By: Jamie Goldman
Are you ready for whatâ€™s next for housing? I know that KEPHART is one step closer now! Last week, I had the opportunity to attend an excellent ULI event titled â€śWhatâ€™s Next for Housing?â€ť There were several industry experts that spoke about demographics, affordable housing, for-sale housing, and our own John Binder spoke about apartments. John was joined by Jeff Hawks with Apartment Realty Advisors, Matthew Schildt with Trammell Crow Residential and Ralph Pace with US Bank. This group spoke about whether the influx weâ€™re seeing in apartment development in Denver will be a lasting market change or a new bubble. All of the panelists agreed that the surge in apartment development in Denver will last for some time to come due to a variety of reasons including:
â€˘ changing demographics and a shift in thinkingâ€¦itâ€™s more socially acceptable to rent
â€˘ itâ€™s still challenging to save money for a down payment and to get a loan to purchase a home
â€˘ increased desire for mobilityâ€¦people want to be able to pick up move to where the jobs are
â€˘ and right now, weâ€™re building to meet pent-up demandâ€¦in Denver 36,000 people turn 18 every year
There were several other interesting tidbits shared by the apartment panel including:
â€˘ rental rates in the Denver market are where they were at 10 years ago
â€˘ between 95-2009 an average of 4,682 apartment homes were delivered per year
â€˘ in 2012 it is estimated that 3,034 apartment homes will be delivered, and in 2013 there will be 3,705 apartment homes delivered which is well below Denverâ€™s historic average
â€˘ most of the apartment development happening in Denver is occurring in or near the Cityâ€™s core versus the suburbs
â€˘ alternative transportation is popular with Gen Y â€“ bike trips are up 24%, walking is up 16% and public transportation use is up 40% among this groupâ€¦even with those making more than $70k per year
â€˘ there is a move toward thriftiness, people want to spend less on rent and more on luxuries like traveling, technology, fashion, outdoor recreation equipment, eating out, etc.
To take a look at John Binderâ€™s portion of the â€śApartments: Lasting Market Change, or New Bubble?â€ť presentation click here.
The other panelists shared equally interesting information including:
â€˘ single family home sizes are starting to creep back up, but McMansions are still out, people are shifting towards smaller, simpler things
â€˘ due to the low, 60-day supply of homes on the market in Denver, bidding wars and lot premiums are back
â€˘ Denver is the #1 place 25-34 year olds are moving to in the U.S.
â€˘ Affordable housing is being built in Denver through tax credits, but there hasnâ€™t been enough development to keep up with demand
â€˘ Denver is currently at a peak on annual rent increases, but incomes are not rising fast enough to keep up
This was a very informative event and based on the knowledge that was shared by the 20 panelists, it looks like the Denver housing market is finally turning the corner. Housing production levels are certainly not where they were at prior to the downturn, but there are definitely signs of hope and statistical data that things are improving.