Denver Millennials May Have Finally Pivoted From Renting To Buying

Posted by Damon L. Chavez on Friday, July 7th, 2017 at 11:48am.

June 28, 2017 / Denver Post - Real Estate, by Aldo Svaldi   Homeownership rate in Denver is slightly above U.S. average for young adults  

Brian Watkins and partner Vanessa Dolge are both under 30 and an exception among people their age: They own — rather than rent — the place where they live.

The pair purchased a bungalow on West Colfax Avenue in Denver this month, capping a nine-month search.

“It’s more about becoming comfortable that you’re making a sound decision for the right reasons given your individual circumstances, because financially it’s a huge commitment,” said Watkins.

Young adults in Denver own homes at a higher rate than their peers in the rest of the country — 34.2 percent versus 32.1 percent, according to a study from Abodo. Among the 45 largest metro areas, Denver ranked 15th for the most millennial homeowners.

After trending downward over the past decade, the homeownership rate among young adults in Denver appears to have hit a bottom in 2014 at 32.8 percent. In 2006, before the housing bust, 43.8 percent of adults ages 18-35 lived in homes or condos they owned.

“The greatest barrier for millennials owning homes in Denver now compared to those in past decades is the fact there are very few condos and homes available under $300,000,” said Kelly Hepburn, an agent with Colorado Craft Brokers who helped Watkins and Dolge find their new home.

The average home a millennial is purchasing in Denver cost $291,299, below the overall market average of $362,542, according to Abodo.

“Millennials are aging into homeownership, the labor market is booming and wages are growing — these three factors are driving demand. However, the factors keeping inventory low are more complicated,” Svenja Gudellt, chief economist at Zillow, a real estate portal, said in a research blog.

In popular places such as Denver and Seattle, where young adults are moving to in large numbers, builders have targeted apartments more than new homes, and that is pushing up home prices much faster than incomes.

At 8.2 percent, metro Denver home prices in April appreciated at the fourth-fastest annual pace in the country after Seattle, Portland, Ore., and Dallas, according to the latest release of the S&P CoreLogic Case-Shiller Indices, out Tuesday.

Jobs have become more plentiful than they were six or seven years ago, and Denver has the lowest unemployment rate of any major metro at 2.3 percent in May.

Watkins said he noticed more people his age hunting for homes.

“During open houses in Lincoln Park, West Colfax, Baker and Sloans Lake, we saw many people our age or slightly older,” said Watkins.

Earlier this year, Abodo released a report stating that millennials in metro Denver were more likely to be employed and less likely to live with family than millennials in other cities. But they also struggle with home prices much higher than in the cities where millennials are making the greatest strides in buying homes.

Nationally, 63 percent of adults own a home, and Denver is at 62.9 percent, according to the new Abodo study. For millennials, the city ranked No. 63 overall out of 135 cities the company studied.

“These numbers in Denver fall in the middle of the pack for homeownership by millennials, when compared to the rest of the country,” said Sam Radbil, a spokesman for the online apartment matching service based in Madison, Wis.

The cities where millennials own homes at the highest rates include Ogden, Utah, at 51 percent; Grand Rapids, Mich., at 45.3 percent; and Des Moines, Iowa, at 43.6 percent.

At the other extreme, fewer than one in five young adults owns a home in Los Angeles, Honolulu, San Diego and New York — metros with some of the most expensive housing in the country.