Denver has become the best place to live if you want

Prices in the mile-high city are rising – fast – as demand outstrips supply in a slow growth area If the idea of living in the mountain air as opposed to a midwinter backwater…

Denver has become the best place to live if you want

Prices in the mile-high city are rising – fast – as demand outstrips supply in a slow growth area

If the idea of living in the mountain air as opposed to a midwinter backwater appeals to you, then apparently it pays to put down roots in Denver. The fastest growing major metropolitan area in the US for the third straight year is still seeing high demand for apartments – and faster-than-average price rises – in a very, very small and basically slow-growing area.

The metro Denver area (measure from Denver airport to the foothills that lead up to the southern foothills of the Rocky Mountains) sprawls out over around two million square miles. The national average is around 600,000 square miles.

According to a recent report from Moody’s Analytics, Denver is experiencing a house price boom which is accelerating as the sheer scale of the community makes land so scarce that developers are forced to resort to the much more expensive option of apartments.

Retail development is also at an all-time high in the state of Colorado, a fact which is helping to boost the apartment sector.

According to the Colorado Economic Development Commission, vacancy rates in the metro Denver area fell to 3.5% in the third quarter of 2016, compared to 5.4% at the end of 2015. Demand for rental properties has also been surging.

The combined rent – gross of utilities – for such apartments is now at an all-time high, compared to income levels in America’s 66 most populous metro areas.

An illustrative picture of what I’m talking about. A combination of the flashy skyscrapers along the Front Range and popular resorts in the mountains – clearly near-luxury homes – have led to the resort city being dubbed the “best place to live if you want to live like royalty”. As Denver’s magazine Aspen Rise describes the situation:

Many famous people have called the Mile High City home, including Princess Diana, former Secretary of State Hillary Clinton, actor Morgan Freeman, supermodel Naomi Campbell, musician Sting, actor Kevin Costner, pop star Cher, football star Peyton Manning, comedian Amy Schumer, model Heidi Klum, talk show host Oprah Winfrey, and John F Kennedy Jr, Jr.

It’s also home to the Rocky Mountain Folks Festival, a popular annual event whose marquis performer in the spring is Stevie Nicks.

All that glamor helps push median sales prices of townhouse and condos up by more than 25% in the last year, while house prices are down by 2%.

Denver’s business and construction communities have been quick to meet the new demand. There are now more than 30,000 new apartments being developed in metro Denver, according to Moody’s Analytics. In the last four years, they estimate there has been a net increase of more than 22,000 units across metro Denver. Moody’s said:

It has not been easy for developers to finance projects, but low long-term interest rates, competition from other markets and a desire to build near transit were among the factors that have allowed builders to complete their projects. The overall supply/demand imbalance is expected to lead to more construction this year.

All of this has seen apartment prices increase by around 6% annually in metro Denver since 2012. The International Council of Shopping Centers (ICSC) said in April that the price of Denver apartment is up 5.7% compared to the national average and 19.6% compared to Chicago. That’s following a year when the average increase was 6.7%.

The National Association of Realtors says that median apartment prices in the metro area increased by 6.4% in the 12 months to April. They’ve been increasing steadily in metro Denver since the middle of 2013, climbing by 2.3% the year after that and another 1.3% the year after that.

In all, that’s almost 15% over a two-year period of price rises, and another 9% since the end of 2013, which is quicker than what we are accustomed to seeing in the residential real estate market in the US.

After the apartment boom, the next big growth industry in metro Denver should be a marijuana dispensary. Colorado, which was the first state to legalise cannabis in 2012, has created a huge and complex cannabis market, with high prices, but also a burgeoning supply chain. A boom in green business could be around the corner.

Lack of jobs

Then there’s the fact that Denver’s economy is in a state of apparent structural decline. There are job losses in a number of the state’s sectors, as well as stagnation in important ones. Employment in Colorado in the construction industry fell by 5% in the last year and currently stands at 59% of its 1990 level. That makes Colorado the state with

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