To a few market naysayers, Mile High developers and real estate agents say, 'This is Denver's decade
Thursday, 17 December 2015 12:00 AM
To a few market naysayers, Mile High developers and real estate agents say, 'This is Denver's decade'
G.J. Gardner Homes Denver-city builder Dave Pagano (right), Jeff Veronie and Jeff Cook show a luxury paired home near Denver s Sloan s LakBy Mark Samuelson
After a third year of pricing increases that topped 10 percent in the Mile High City, the national housing report from business faculty at Boca Raton's Florida Atlantic University was a bucket of ice water tossed on a crackling yule log: "The housing market in several cities - including Dallas, Denver and Houston - is nearing pricing bubble territory," the study said. "The U.S. housing market across the board is moving toward rent territory," added economist Ken Johnson, Ph.D., one of the authors of the Beracha, Hardin & Johnson Buy vs. Rent Index.
Bull feathers, say developers and real estate agents who've watched the performance of this Denver market, as well as the ones that preceded it during the downturn beginning eight years ago.
"This market is not done by any stretch," says Alan J. Smith, one of the broker-owners of RE/MAX Professionals, which during 2015 stepped into the number-two spot among Denver metro real estate agencies. "I don't see any corrections coming anytime soon."
Smith and other owners of top-performing real estate companies look back at the past eight years and weigh the losses of the first five years against the recent three. "We lost anywhere from 20 to 25 percent in value during the recession, and have gained back about 30 percent," Smith says. "The old high (previous to 2009) was based on people buying things they shouldn't have. Now we're seeing very strong buyer confidence. And people want to live here."
"Look at the period since that last recession began, and we underbuilt," says developer Chris Crosby with Nichols Partnership, developer of the 496-unit SPIRE condo tower in downtown Denver; most recently completing a $20 million makeover of a hotel into the Turntable Studios affordable rentals beside Sports Authority Field. "We have not built enough new product to meet demand."
Crosby, at an event at the new Westin Denver International Airport hotel overlooking DIA's tent-roofed Main Terminal, added that the Mile High City spent its recession years making infrastructure improvements - many of them, such as the hotel and the Commuter Rail line that runs from underneath the terminal, 22.8 miles west to downtown's Union Station, only now coming on line.
"Now, as it's turned out, we're uniquely positioned for growth," Crosby said. "There's a lot of game left to be played, and once we see the airport/Union Station connection, those things will continue to fuel our growth." "My personal feeling," Crosby added, "is that this is Denver's decade."
RE/MAX Professionals' Smith waves off one particular premise of the FAU report - that buyers nationally should be looking at renting rather than buying. "It's never better to rent than to buy," Smith says.
Builders, he adds, always need to be concerned about overbuilding. But trends even in far suburban areas where most new building is taking place show rapid absorption.
The resale market, meanwhile, continues to show demand, Nichols Partnership's Crosby adds. "We still haven't produced enough homes. We see a supply-demand imbalance, and a lot of new household creation happening. There's definitely room for new product."
That's doubly true in new urban areas of Denver and Boulder, Crosby says. New infrastructure such as the Union Station project are now having a multiplier effect, as retailers and homebuyers sense the arrival of novel amenities such as downtown grocery shopping, and then plan accordingly.Crosby, who is having a personal home built by custom builder Jim Latsis as part of the Boulevard One expansion at Lowry, adds that buyer enthusiasm for urban projects shows no sign of letting up. His company pursues those opportunities from offices on Platte Street between the Riverfront area and LoHi. In addition to the nearby Turntable project, they're doing the Pearl West mixed-use development at 11th and Pearl Street in Boulder.
Alan Smith, at RE/MAX Professionals, notes that its eight offices around downtown and the south-southwest metro area saw net sales of $2.4 billion in 2015. Per-agent production there, he adds, outpaced average Denver area agent production five-fold.