The US economy is growing in most parts in the country, Colorado being among the areas where development is the most reliable, but the pace of the growth has somewhat slowed down recently, which has instant effects on the state’s real estate market. One of the trends that will most likely govern the real estate landscape in the Centennial State is a somewhat slowed down development in the commercial real estate development and speedier development in the residential segment – here are some factors that influence local real estate trends.
What Causes the Slow-Down in Commercial Real Estate
One of the most important factors that influence the direction of development in the segment is the emergence of alternative property types, such as adaptive reuse (the process of using existing buildings for purposes other than the purpose that the building was initially erected for) or office space shared by multiple small business owners. These trends, along with the increasing number of telecommuters and of enterprises that no longer work from rented offices have significantly decreased the demand for new offices as well as for new warehouses or other types of commercial construction.
The other factor that determines the decrease in commercial construction is the shortage of skilled and unskilled labor that almost all industries in the state are faced with and that acts as a deterrent for companies that have previously planned to move to the state.
Trends that Affect the Residential Real Estate Landscape
Residential real estate is becoming pricier by the day, due to the high demand for local residential property. As a result, the median price for an average-sized single-family home is around 445,000 in the Denver metro area, more than 1% higher than it was last year. The prices for condos show the same trend, with medial prices around 304,000.
The demand for residential real estate is growing according to Greenfield real estate agents, but the number of developments have slowed a bit recently. One of the reasons for the trend is the slightly growing number of foreclosures, a process that puts many listings into the picture without increasing the demand for new construction.
Another trend that noticeably affects the state’s real estate market is the higher demand for high-end property, valued at over 1 million and increased demand for condos, as compared to single-family homes – in other words, demand is increasing for smaller property on the one hand and for luxury property on the other, while the interest for average-sized single-family homes has not changed that rapidly or that significantly. The trend is likely to continue in the following months, too.
Return to a State of Balance
Though some experts say that the changes that affect the Colorado real estate market are alarming, others say that the process will actually bring about more predictability and will lead to the development to a stable, predictable market, without the surprising or shocking ups and downs of the last decade. Unfortunately, foreclosures will continue to affect the local real estate landscape for the coming years, too, especially in large urban areas, such as the Denver metropolitan area.