The pull of societal strings always plays a role in what’s happening in Residential Real Estate. What’s Hot, and What’s Not.
With 11,000 Boomers turning 65 in this country everyday, and Millennials becoming the most populous generation in the work force, societal norms are being challenged once again.
In Denver, when the Boomers were starting families, we had jet traffic overhead from Stapleton, we had busing, we had neighborhoods suffering the plight of social unrest very close to the CBD, we did not have all four of the “major professional sports” and we did not have a world class transit system serving all of the above.
Now we have Millennials and Boomers charging into our Core Tier One neighborhoods in large numbers. We have “new” construction of residential properties on almost every block in town. We have a dozen or more “urban” neighborhoods enjoying a new identity with weekend “festivals” drawing locals and outsiders alike.
Some have speculated that this will impact the demand for our “Second Tier Suburban” markets because of the lack of buyers. I think these doomsayers are wrong. Our second tier market is doing quite well, thank you very much. Growth along the SE Light Rail all the way to Lone Tree with both jobs and residential opportunities has supported this growth and vitalization extremely well. Homes in Littleton, Cherry Hills, Greenwood Village, Centennial, Highlands Ranch, Lone Tree, Castle Rock and Parker are very strong with builder sales offices reporting 12-14 delivery times for a new home.
What about our 3rd Tier Markets; you know, those “distant suburbs”. Larkspur, Elizabeth, Sedalia, Morrison and others are in fact in many cases returning to previous average high price levels. Only at the highest price ranges are they lagging the overall market trends.
What does this all mean for our long-term residential health? There is no question, the “urban push” by Millennials and Boomers will continue, and it will provide a more than ample foundation of support for price appreciation into levels never reached before. Due to the very much-improved urban environment, when the kids come along for the Millennials, they may not leave. They may stay put, remodel and support the neighborhood school. Boomers will be close to the “action”, and we may see even more support for the Arts, Museums and entertainment demanded by this group with a very high disposable income.
In our Tier Two Locales, expect more of the same. There will always be a need for our close in suburbs that provide some space for families, hobbies and a break from the “hustle and bustle of the city”. In fact, these “Town Center” communities are thriving due to their low municipal debt and strong fiscal policy management. Drive through any of these 1970s communities and dumpsters are the tattoo of a vital market.
Our Tier Three Locales will not be as free from economic events. Energy, Interest Rates and Commuting Times have always weighed heavily on these locations, and moving forward, it will be no different. In fact, if a reproduction cost analysis is done on many of these areas, homes are on the market now at prices below their reproduction costs. So, as it may be a good time to buy in these areas, the aforementioned issues will always be impactful.
So, what should you do? The simplest answer is and always has been the same. “Live Small to Live Large”. Don’t be “house poor”. Don’t buy into the hype. Buy shelter if you are starting out in a good accessible location. If your budget affords you the possibility to create a lifestyle, remember, at some point, resale will be necessary. Don’t go overboard. When all said and done, being happy in your home should be your goal!