More Denver-area residents were looking at homes in other metro areas than the other way around during the first quarter, according to a new study that could undermine the belief that the region will always be a popular place to relocate.
Denver now joins tech hubs San Francisco and Seattle, which have experienced even bigger real estate prices increases, in the column of fading popularity, at least with potential homebuyers, according to an analysis of Redfin’s website traffic.
“That first caught my eye. Why would people be looking to leave now rather than come?” said Taylor Marr, a senior economist with Redfin who has tracked where people are looking for homes in relation to where they currently live for the past five quarters.
Marr is careful to weed out people searching homes in Hawaii during the dark days of winter or those who stalk celebrity listings. People have to search on listings in another region at least 10 times. And while looking doesn’t equal buying, Census Bureau reports on migration have confirmed with a lag the shifting preferences that Redfin is catching early.
Marr offers two answers on why Denver has lost popularity. Job prospects are much better now in a lot more cities. Nationally, the unemployment rate is a low 3.9 percent, while in Colorado it is 2.9 percent. But perhaps more important, housing costs in metro Denver — with a median home price of $417,000 versus $257,900 nationally — are too high relative to incomes.
About 80 percent of home searches in Denver in the first quarter occurred within the metro area. But a year earlier, 85 percent of searches were close to home. Many of the searches are in more affordable parts of the state such as Colorado Springs and Fort Collins, but a rising number of people are looking out of state.
Among the most popular markets Redfin’s Denver users are scouring are Phoenix, Los Angeles, Dallas, Seattle and Chicago.
Phoenix is a lower cost market and popular with retirees. Seattle, while more expensive, has strong technology industry ties with the state, which has long drawn more Colorado residents than it loses. Dallas is a housing bargain, relatively speaking, with plenty of job opportunities, especially in oil and gas.
What is harder to explain is Los Angeles. If affordability is pushing people out, then why move to a much more expensive region?
Marr dug deeper among the 90 cities that fill the L.A. Basin and found that Denver searchers were looking in more affordable inland places such as Riverside, not the pricey coastal towns such as Newport Beach, where Chipotle Mexican Grill is relocating its headquarters.
Chicago is interesting in that Cook County sent thousands of people to metro Denver with very few going in the other direction. But after trying the city for a few years, it could be more may be ready to move back.
There are some expensive cities — New York, Washington, D.C., and San Francisco, for example — that see constant turnover as young adults move in and move out. But Denver doesn’t have the same pull as those places. It needs to get the young adults who have moved here to put down roots rather than move on.
“Americans vote with their feet for what cities are doing it right with job opportunities, affordable housing and the amenities,” said Marr. He adds that if Denver wants to stay in the game, it must figure out how to bring housing affordability back into the equation.