Photo: Realtors post ‘Coming Soon’ signs’ to generate interest. On average, houses are selling in less than 10 days after listing in Denver.
Surging real estate values are changing the University Park neighborhood and all of Denver. This price surge is impacting businesses, residents, and students.
According to the Denver Business Journal, Metro Denver continues to outperform the national average on home-resale price gains, maintaining year-over-year increases over 9 percent for another month, according to the latest S&P/Case-Shiller Home Prices Indices report. In July, the only major U.S. cities among the 20 closely tracked by Case-Shiller to see greater annual price gains were Portland, Oregon (up 12.4 percent) and Seattle (up 11.2 percent). Denver’s Case-Shiller home price index reached a new high of 187.42 in July. That means that local home resale prices averaged 87.4 percent higher than they were in the benchmark month of January 2000, according to the Case-Shiller report series, based on non-seasonally-adjusted data.
The closing of the Campus Lounge in the Bonnie Brae neighborhood was based on owner Jim Wiste’s decision to retire, not the surging prices in the neighborhood. However, what business goes in its place will likely reflect the changing demographics in the pricey Washington Park/Cherry Creek/Bonnie Brae area. The buyer, Dan Landes, runs a collection of vegan restaurants. In the Denver Post, reader Denver Pyle reflects the sentiment of many locals: “It may be ‘a given’ (Campus closing) but I grew up there when it was actually a normal American neighborhood, not an overpriced yuppie status enclave. It may be ‘a given’ but it still sucks.”
Boone’s Tavern on Evans was a neighborhood sports bar near the University of Denver for years, taking over the spot occupied by Fagan’s for decades. The Table to Tavern Group closed Boone’s and opened the Rosedale May 15th. Co-owner Angie Mitbo says that the Rosedale will have a more upscale ambiance and menu similar to those at the group’s third restaurant, Blackbird Public House, at the corner of Alameda Avenue and South Downing Street.
In both cases, a neighborhood proprietor or single-site operation has been replaced by a multi-site operator. There is nothing wrong with that but it is certainly a change to the sole-proprietor model common to the DU neighborhood.
The University neighborhood west of DU is lined with traditional Denver bungalows. Some homes are well-kept and others in poor repair. A house ready for tear down could have been purchased for under $200,000 just five years ago. Today, buy this ‘fixer-upper’ or tear down house is for sale for $369,900 (below).
Plan on spending $600-850 thousand for a good three-bedroom family home in good condition near DU.
Of course, the pressure extends to students already burdened by $46,000 in annual tuition (before scholarships) and fees and an estimated $12,000 per year living expense (rent & food). While the vast majority of students are receiving financial support, lodging costs continue to rise at a rate much faster rate than almost every other market in the US. The pressure mounts on parents and students as they face the cost of attending school in the most expensive city that is not on a coast.
No doubt, DU has played a large role in this transformation. Just visit Iliff Avenue, former home to army barrack classrooms used by DU following World War II to accommodate the surge of returning troops under the GI bill. Back then, DU was known as “GI Tech.” Now, there are gleaming multi-million dollar buildings in their place – The Newman Center for Performing Arts, the Daniel Felix Ritchie School of Engineering & Computer Science, Joseph Korbel School of International Studies, and Olin Hall. All of this construction has fueled huge investment in the University Park neighborhood as well.
Chancellor Chopp recognizes the housing issue in DU’s Impact 2025 study. One of the study’s missions includes: Creating more affordable housing near campus for undergraduate and graduate students, faculty and staff. To address housing pressures and cultivate a richer sense of community, we will work with developers and government agencies to accomplish these aims. The underlying issue is that most people are now priced out of the Denver-area market. Additional recommendations include improving transportation options around DU for those people traveling into the DU district.
The reasons for the rise in housing costs in metro Denver are surging population with 1,000-1,500 people moving to Denver every month. Further, the number of homes available for sale is dropping to record lows. The median price of a single-family home sold in May reached $398,000, a 3.6 percent increase from April and a 10.7 percent jump from a year earlier. Housing inventories are at record lows and housing prices are hitting new highs (you know, supply and demand!).
Plans to create a more unified “Denver District” may result in the unintended consequence of driving up local business and housing values by creating a more convenient, active, community-engaged campus. Of course, it’s the right thing to do to provide a more cohesive area for students, the community, and others to enjoy the campus and surrounding area.
Even the City of Denver is getting involved in affordable housing, approving a property tax increase and other fees to pay for 6,000 new affordable homes to be built over the next ten years in the city of Denver.
The long-term answer is not an easy one for those living in Denver or those planning to move here. The only potentially obvious answer, based on Denver’s boom and bust past, is a market correction to bring area real estate back in line with other metro areas. There are a number of theories that as soon as millennials, the generation fueling Denver’s boom, begin raising families (yeah yeah, queue the “millennial think-piece” quips), they will move out of the city and into the suburbs, thus devaluing real estate in and around Denver.
However, as long as people move here more quickly than housing can be built, prices will continue to remain at historically high levels. Of course, we won’t have an answer to this anytime soon as a large percentage of the millennial generation have yet to finish college.
One thing is for sure, though. Being a local Pioneer has never been more expensive.