Denver Real Estate Discussion / Opinion Thread (NO Data Charts) (Colorado Springs: tornadoes, wage)

[jwiley]

Originally Posted by 2bindenver

Home prices have to do with supply and demand.

Home prices have nothing to do with annual incomes, rising or not.

In the Denver Metro area, today, there are 3735 properties on the market.

Sure it has to do with supply and demand, and price point is a huge factor in demand if you know anything about economics you know that. If the price is $1 just about everybody in Denver would own a house, if the price for a basic house was $1 million than very few people would be able to buy a house and it would lower demand. As the prices have risen people are being priced out of the market, so while realtors will push the whole idea of their being a low supply, reality is that supply seems to be enough to slow down the rising prices as the demand has been lowered.

[2bindenver]

Originally Posted by jwiley

... reality is that supply seems to be enough to slow down the rising prices as the demand has been lowered.

Please provide examples.

[poppunk]

Originally Posted by jwiley

Sure it has to do with supply and demand, and price point is a huge factor in demand if you know anything about economics you know that. If the price is $1 just about everybody in Denver would own a house, if the price for a basic house was $1 million than very few people would be able to buy a house and it would lower demand. As the prices have risen people are being priced out of the market, so while realtors will push the whole idea of their being a low supply, reality is that supply seems to be enough to slow down the rising prices as the demand has been lowered.

Simplifying it to supply/demand and "priced out of the market" do not speak well to the complexity involved.

"Priced out of the market" is a hard limit. It doesn't factor in what people are willing to pay, and in this case (housing) there is a gradient of products people can buy into.

I moved here from the Baltimore/DC metro last year. I was living in the equivalent to Federal Heights because that is what I was willing to pay. A lot of people who made less than me lived in places that didn't have neighbors with trash in their yards and had good schools. I did not. I wasn't willing to spend 50% to 75% of my household take home pay to not live somewhere like that. I wasn't mathematically priced out of a good house in a good school district, but I wasn't willing to assume the load that came with paying way more of my take home income.

When the prices went crazy in that metro area, most people just spent the bulk of their income on a mortgage or rent. I don't think that's as much the case here, but there's room for housing prices to climb even more if people want to hamstring themselves like they do back east.

The scarcity in housing inventory creates pressure on prices, and what the population can support (wealth, income) sets the limits. But those limits are not discrete and there is probably no way to reasonably model them given the complexity of the population itself and the varying choices made by individuals.

The system will figure itself out, but predicting how or when is shrug worthy.

[Dirty-Mill]

Originally Posted by davebarnes

According to Case-Shiller, housing prices in greater Denver fell in December 2015.
Is this the beginning of the bubble popping?
All we all doomed?

No, we are not doomed. Denver will continue being a terrible place to purchase a home.

[emm74]

Originally Posted by poppunk

Simplifying it to supply/demand and "priced out of the market" do not speak well to the complexity involved.

"Priced out of the market" is a hard limit. It doesn't factor in what people are willing to pay, and in this case (housing) there is a gradient of products people can buy into.

I moved here from the Baltimore/DC metro last year. I was living in the equivalent to Federal Heights because that is what I was willing to pay. A lot of people who made less than me lived in places that didn't have neighbors with trash in their yards and had good schools. I did not. I wasn't willing to spend 50% to 75% of my household take home pay to not live somewhere like that. I wasn't mathematically priced out of a good house in a good school district, but I wasn't willing to assume the load that came with paying way more of my take home income.

When the prices went crazy in that metro area, most people just spent the bulk of their income on a mortgage or rent. I don't think that's as much the case here, but there's room for housing prices to climb even more if people want to hamstring themselves like they do back east.

The scarcity in housing inventory creates pressure on prices, and what the population can support (wealth, income) sets the limits. But those limits are not discrete and there is probably no way to reasonably model them given the complexity of the population itself and the varying choices made by individuals.

The system will figure itself out, but predicting how or when is shrug worthy.

Exactly. People have a perception that housing in Denver is, or at least is supposed to be, "affordable" in terms of the percent of income. That has been changing and in order to buy the same size, quality of home, quality of schools, etc., it's costing more. It may not be desirable to spend a higher percent of income on housing, but that is the reality for many markets around the country. That's the part that people seem to have a big problem with, the idea that for some reason, it's not worth it to spend that much of your income on housing here, even though it's routine to spend much higher amounts (percentage, not just dollars) in NYC, Boston, LA, San Francisco, etc.

Having said that, I do think that increases in housing prices have outstripped income in Denver, and I think wages need to catch up a bit. But I also think that generally speaking, people have to just get used to the idea that housing here is going to cost more than they would prefer to pay - a sentiment that people in those cities I just named share but they have accepted that in order to live in their desired location, that is in fact what they have to pay. Until people accept that about Denver, they will continue to complain that prices are too high and the bubble has to burst. I don't think that will be the case, although I do think that the rise in home prices will level off because that rate of increase is not sustainable. Exactly when or how? Who knows?

[2bindenver]

Originally Posted by Dirty-Mill

No, we are not doomed. Denver will continue being a terrible place to purchase a home.

Denver is a great place to buy a home. It's a terrible waste to rent in this market. (Did you think I would say anything to the contrary?)

[Dirty-Mill]

Originally Posted by 2bindenver

Denver is a great place to buy a home. It's a terrible waste to rent in this market. (Did you think I would say anything to the contrary?)

There are too few homes on the market. It is not a good place to buy a home. It is even worse to rent here.

[headingtoDenver]

Originally Posted by Dirty-Mill

There are too few homes on the market. It is not a good place to buy a home. It is even worse to rent here.

It's only a terrible place for those who can't afford to buy a home here. If you can afford it, it is a great place to buy a home.

[Dirty-Mill]

Originally Posted by headingtoDenver

It's only a terrible place for those who can't afford to buy a home here. If you can afford it, it is a great place to buy a home.

Nope. Even the higher priced homes are in short supply.

[Chelito23]

Why are prices in Metro Denver so high, considering there is what seems like an unlimited supply of open and developable land to the north, east and south? I understand the high COL and desireability, but it seems like there should be more affordability due to more open space. Or isn't all that land really avaibale for develpment?