Denver’s real estate market is rapidly growing, but what is driving that market and why is it becoming a millennial haven?
Q: I recently heard you on the air talking about rental construction in Denver. I just visited my two boys there, and I saw all the cranes up close. I wonder: who is filling all those new apartments? What’s the economic engine driving Denver’s influx of millennials?
A: Thanks for reaching out and listening to the show. Economists and housing experts in the real estate industry think that the primary driver in Denver is the burgeoning tech industry. Companies are either moving there or opening up satellite offices so their employees can take advantage of the lifestyle (skiing and hiking on weekends, biking everywhere, etc.). Because so many jobs are available, residents from California (an even higher cost state) are moving as well, increasing their standard of living.
Those millennials (and older people, too) are renting as are, in some cases, executives who might live further out but need a place for weekdays. You are also seeing a fair number of retirees moving to the greater Denver area.
If your kids wind up in Denver, will you eventually move there? If so, you’re like many parents of millennials.
But Denver is not the only place where rental construction is going strong. There are quite a number of urban areas that are attracting millennials. Downtown areas offer a large variety of restaurants, things to do and close access to workplaces. Since millennials are waiting longer to have kids, they have more time to enjoy the benefits of urban living. And, some are now staying. In some urban areas, schools systems have improved enough to keep millennials from moving to the suburbs.
You also need to keep in mind that millennials typically graduate from college with a considerable amount of debt, including student loans and credit card debt. With that debt, they often simply can’t afford to buy a home right out of college. In addition, we think that the financial stress millennials face with their added debt pressures probably will keep a good part of them renting for some time in Denver and elsewhere.
Places like Denver offer the best of both worlds for both younger and older employees, plus retirees, with access to fairly good public transportation, the ability to live fairly close to work and family, and access to a wide variety of recreational activities. We think that millennials are pushing construction in urban areas and rental construction will continue to grow.