter (wrong time of the year) with some exterior charm, but the house sat on a less desirable block within the same neighborhood (location). Plus, the kitchen and 3 bathrooms needed updated (Condition).

Agent B-

 
"Price point and location are the biggest factors that determine a property's days on the market." DUH!  Here are some more comments-
  • "Homes under $350k should go under contract the first weekend with multiple offers if priced correctly."
  • "Homes under $500k will likely sell in the first week on the market."
  • For homes priced from $500k to $1 million she says they should go under contract within 2-3 weeks if priced correctly.
  • "Last year on certain properties, I would see 5-7 multiple offers. Now I'm seeing 2-3 on the same property price points." But, sellers must price correctly. This supports what I wrote last month when I said we are now having "bidding battles" and not "bidding wars" this year.

Agent C-

 
"Location, location, location, helps to sell a correctly priced and well-marketed home quickly." Further he said, "homes that are in move-in condition, with updated kitchens and clean-and-cute bathrooms are likely to sell quickly, assuming they're priced correctly and marketed effectively."

 

Here are the reasons why Agent C says it takes much longer to sell a home-"a pricing issue, a challenged location, showing limitations (often tenants), a home that shows poorly (including smells), and a home that's in quite poor condition."

 

In summary, to receive Top Dollar quickly the home must be updated, in a great location, priced well, and marketed effectively.

In my 36+ year in Denver residential real estate sales, everything changes and remains the same.  Basically, it's always been the basics of real estate 101! 


 


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