Downtown Denver is growing. In the past decade downtown Denver’s skyline has seen a dramatic change with the rise of many luxury loft and condo buildings, initiatives to expand the downtown theater and arts district, the addition of many amazing restaurants, shops, and entertainment venues. As a result he lifestyle for residents of downtown Denver has just gotten better and better every year. But not only is the lifestyle improving, but so are the options for where to live.
The Denver loft dweller now has more options than ever if they want to live in an amenity rich building. Purchase a loft or condo and enjoy the roof top pool, state of the art work out facility, private movie theater, wine room, business center, lighting quick internet, 24 hour concierge, and the list just goes on. When the Glass House and the Beauvallon were built they were unique with respect to these types of amenities. They were also incredibly popular. The Glass House sold out almost it's entire inventory of units within the first 45 days. That was a sign that the market did value amenities... and other developers were quick to follow. More recent projects like the Pinnacle, One Lincoln Park, Spire, Ritz Carlton and Four Seasons stepped forward with their own projects and have upped the ante. Now you can own a loft or condo and enjoy luxury hotel amenities by ordering room service or enjoying a nightly turn down that leaves you a little chocolate on your pillow to enjoy before calling it a day. However, as the options have increased, so have inventory levels, creating pricing pressure, especially in the higher end units. The change in the economy created an incredible opportunity for buyers. The bargain hunting for these luxury lofts and condos is in full swing. The question now becomes is this the time to buy or will prices drop further as the new buildings like the Spire and Four Seasons come online?
First, some examples of the types of bargains we are currently seeing and why. When the Spire first hit the scene, there was a feeding frenzy of activity and speculation about where pricing on this theater district property would head. Sales were very brisk at first, but then special incentive started rolling out to maintain the sales momentum. Recently a $35,000 incentive was offered to buyers that they can use to lower the purchase price or to buy appliance upgrades, parking or extra storage (source: Denver Business Journal – http://www.bizjournals.com/denver/stories/2009/12/07/daily48.html -Denver’s Spire skyscraper finished early and under budget). This was over a 10% price drop for many of the lofts. The result was that the Spire has maintained the sales momentum in the lower end lofts, but they have been slow at the upper end. Thus, “for the newest marketing phase now under way, for more expensive units on floors 20-25, the developer is offering $40,000 to $80,000 off purchase price, depending on unit price” (source: Denver Business Journal http://www.bizjournals.com/denver/stories/2010/01/18/daily74.html - 100 Spire buyers expected to close in February). At the Beauvallon, financing became almost impossible due to litigation surrounding construction defects. The lack of available financing led to many foreclosures and short sales that were snapped up by cash buyers for as little as 50% of the original sales prices. Now the litigation has been settled and at the price tag of $17 million with financing available again the values rapidly are on the climb (source: Denver Post – Swanky Denver condos getting new skin). Inventory levels at the Glass House soared to new levels this year and some units sold for over $100K below their last sales price. New pricing sheets came out at One Lincoln Park and the Pinnacle for the unsold builder inventory and the higher end units saw price reductions well in excess of $100K as well. Just last week we were able to negotiate $20K off of the current list price on a Pinnacle loft that had already seen a $100K price cut from the original pricing. Further, the property appraised for well over purchase price reinforcing the fact that our clients got a bargain.
Across the board, supply is out of balance for units above $500K and that is where the real bargains are. A balanced market has 6 months of supply and currently some estimates put inventory levels for the higher end units well above 20 months. In the lower end of the luxury market (under $300K) inventory levels are not as out of balance, but new FHA lending guideline could limit financing (source: Denver Post – It’s and uneasy wait on new condo-loan rules) and impact sales volume.
Understanding the current situation, the question becomes, is now the time to buy or will better opportunities be on the horizon? To answer that question, you have to remember what city we are talking about. Denver is “a city that ranks high on most of the lists…It’s a new city, a growing city, a younger city on what most people would perceive as the doorstep of God’s country – the Rocky Mountains.” (source: 9news – Pew Research Center Survey says Denver is most popular place to live) Denver’s population continues to increase and city center living is more and more popular among young environmentally conscious professionals wanting to avoid the gas guzzling commute. Denver has a downtown venue for every major professional sport. The cultural scene is thriving and a just approved $14 million dollar makeover of the theater district will benefit buildings like the Four Seasons and Spire. The light rail system continues to grow and funding is in place for an extension from downtown’s Union Station to DIA. The list goes on as Denver is thriving. These positive local factors are very important when you realize that there will not be any new inventory created in the Denver loft and condo market for years to come. Currently, there is no talk about any new projects in large part due to the instability with the national commercial lending banks. It is unlikely that Denver’s skyline will see any additions for the next 5+ years and thus, current inventory will be absorbed and prices will climb. The situation could be significantly different by the end of 2010, so find a good Realtor who knows downtown Denver and start shopping to find not only a real bargain, but a property that will be a dream to call home. You can get started by reviewing the most comprehensive inventory of Denver’s loft and condo buildings right here at www.denverloftsandcondosforsale.com. Our site provides an overview of what each of Denver’s luxury hi-rise buildings has to offer as far as current pricing, location, amenities and floor plans. See our Downtown Denver section for the details (http://www.denverloftsandcondosforsale.com/blog/category/downtown-denver/).
Finally, remember that now is a special time in history to buy any real estate in Denver. First time home buyers and step up buyer’s alike can qualify for the homebuyer tax credit if they contract prior to the end of April, 2010. Interest rates are currently at a truly historic low. Further, savvy investors are moving their money into real estate as a vehicle to take advantage of the potential that the national economy may be heading towards an inflationary period. The final word from this author is that the window of opportunity for bargain hunting remains wide open at the moment, but it may begin rapidly closing over the course of the next 12 months. And let's not forget the magical home buyer credits that are scheduled to expire in April creating another incentive for folks to take advantage of the market today.
John Stegner & Brian Lehnerz – New Era Realty
