CREJ - Multifamily Properties Quarterly - August 2017
It’s hard to discuss the Denver housing market and not end up on the topic of affordability, which quickly devolves into generalities as each person shares his thoughts on “affordability.” However, in this issue, the topic is examined through multiple lenses and offers readers perspectives that are rooted in math and based around current statistics. The first set of statistics that may come in handy next time you find yourself in this inevitable conversation is Craig Stack’s article on Page 12. In it, he looks at average Denver wages and compares them to average Denver apartment rents. Based on the industry-accepted baseline of spending no more than a third of your income on housing, Stack uncovers that the Denver apartment market looks pretty fair. The accompanying graphic drives home this point and compares our income-to-rent ratio with other thriving cities. However, while rental rates seem to be keeping pace with incomes, the cover story makes an argument that entry-level housing may be a thing of the past. The author, Andy Hellman, makes some compelling points as he breaks down the costs of buying and living in today’s typical condo. When the monthly costs are considered – basing everything on averages defined within the article – the condo homeowner in the example ends up spending about $200 more a month than the average renter. However, the larger frustration for many in this demographic is the down-payment cost that comes with a purchase this large. For a $320,000 condo, with a 20 percent down payment, they’d be looking at paying $64,000 up front. Saddled with student loan debt and life expenses, squirreling away savings for this type of down payment is challenging, to say the least. In fact, for millennials in Colorado, many are looking at a 10- to 15-year period of savings before they can afford an average down payment, based on income data from the U.S. Census Bureau, according to a June report from Abobo Apartments. Now some may point out that this equation focuses on condos, and our legislative environment has not been friendly to condo development over the past decade, making the supply extremely limited and driving costs up. However, as of late July, Denver’s median home prices for one- and two-bedroom houses were $260,000 and $375,000, respectively, according to Trulia. The takeaway seems to be that Denver still is affordable for many renters who want to live comfortably in a vibrant community, but purchasing homes will take time and successful saving habits. All this bodes well for the for-rent market. Michelle Z. Askeland maskeland@crej.com 303-623-1148, Ext. 104