Families being priced out of metro-Denver housing market

‘California problem’ is impacting inventory and prices

Thelma Grimes
Posted 8/18/21

It is no surprise that local families are feeling frustrated and burned out in the current housing market, as national economist Elliot Eisenberg says Colorado is going through a “California …

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Families being priced out of metro-Denver housing market

‘California problem’ is impacting inventory and prices


It is no surprise that local families are feeling frustrated and burned out in the current housing market, as national economist Elliot Eisenberg says Colorado is going through a “California problem.”

In January, Eisenberg, of econ70.com, compared the Colorado housing market to a car cruising down the interstate. Before the pandemic in 2019, all signs were stable and cruise control was set at 65 mph. In 2020, it slowed down to about 25 mph. In 2021, the market spun out of control, hitting 95 mph.

There are several factors contributing to the current market conditions, but mostly, it is the “California problem,” Eisenberg said.

“For a long time, the California problem stayed in California,” Eisenberg said. “But now it is coming to Colorado as people in California are saying ‘hell with it.’ The housing prices are too high, taxes are too high, the cost of living is ridiculous. They are jumping ship and heading to Denver.”

The problem, Eisenberg said, is that Colorado was already falling behind in building enough homes. Add in a continually growing population and the market becomes a problem, he said.

According to the Denver Metro Real Estate Market Trends Report for July, Colorado’s population increased by about 50,000 people between July 2019 and July 2020. From 2010 to 2020, the state grew by about 760,000 people, the eighth-highest growth rate in the U.S.

Jill Schafer, a member of the Denver Metro Association of Realtors (DMAR) and agent for Kentwood Real Estate, said there is an incredible lack of inventory across the Denver metro area’s 11-county market, which includes Adams, Arapahoe, Boulder, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson, and Park counties.

Schafer said with population increases, local families are being forced to “drive until they find something they can afford.” Schafer explained a ripple effect, using her son as an example. He and his family could no longer afford the increased cost of homes in Denver, which meant driving south. He was lucky to land in Castle Rock, Schafer said, but by the time he moved in, his home value had already increased by tens of thousands of dollars.

Shawn D., who requested that his last name not be used for work-related reasons, said his family of five are currently living in a rental home in Highlands Ranch. Shawn said the “insane” housing market along the Front Range has him and his wife questioning their move to Colorado from Florida two years ago.

Shawn said they sold their Florida home for $280,000, making him feel like they had a good down payment and would be fine in moving to Colorado. Instead, they have been met with one letdown after another. Shawn described a market where they get on waiting lists for new housing developments that only become a lost cause.

Shawn, who works in downtown Denver when he is not working remotely, wanted to buy in Highlands Ranch. When that became too difficult, they started driving all over. Shawn said they have put offers on homes in Castle Rock, Evergreen, and anywhere else they could in the Denver metro area. They even considered homes in Bailey, which were also overpriced, he said.

Adrian Espinoza, a Coldwell Banker real estate agent in Lakewood, said inventory is the biggest issue for clients looking for a first home, or families and couples looking to upgrade.

Espinoza said on any given day across Front Range, there are 5,000 homes up for sale. In a normal market, he said there should be between 20,000 and 30,000 listings. The lack of inventory cuts options for clients and drives prices higher.

In January, DMAR estimated there were more than 24,000 active listings along the Front Range. In July, there were just over 3,000 homes up for sale.

A Zillow report estimates home values along the Front Range have increased by an average of 20% from the same time last year. In Douglas County, the median home price is $656,281, a 20.1% increase from 2020. In Jefferson County, the median home price is $584,544, a 21.8% increase. Arapahoe County has the lowest increase, with the median home price of $490,501, a 16.3% increase.

Espinoza said the problem with the reports listing median home prices that seem reasonable is that there is not enough inventory to sustain those numbers. Espinoza said in Castle Rock alone, homes are being scooped up so quickly and above asking, that there are few choices in the $600,000 range.

Espinoza represents Courtnee Lamb in Castle Rock. Trying to sell her current family home to move into a bigger home with extra property has been a nightmare, Lamb said.

“We put our home up for sale and it is at two weeks on the market,” she said. “No one expected that, which means when we are putting contingency offers for homes we want to buy. Sellers do not want to because a bigger cash offer will likely come later.”

Lamb described a market where she and her husband submit an offer $40,000 above asking price one night, only to be outbid by someone offering $80,000 above asking the next morning.

Lamb said they like Castle Rock and want to make sure their children remain in the same school, but the housing market is driving them to look in Elizabeth, Franktown and Colorado Springs.

Espinoza said he advises his clients to wait if they can, hoping something will become available in the area where families want to live. But he admitted the current market is creating a lot of stress and frustration.

Shawn said one of the most frustrating parts of trying to find a home is that it feels like families like his are no longer welcome in the Denver metro area.

Eisenberg said Shawn is not wrong. As Californians make a lot of money selling their homes and move to Colorado, they have the funds to spend.

“You have really rich people coming to a market where prices are great and spending an extra $80,000 above asking price is no big deal. It means nothing to them,” he said.

As Californians keep moving to Colorado and other states, the housing market is changing, Eisenberg said. That means the drive to affordability for current families means shifting to housing searches farther south in Pueblo or heading out of state to Kansas or Idaho, he said.

Shawn said he signed another one-year lease on his rental home, noting that it came with a 3% increase. In the next year, Shawn said if his family cannot find a suitable home along the Front Range, they will leave the state.

“I definitely feel like I have been priced out of my ability to grow and make this a longtime home,” he said. “If this market stays this way, people are going to leave. It is unhealthy, unstable growth.”

Eisenberg said there are other factors driving prices and inventory.

Eisenberg said citizens fight growth. They want to preserve open space and push for less housing developments. However, that means not enough homes are going up to stabilize the market, he said.

“The Denver housing market has become one of the most expensive markets in the country,” Eisenberg said. “Politicians want to keep their jobs, so they don’t push for more housing. But the only solution is to build more homes.”

Schafer said another factor is people are staying in the homes they have. Families see the market and decide to stay put. Older couples who would normally downsize are staying put because they cannot afford the rising cost of a townhome or condo.

Eisenberg said when the average cost of a townhome or condo goes above $350,000 older couples cannot scale down and single young professionals and couples cannot move into the buyer’s market.

In the end, Eisenberg said the reality is current Coloradans will start relocating to places like Boise because it is considered the new Denver.


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