How Millennial Newcomers Have Made Buying a Home in Denver So Much Harder

How Millennial Newcomers Have Made Buying a Home in Denver So Much Harder
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Metro Denver is currently the least affordable market in the country for first-time home buyers, according to newly released statistics. Major factors include millennial newcomers whose willingness to pay more is boosting prices higher and higher and higher.

This information comes from Daren Blomquist, senior vice president of ATTOM Data Solutions, who notes that the number of millennials in metro Denver went up by 9 percent from 2012 to 2015 — and that trend shows no sign of slowing.

"The influx of millennials (and other populations, for that matter) is putting more upward pressure on home prices," notes Blomquist, corresponding via e-mail, "especially given the low supply of starter homes and particularly condos available for these first-time home buyers."

Down Payment Resource, which collaborated on the new study with ATTOM Data, is trying to assist such consumers by directing them to down payment assistance programs available through assorted national, local and state agencies, including the Colorado Housing and Finance Authority. People interested in buying their first home can increase their down payment on a median-priced home by as much as $13,900, or 129 percent over the minimum down payment of 3 percent, through the use of such programs — at least 89 of them — with potential monthly house-payment savings of $5,000 over five years.

Still, these programs are not without risk, especially in a market as supercharged as Denver's — and other places in the state aren't far behind. As Blomquist reveals in a Q&A on view below, metro Denver is one of four Colorado communities that were among the ten least affordable for first-time home buyers nationwide during the first quarter of 2017.

Here's the conversation, supplemented by RealtyTrac infographics. That's followed on page two of this post by annualized Denver wage information for every quarter since the beginning of 2005 through the third quarter of 2016, and fair market rents for three-bedroom properties in Denver County from 2009 to 2016. During the latter period, rents for such abodes went up more than 32 percent.

Gulp.

Westword: Your data shows that Denver is the least affordable market for first-time home buyers in the entire country. Is that for Denver proper or the metro Denver area?

Daren Blomquist: Our Q1 2017 affordability report shows three Denver-area counties ranking as the top three least affordable markets in the country based on our affordability index, which is an index grounded in percentage of average wages to buy a median-priced home relative to historical norms for any given county. Ranked No. 1 was Adams County, followed by Arapahoe at No. 2 and Denver County at No. 3.

Has Denver been edging closer to the least-affordable spot over the past year or two — and if so, what place has it landed in over, say, the quarters in 2015 and 2016?

Before Q1 2017, the most recent quarter in which a Denver-area county ranked as least affordable was in Q2 2016, when Denver County ranked as the No. 1 least affordable in the country. It also ranked No. 1 least affordable in Q1 2016. Denver County has consistently ranked among the top three least affordable counties for six consecutive quarters ending in Q1 2017.

What other U.S. cities follow Denver in the least-affordable ranking?

After Denver, the metro areas with counties ranking least affordable are Greeley, Colorado (not too far, obviously); Houston, Texas; Austin, Texas; Flint, Michigan (might be a bit of a surprise); Charlotte, North Carolina; Fort Collins, Colorado; Nashville, Tennessee; Boulder, Colorado; and Detroit (maybe another surprise, but keep in mind this is affordability relative to historic norms for that county).

Are wages failing to keep pace with housing costs, and is that the main reason that Denver has become so difficult to afford for first-time home buyers?

Yes, absolutely. Our affordability report for Q1 2017 shows that median home prices in Denver County have risen 147 percent since bottoming out in Q1 2009. During that same time period, average weekly wages according to the Bureau of Labor Statistics have risen 10 percent.

Has the influx of millennials into Denver exacerbated this situation?

Yes, the influx of millennials (and other populations, for that matter) is putting more upward pressure on home prices, especially given the low supply of starter homes and particularly condos available for these first-time home buyers. The condo situation is exacerbated by the state’s onerous condo-defect law that has resulted in builders shying away from building condos.

What factor has high rent costs played?

The millennial population growth combined with low supply of homes and condos for sale has also put tremendous upward pressure on rents. Those high rents in turn make it more difficult for millennials and other first-time home buyers to save up for a down payment on a home.

What other factors have contributed to make Denver the least affordable city for first-time home buyers?

It may be somewhat implicit in the above, but some of the influx of population to Denver has come from even higher-priced markets, where buyers are accustomed to spending a higher share of income on housing or where buyers are coming in flush with cash from a sale of a property in that market. So the increase in population also comes with a combination of an influx of many cash-rich buyers and a cultural shift in the expectations for housing costs. This is changing the affordability landscape in Denver.

Continue for more about Denver ranking as the least affordable market in the country for first-time home buyers, including information about down payment programs, wages and rising rents.



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