On almost every block there is new apartment construction. Some day it could come crashing down. When it does, I think it will hurt the big guys like Mill Creek more than us smaller operators, as they have massive debt to service.

I laugh when I hear about how "unaffordable" apartment renting is here. So unaffordable that people are flocking here and are absorbing all of the inventory! :)

From the Denver Post:

“We will continue to start projects with 10,000 to 12,000 units a year until it is crystal clear things are headed down.”“When we have a recession, it will definitely hurt.”

Developers had 26,916 apartments under construction across metro Denver at the end of last year, according to his counts. Beyond those, another 25,686 are in the planning stages.

The region added 12,324 new apartments last year and 13,348 the year before, according to the Denver Metro Apartment Association. To put that in perspective, over the past three decades, the number of new units added in metro Denver has averaged 4,534 a year.

What is DNV's current vacancy rate?

The basic dynamic is that developers won't build additional units unless they think that they can make a profit. So they must expect that there will be customers for these units that they are building. Thus, the city planning office must have estimates of the rate at which the market is absorbing this new construction.

Does DNV have population increase of 4534 new households per year?

Yes, but is there a housing shortage? What is the outlook for high rents?

Of course, development brings traffic, store traffic, etc. But what is the outlook for landlords? Are rents going up? Steadily and at a good rate? If you have a property for rent, can you raise rents every year and still find the kind of tenants that you want? How much can you raise every year? and for how many years? Is there a steady inflow of new households to fill these new units? How long until your market will be saturated with new housing without customers? Are there good employment prospects, especially professional (best tenants)?

If the good employment attractions are there, sure there will be traffic, crowded stores, etc., but in addition to apartments, there will also be development of houses, stores transportation, infrastructure, and prosperity for everyone, unless it comes to an end.

Illegals are coming to the borderless USA in huge numbers before a wall is erected thru out the southern border. That's on top of the who knows how many who come here legally.

Moshe,

Not sure, but I doubt it can continue at this pace. The only good news is that fewer are buying houses here and are opting to rent.

I remember back in 1990. I paid around $60,000 per apartment unit in bulk. The GRM (gross rate multiplier) was around 11. Things were being over built then the economy collapsed and apartment building took a 50% dive in value. Units were selling for around $32,000 per unit and the GRM was down to 5.2.

In 2006-2007 after the mortgage meltdown and the end of easy money, units went from $120,000 per unit down to $80,000 and the GRM went from 16.0 back down to 10.0.

If you think that's bad, look at commercial retail. I remember all mall being 90%+ occupied. Then because of over building and the economy, we had 50% to 60% vacancies in small retail strip malls.

Jeff of CO made a major point about the traffic problem. It's unfortunate the gov entities are also poor at planning the expansion of roads when major building of units and increase of traffic will occur.

The city loves all the fees and added tax revenue HOWEVER extremely poor road expansion will occur.

Tom, you made some good points, also. But I have to say that adding highways lanes really doesn't accomplish much - except to attract more development and traffic (induced demand).

The cities, counties, and states are great at adding fees and collecting taxes, though.

All of the development and increased taxes and fees in Denver and we can't get our neighborhood alley paved, and

city services are hard to come by.

Thankfully, in most cities and towns in this state we get to vote on tax increases.

I was thinking about Colorado this past week myself Jeff. Our state is considering the merits and disadvantages of legalizing pot. Colorado as a leader of this movement of acceptance has had a a huge benefit from it.

In your opinion, to what extent has the legalization assisted in the real estate boom that your state has experienced?

I am wondering if Pa is too late at to that table and might be on the same path that states followed when it came to gambling? Once upon time New Jersey and Nevada were the two states you went to gamble. It seems now, most states have some form of gambling so I have to wonder if these late comers actually attract any new money is attracted or if they just recycle money from within the state.

Since you are seeing first hand what is going on, I am hoping you could shed some light on why the demand is so great. Is it pot tourist, energy and mining, strong economy, the great outdoors, a pot boom?

Ray,

Those are good questions. Unfortunately I don't have many good answers. I'm sure that it happens, but I can't imagine anyone moving here just because weed is legal. I think it's a lot of people in their 20s and 30s who are flocking here because of a strong economy and the physical setting. Of course oil and gas are huge here, as is tech.

This is a very different city from the one I moved to in '91. I moved to Colorado Springs in the mid-80s and then Columbus, OH in '89, then back here. It is a different world.

Here's a good comparison that has been made before: Morristown, NJ. Look at it in the '80s and look at it now. It mirrors Denver on a smaller scale.

I think the Denver area would be like this without legal weed.

Oh, before I forget, the taxes on hit have been a windfall for the state, but of course they always say they are broke!