Tired of competing for homes? Why are there so few homes for sale? When will there be more inventory to choose from? All good questions and none will be answered anytime soon – at least that’s the consensus among real estate professionals.
The inventory problem in Denver and around the US is the number one topic of discussion in real estate. Everyone seems to be looking for an answer to the questions I posted above. I have been meeting with fellow real estate agents, lenders, title reps and attorneys and when we talk I ask them about their perceptions of the inventory shortage. Everyone seemed to be in agreement that this inventory shortage issue was not going to end anytime soon. Some believed it would be another five years while others thought it was plausible it could last 10 years or more. Obviously, none of us have a crystal ball and know what will happen with the economy, politics or world affairs all of which have the power to change the trajectory of the real estate market in a New York minute. Probably the best approach is to look at the factors that are driving the inventory shortage and then ask the questions of whether or not these are likely to change in the next five to ten years. Here are some points to what’s happening and why there’s a shortage of homes for sale.
- Some reports say that as many as 100,000 people are leaving the state of California each year and moving West. We know the cost of living in California has skyrocketed and many people are leaving because of taxes, jobs, and just sheer unaffordability. That has caused many of the western cities to boom like Denver, Reno, Salt Lake City, Albuquerque and many cities in Texas. The sheer amount of people moving every year to Denver is the primary cause of the inventory shortage. It’s a simple case of far more demand than supply.
- Jobs, Jobs, Jobs are a big reason people are moving here and gobbling up all the real estate. Business.org just ranked Denver is the 10th best tech city in the country. San Francisco was number one. According to the Denver Post, venture capitalists have pumped 1.1 billion dollars into Colorado tech startups in 2017 alone.
- Affordability – while Denver is becoming less and less affordable by some people’s standards it’s certainly a lot better than cities like San Fran and Seattle. A one bedroom is San Fran will cost you $3,000 a month. The same one bedroom in LoHi will cost you $1600.
- Years and years of little construction has left us way behind with available inventory. Very little home/condo building went in Denver between 2008 and 2012. Those four years off took its toll and home builders have never been able to catch up to the meet the consumer’s demands.
- The same four years off left the construction industry without many of their sub-contractors. Plenty of companies got out of the construction industry after the crash and never came back. That left home builders in a bind not being able to find labor to complete the homes. The lack of trade schools has also hurt because new students are not learning how to be a plumber or an electrician. This lack of skilled labor might be the number one reason the inventory shortage problem doesn’t change for the next 10 years.
There are many more reasons I could go into, but this covers the major points. If you are left with the thought will I be able to find home anytime soon in Denver…call us and we’ll share a few ideas on how we can help.
Dan Polimino is a Broker/Owner with the Colorado Dream House Team, Keller Williams Realty DTC. Contact the Colorado Dream House Team at 720-446-6325, firstname.lastname@example.org, coloradodreamhouse.com
All reported sales were not necessarily listed or sold by the broker and are intended only to show trends in the area.