*All quoted material in this piece originated in Ben Casselman’s New York Times article on Denver’s housing market, which can be found here.
According to The New York Times, Denver has recently joined places like San Francisco as a “net outflow” city, one where more residents are looking to move out versus in. This comes at a time when the median sale price for a home in Denver is now $410,000 – a figure that does not accurately represent the needs of the city’s low and middle income residents. And at the same time, potential home buyers are exhausted by the rising cost of housing they cannot afford.
“The specifics vary, but economists, real estate agents and home buyers say the core issue is the same: Home buyers are reaching a breaking point after years of breakneck price increases that far exceeded income gains.”
In a similar situation, economists would anticipate a drop in the median sales price, but Denver’s case is a bit different. Because this is an issue primarily driven by Denver’s rise in population – more than 300,000 residents in the past 8 years to be exact – there is a still an inherent need for housing. Real estate agents in the area explain that many homeowners are nervous to sell as they are scared of not finding a new home, especially as interest rates continue to rise.
“Rising interest rates are compounding the problem because would-be sellers do not want to give up their low interest rates, a phenomenon economists call the lock-in effect.”
Casselman spoke to many Denver residents, home builders and housing-related organizations to get a grasp on the complexities of our city’s housing market. Casselman met with Gene Myers of Thrive Homebuilders, who broke down the high cost of building a home in Denver. For a single lot – the price of land, building permits and additional associated costs can run upwards of $150,000 all before construction even starts. These costs make it difficult to construct affordable single family homes, which Denver desperately needs.
As residents move to Denver, many expect the luxuries that traditionally accompany a city. Casselman spoke with Phyllis Resnick, co-author of the Shift Research Lab Report, Exploring Colorado’s Housing Affordability Challenges in All of Their Complexity. Resnick explained that many new residents moving to Denver want experiences, services and conveniences that require a low and middle income workforce.
Ultimately, making Denver unaffordable to its low and middle income working class could significantly hinder the city’s growth and prosperity. City’s depend on every level of their workforce, and literally cannot afford to price them out. Casselman concludes his article with a message that resonates true with Urban Land Conservancy’s mission: “To have a big impact, economists say Denver and other cities have to build more homes affordable to middle-class families.”