Last month I wrote about how I feel that investing in Downtown Denver is such a great idea right now and how it is an overlooked "hot" market. The general reasoning for this is that while thousands of people are moving Downtown, almost no new condos are being built to support this increased demand. Click here to read the full blog post. Browsing through the Denver Business Journal recently, I found some solid facts to back up my Downtown theories so thought I would share.
According to the Denver Business Journal, "Colorado needs inexpensive housing as new residents flood into the state, yet few new condominiums are being built.Why? A key reason is Colorado law, which puts condo builders at risk of expensive class-action lawsuits filed over construction defects.Condo construction in the state has fallen from 26 percent of total housing starts in 2007 to just 2 percent this year."
When I tell new buyers and especially investors that they should look Downtown, the immediate reaction is, "why, they are building like crazy down there." That is true, but every single crane you see in Downtown Denver is either building a new apartment for rent or an office building. I don't know of a single condo building being constructed for resale which explains why condo construction in the state is down to 2%.
It amazes me how well these new apartment complexes are renting, many are almost fully leased before they are even completed. This tells me that people want to be Downtown and they are paying big money each month to do so. But eventually these renters are going to be tired of paying their landlords mortgage and either are going to want to buy a place Downtown, or in the surrounding areas, which is the general trend I see. And unless Colorado gets rid of this law, supply is never going to catch up with the demand that we are already starting to see. To read the full article from the Denver Business Journal, click here. And if you want to talk more about the investment possibilities for Downtown Denver, just let me know.
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