"Affordable" Housing

I’m in the Denver area helping my kid move into their new house. It’s going to take a while, because the house is in pretty good shape, but there are a lot of small details that need to be addressed.

The media coverage of the Denver real estate market says that there’s finally a decent amount of inventory available, but on the ground, most of the inventory is people trying to sell houses that are in poor shape. My kid had a good realtor, knew some locals, etc., but the experience they had included seeing a bunch of places that would require thousands of dollars of rehab in order to be reasonably livable. The place they ended up buying flew off the market because the owners had done a light remodel before listing it.

More anecdata, but interesting: there are a bunch of new high-end apartments being built around the train stations here, and they’re going to try to get $2K/month for a one-bedroom with limited amenities. I believe the vacancy rate for those places is higher than the developers would admit. Some of my kid’s friends bought condos / townhomes that have HOA fees that run into the $400-500/month range for a place that costs $400K.

So, yeah, the market is a little better for buyers than it was a couple of years ago, but it’s still tough for first-time homebuyers. I ran the numbers on the inflation-adusted cost of our 4 bedroom/2.5 bath house on a big lot in a Rochester suburb, and a much smaller house in Denver is $200K more. It’s a big stretch for a two-income couple.

Given yesterday’s job numbers, it’s obvious that we’re headed into a recession. If that means that mortgages are a little cheaper, so what? If you don’t have a job, you can’t afford a mortgage, no matter the rate. I’m guessing that the housing market will react as it always does in recessions: the condo/townhome market will take a big hit, but home prices will slump a little bit, if at all. The bottom line is that there wasn’t enough single-family housing being built in Denver and the close-in suburbs for a long time, so we’re not looking at a 2008 situation.