The old real estate saying “drive until you qualify” has always cut both ways.
Sure, housing typically gets less expensive the farther away from a metro area’s job centers or outside its hip and benefit-rich neighborhoods a would-be homebuyer is willing to look, but what one saves on a mortgage, one shells out in other ways.
Housing market mega-site Zillow published a report in July examining home prices relative to commute times in the nation’s 33 largest metro areas. In it, data scientist Sam Henly wrote, “Over a 30-year career, shaving 15 minutes each way from the two-a-day, five-times-a-week routine is equivalent to giving ourselves back five months of our lives.”
But budgets are budgets, and for people looking to get the most out of what they have scrounged for a down payment, a look at the big geographical picture isn’t just wise, it’s necessary. The Zillow report provides an index of median home values in the Denver area ZIP codes and compares them to the time it takes to drive from those places to what researchers have pinpointed as the city’s center — the 80202 ZIP code, home to the Central Business District, Union Station and city hall.
Per that report, living a half hour from downtown generates some savings, but homebuyers whose budgets top out at $400,000 may have to plan for a longer commute.
Homes 15 to 30 minutes from downtown Denver by car have a median value of $420,000, according to Zillow, 13.8 percent less than the median-valued residence 15 minutes or closer. Homes 30 to 45 minutes outside downtown had a median value of $397,000 as of this summer, 18.5 percent less than in the inner ring of downtown neighborhoods. This ring includes pieces of cities such as Littleton, Thornton and Broomfield.
The decrease in values is gentler in Denver than in some similar markets across the country. In Austin, Texas, moving 15 to 30 minutes from the city center means buying a house worth $144,000 less in terms of median value, Zillow found, a 30-percent decrease.
One potential reason for this? Denver’s market has been riding a sustained hot streak. In the city proper, median home values doubled between February 2011 and August of this year, according to Zillow’s market tracking.
“In general, in the fastest appreciating markets you’re going to see a premium” put on all housing, Zillow senior economist Aaron Terrazas said. “In part because people are willing to pay for anything they find and like. People are just happy to get in a house.”
Terazzas noted that Zillow’s study is a bit crude and doesn’t account for amenities that factor into home-buying decisions such as proximity to parks or good schools. Nor does it reflect changing consumer preferences. Millennials, the most potent force in the homebuying market today, are growing up, marrying and having kids. After decades of preferring an urban lifestyle, more and more of those 1990s and late ’80s babies are looking to return to the suburbs whence they spawned.
“We’re seeing more price appreciation in the suburbs, particularly those suburbs that are conducive for rearing families,” Terazzas said. “I don’t think those areas in the urban core are going to have the same return on investment in the coming year as they have over the last few years.”
Zillow’s assessment is built around a traditional model of a U.S. city with a central business district (like Denver’s aptly dubbed Central Business District) serving as concentrated job center and focal point of government administration. Researchers pinpointed a city’s “core” ZIP code using 2016 U.S. Census Bureau data that tracked employees per square mile and data from study partner HERE Technologies tracking the number of trips into an area during morning rush hour.
But the home value-commute trade-off becomes less clear, and less important, in metro areas with multiple job centers. When zooming in on specific ZIP codes, home values begin to climb and even surpass downtown areas near the Denver Tech Center. The 80222 ZIP code — home to the Virginia Village and University Hills neighborhoods — has a median home value of $440,000, $20,000 more than the average home with a similar-length commute to downtown. It’s within 15 minutes from DTC. In the nearby 80121 ZIP code, which includes parts of Littleton and western Greenwood Village, the median home value is $459,800, more than $62,000 over homes a similar distance to downtown. The south metro area is also home to affluent communities such as Cherry Hills Village and Greenwood Village, which may skew results high.
For the right deal, ask a local. Steve Danyliw has 15 years experience working as a real estate broker in the metro area. Aside from his works with his Danyliw & Associates business, he is also chair of the Denver Metro Association of Realtors market trends committee. When he thinks of affordable homes not far from the urban core, Danyliw looks to the northeast.
“Neighborhoods like Green Valley Ranch and Montbello, those are traditionally very affordable but provide quick access to the core Denver business opportunities and job centers,” he said. “Aurora is still a pretty good opportunity right now when you factor in affordability and being centrally located.”
It all depends on the buyer and their preferences. Regardless of national research trends, Danyliw said the millennials he works with put a premium on living near their workplaces and leisure amenities. As Denver has grown, traffic woes are driving people of all stripes to embrace that mind-set.
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“People don’t want to spend an hour, hour and half in traffic each day,” he said. “Lord knows that has been very problematic and a concern for a lot of buyers coming in here.”
One way to get around that — and another housing choice factor not weighed in Zillow’s report — is moving closer to transit. Since RTD began building its FasTracks rail system in the mid-2000s, transit-oriented developments have been all the rage in metro Denver, both for developers and many consumers.
The West Line Village development in Lakewood has generated lots of consumer interest in the duplexes and townhomes it’s building near RTD’s West Rail Line, so much so that developers have acquired more land to expand the 175-home project. The village’s first phase won’t be move-in ready until next month, but all 29 units there have sold out. Twenty-eight homes in Phase 2 also are under contract and Phase 3, which has yet to break ground, already has a handful of buyers, according to officials with builder DIRC Homes.
Units range in size from 800-square-foot studios to 1,500-square-foot homes. Prices start at $275,000 and go up to $450,000, with options and upgrades. Because the homes are new, prospective buyers don’t have to prepare to be sucked into a bidding war, DIRC staffers note.
“We’re really delivering a workforce housing product,” said Paul Malone, president of the building company. “There are a handful of ways to get downtown.The northern edge of our property is 500 feet from a light rail station. You can be on Sixth Avenue in a matter of minutes. The bike ride to downtown is mostly downhill from here.”
As with any home choice, there is a trade-off. Homebuyers who want a quarter-acre lot to call their own might have to keep driving.
