Priced out of Den­ver? Don’t go run­ning to the sub­urbs. A new Zil­low re­port says it ac­tu­ally costs more to live there.

The Denver Post - - FRONT PAGE - By John Aguilar

If Den­ver’s red-hot real es­tate mar­ket has you seek­ing sticker-shock relief in the sub­urbs, you may be in for a nasty sur­prise.

Ac­cord­ing to a re­cent study from on­line real es­tate data tracker Zil­low, fam­i­lies pay on av­er­age $3,635 more a year to live in the com­mu­ni­ties sur­round­ing Den­ver than do res­i­dents of the city it­self. That bucks the na­tional trend in which city dwellers pay a siz­able pre­mium — on av­er­age $9,000 an­nu­ally — over their sub­ur­ban coun­ter­parts, the re­port con­cluded.

The analysis comes as Den­ver’s hous­ing mar­ket con­tin­ues to pro­duce record prices and shrink­ing in­ven­tory, with homes late last year reach­ing their low­est af­ford­abil­ity level in more than a decade. The me­dian price of a home in Den­ver is now $371,000, ac­cord­ing to Zil­low.

“As homes get more ex­pen­sive, there has been a big push into the sub­urbs to find more af­ford­able hous­ing and that, in turn, drove prices there up,” said Svenja Gudell, Zil­low’s chief econ­o­mist.

Zil­low used three fac­tors to com­pare the costs of ur­ban and sub­ur­ban ar­eas: mort­gage pay­ments, prop­erty taxes and child care ex­penses. It cal­cu­lated that a sub­ur­ban­ite pays $66,059 a year to meet all three bills, while a Den­ver res­i­dent lays out $62,424 for the same. The study in­cluded 10 coun­ties around Den­ver but no­tably not Boul­der County, which alone would dis­pro­por­tion­ately in­flate sub­ur­ban costs due to its out­sized home prices.

With the metro area’s di­ver­si­fied econ­omy and mul­ti­ple em­ploy­ment cen­ters that ex­tend well be­yond Den­ver’s down­town busi­ness district, its “high-pow­ered sub­urbs” were able to ab­sorb much of the hous­ing price col­lapse that dec­i­mated real es­tate mar­kets in other cities dur­ing the Great Re­ces­sion, Gudell said. Zil­low lists Jef­fer­son County’s me­dian home price at $376,000 and Broom­field Coun-

ty’s at $388,000, both ahead of Den­ver.

“Den­ver didn’t have the ex­treme (hous­ing) re­set so that the outer area that was pretty ex­pen­sive to start with stayed ex­pen­sive,” she said.

Mil­wau­kee, Bal­ti­more and Cincin­nati were among the cities that joined Den­ver in hav­ing pricier sub­urbs while res­i­dents of Chicago, Bos­ton, Dal­las and Min­neapo­lis paid more per year than peo­ple liv­ing in the sub­urbs around them. Home size was not con­sid­ered in the com­par­i­son, and the re­port ac­knowl­edged that a sub­ur­ban res­i­dent gets an ad­di­tional 427 square feet in their home on av­er­age than a Den­ver res­i­dent.

The dif­fer­ence in home size is crit­i­cal to why peo­ple choose to live ei­ther in the city or the sub­urbs, said Dave Ku­pernik, an agent with 24K Real Es­tate in Parker, who crit­i­cized Zil­low’s re­port for not tak­ing it into ac­count. While the me­dian home price in Dou­glas County — at $441,000 — is well above Den­ver’s, he said that’s be­cause the homes are far larger and come with more land.

“It’s usu­ally a life­style de­ci­sion,” Ku­pernik said, not­ing that pri­or­i­ties shift when it comes time to grow a fam­ily. “Peo­ple are buy­ing for that larger house, newer con­struc­tion and large lot.”

That also goes for the mil­len­nial gen­er­a­tion, of­ten cast as a tribe of ur­ban dwellers who pre­fer rent­ing in densely packed ur­ban cores to buy­ing a house in the sub­urbs. But a sur­vey con­ducted by Zil­low late last year found that just one in four mil­len­nial home­own­ers lives in an ur­ban area and that nearly half live in sub­ur­ban com­mu­ni­ties.

Steve Strecker, 35, re­cently made the move from Den­ver’s High­land neigh­bor­hood to Lit­tle­ton, trad­ing in a town­house for a sin­gle-fam­ily home in the south sub­urbs. He and his wife have a 4month-old baby.

“It was a shift for us,” said Strecker, who works in the ski in­dus­try, “to find a place that is more kid-friendly.”

He said he paid about the same for his new Lit­tle­ton house as he got from sell­ing his Den­ver home. So far, the sub­urbs don’t seem any more ex­pen­sive than liv­ing in Den­ver did, Strecker said.

“I think we made kind of a lat­eral move,” he said.

Mark Trenka, owner of Cen­tury 21 Trenka Real Es­tate in Den­ver, said not only are em­ploy­ment cen­ters, such as the Den­ver Tech Cen­ter in Ara­pa­hoe County and In­ter­locken in Broom­field County, help­ing keep home prices up in the sub­urbs, but so is the metro area’s grow­ing trans­porta­tion net­work. Two light-rail lines ex­tend­ing into the south­ern sub­urbs have meant “very good ac­tiv­ity” for High­lands Ranch’s hous­ing mar­ket and he ex­pects the same for Lake­wood, as the W-Line be­gins to at­tract jobs and hous­ing to the western sub­urbs.

“We know the mar­ket is go­ing to fol­low the jobs,” Trenka said. “When you have a healthy job mar­ket, that’s your health­i­est real es­tate mar­ket.”

Last week, the Colorado Depart­ment of La­bor and Em­ploy­ment an­nounced that the state’s un­em­ploy­ment rate fell to 2.9 per­cent from 3 per­cent, a low last reached dur­ing the dot-com boom.

But don’t be sur­prised if Zil­low’s num­bers start shift­ing back to­ward Den­ver in the next few years, said Gary Bauer, a mem­ber of the Den­ver Metro As­so­ci­a­tion of Real­tors’ mar­ket com­mit­tee. With all of the redevelopment ef­forts go­ing on in the city, “things are chang­ing,” he said.

In his old neigh­bor­hood of Jef­fer­son Park, Bauer said a church was torn down to make way for 15 town­homes. He has heard from de­vel­op­ers about plans to raze ag­ing homes and build new ones in the Bar­num and Sun­ny­side neigh­bor­hoods of Den­ver. Then there are the more well-pub­li­cized renewal ef­forts go­ing on in the River North neigh­bor­hood, Bauer said.

Den­ver’s hous­ing di­rec­tor, Rick Padilla, con­cedes that the city’s hous­ing mar­ket is dy­namic, but be­ing a land­locked mu­nic­i­pal­ity that is lim­ited in its abil­ity to of­fer the kind of space that fam­i­lies are seek­ing, the sub­urbs will con­tinue to have an ad­van­tage at­tract­ing par­ents with young chil­dren.

“The builders are smart — they know what the de­mo­graph­ics are,” he said.

He­len H. Richard­son, The Den­ver Post

Aaron James per­forms a trick on his skate­board while cross­ing the Mil­len­nium Bridge in down­town Den­ver on Tues­day. A sur­vey con­ducted by Zil­low late last year found that just one in four mil­len­nial home­own­ers lives in an ur­ban area and that nearly half of them live in sub­ur­ban com­mu­ni­ties.

A man plays with his son at Hir­shorn Park in Den­ver on Tues­day. A re­cent Zil­low re­port says it costs more to live in the sub­urbs than it does to live in Den­ver. He­len H. Richard­son, The Den­ver Post

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