In recent years, people have been moving to Denver in droves, lighting an even larger fire under the already red-hot housing housing market in the Mile High City. And even though local home prices have moderated to some degree in recent months, a new analysis suggests that Colorado Springs and Boulder are currently more appealing to potential buyers than is Denver.
And the Springs was chosen even before news broke about it getting Colorado's first In-N-Out Burger restaurant.
The latest report from ATTOM Data Solutions looks at the markets across the United States where home buyers are most likely to move in the final quarter of 2017, and El Paso County, anchored by Colorado Springs, placed second on the list, behind only Loudon County, Virginia, in the Washington, D.C., area. Meanwhile, Boulder placed third in the country, behind only Memphis, Tennessee, and Jackson, Mississippi, for those interested in acquiring investment properties — places that they intend to either flip or use as rentals.
As for Denver, it remains attractive to home buyers in Colorado and across the nation, but this interest doesn't appear to be as passionate as it was during the first half of the decade. According to a report jointly created by LawnStarter and the Bellhops Denver moving service that we referenced in a September post about the ten cities that sent the most transplants to the Mile High, the metro area grew from 2,554,864 to 2,853,077 between 2010 and 2016, a gain of 298,213 residents. That's an increase of 11.7 percent, making Denver and its immediate surroundings the seventh-fastest-growing region in the country with a base populace in excess of one million.
For more details about the ATTOM findings, we reached out to senior vice president Daren Blomquist, our source for the June post "How Millennial Newcomers Have Made Buying a Home in Denver So Much Harder." Here's the enlightening email Q&A that resulted, complete with detailed explanations about why so many home buyers seem to prefer Colorado Springs and Boulder to Denver right now.
Westword: What are the major factors that you analyzed in determining where home buyers are most likely to move this quarter?
Daren Blomquist: ATTOM looked at loan application data, specifically good faith estimates that lenders are required to send to prospective home buyers who have applied for a purchase mortgage on a specific property. We have found historically that 60 percent of properties where a good faith estimate has been sent actually end up selling within thirty days of the estimated settlement date included on the good faith estimate, and 76 percent of properties with a GFE end up selling within ninety days.
The pre-mover index we created is a ratio of the number of homes with good faith estimates to total housing inventory in a given market. The index is designed to measure the amount of churn in the housing market we would expect to see over the next thirty to ninety days. All markets are indexed off the national average. The national index is 100, and any index above 100 indicates an above-average level of home sales churn for a market in the next thirty to ninety days, while any index below 100 indicates a below-average level of home sales churn in the market over the next 30 to 90 days.
In what areas did Colorado Springs score highest?
The Colorado Springs metro area had the highest pre-mover index in the country (305) out of 123 metro areas we analyzed for the report. What is helping to drive this high index is the availability of jobs, and well-paying jobs in Colorado Springs (unemployment rate at 2.7 percent in September, well below the national average, and average wage growth of 8.2 percent compared to a year ago, also outperforming the national average), along with relatively affordable homes for sale. The average value of homes with a pre-mover flag in El Paso County (Colorado Springs) was $260,723, requiring 37.8 percent of the average wage earner’s income. By comparison the average property value in the Denver-area counties included in this analysis is between $346,000 and $489,000, requiring up to 54 percent of average wage earners’ income in some of the counties.
Is the interest among people from outside Colorado about moving to Colorado Springs similar to that of people who already live in the state — and if not, what are the major differences?
This index does not speak specifically to where the buyers are coming from, but certainly anecdotally we hear that much of the interest is coming from what I’d call housing refugees escaping even higher priced markets. One home flipper I talked with recently in Denver is flipping high-end homes that sell for about $1.5 million, and he said five of the last seven homes he sold are to out-of-state buyers.
Denver has been a magnet for people of late, so some folks may be surprised that Colorado Springs scored higher in your analysis. Is it possible that Denver is getting a reputation for being overcrowded, prompting potential movers to consider other locations in the state?
Denver still has an above-average pre-mover index at 165, indicating it continues to be a magnet for home buyers. However, home prices have risen so quickly there that it is creating some affordability constraints for some buyers (see some of the stats cited above). Colorado Springs could be seen by some buyers as a more affordable alternative to Denver with similar amenities and lifestyle along with access to jobs both locally as well as not too far down the road in Denver.
What are the most appealing areas in Colorado for people looking to move, and why do so many folks want to live there?
The Colorado county with the highest pre-mover index among the ten counties we analyzed for this report was El Paso (Colorado Springs), followed by three Denver-area counties (Douglas, Arapahoe, Adams) and then Pueblo County (Pueblo). The common theme I see here is markets along the Front Range that combine natural beauty and the lifestyle that comes with that along with access to good jobs.
In the meantime, Boulder scored high among locations for people wanting to purchase investment properties. What elements explain its high appeal?
That was interesting, as most of the investment hot spots were in lower-priced markets that would be good for buying rental properties [for] cash flow. The appeal of Boulder may come from investors focused on student housing and investors banking on the new Google campus set to open in Boulder as driving more demand from both renters and home buyers with incomes to pay top-tier rents and home prices.
It's common for investors to purchase homes and apartment buildings in college towns, since so many students covet off-campus housing — but Boulder is ranked higher than the vast majority of them. What are the main reasons why?
We haven’t seen Boulder show up on so high on the list in past quarters when we’ve run this report, so I would suspect the surge in the third quarter may be due to the opening of the new Google campus, slated for December.
What are the positives for communities like Colorado Springs and Boulder in regard to so many people wanting to move there?
This is good for homeowners as it pushes up the value of their homes and makes it easy to sell if they need to sell. It’s good for the property tax base as that will increase along with home values.
What are the most significant negatives?
One negative for homeowners will be higher property taxes that come with higher home values. Other significant negatives are traffic and lack of affordable housing inventory for lower-income folks.
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Does it appear that major cities in Colorado will continue to attract strong interest from potential movers over the foreseeable future?
Yes. All signs point to that for now.
Or is there an end in sight?
Not necessarily in sight, but the housing market does tend to operate in cycles. So no one should expect the current trajectory of home prices and home sales in these Colorado markets to continue indefinitely.