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You’ve probably noticed that I-25 and the Denver metropolitan area are much more congested than ever before. That’s because Denver’s population is booming. Patty Silverstein, a local economist, predicts that we will add 50,000 people to our area each year until 2025. How will this affect the housing market?
First, let’s take a look at population growth. The largest portion of our population consists of millennials, and people between the ages of 70 and 90 make up the smallest portion of our population. The number of people between 70 and 90 is unusually small. Fewer people will be moving to retirement facilities, which further complicates the issue of inventory. In other words, where will these 50,000 new people live?
Not only that, 36% of the millennials in our area still live with their parents. There’s a lot of pent-up demand in our market as well. Ultimately, we will have to build our way out of the problem.
In 2014, 16,000 new build permits were pulled for rental properties and new homes. In 2015, 18,000 new unit permits were pulled, and the same number is projected for 2016. In order for us to keep up with demand, Denver needs to be building 31,000 new units each year: 10,000 rental properties and 21,000 homes for sale.
As you can see, we are not keeping pace with the number of people migrating to our area. This will cause an imbalance in the housing market between supply and demand. This imbalance will escalate prices until some kind of balance is reached.
Right now, we are definitely in a seller’s market and will remain in one for some time. If you have any questions, give me a call or send me an email. I would be happy to help you!
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