It’s plainly evident that we are living in magical economic times in Denver. Soaring home prices, jobs aplenty, massive positive migration and an elite place as one of America’s most vibrant, dynamic and economically flourishing cities.
And all of that is true. For better or worse, Denver has been discovered, and the Mile High City of today bears little resemblance to the smaller, more affordable and much-easier-to-navigate city I fell in love with back in 2005.
Growth has it challenges, though, and we’ve documented them before. Traffic, air quality, lack of affordable housing and a rapidly growing divide between rich and poor are all "big city issues" which Denver must now tackle.
While it goes without saying that growth beats stagnation and prosperity beats austerity, living in a region with 2.2% unemployment presents another challenge – finding competent vendors to do work at reasonable prices.
There’s more to this conversation than you might think, because truth is, after six solid years of equity growth with total gains rapidly approaching $150 billion in the metro area (or more than $50,000 per person!), there is totally unprecedented wealth along Colorado’s Front Range.
If you own real estate, you have equity. And that means nearly two-thirds of the residents in the Metro Denver area are feeling pretty good about things these days.
What that translates to in the goods and services arena is demand… lots of demand.
Which means if you want to hire a contractor, landscaper, roofer or simply get a radon mitigation system installed in your home… you’re going to probably have to wait a while before someone shows up, and if you’re not careful, you’re going to pay way more than you expected.
Getting vendors to do timely work at reasonable prices seems easy enough… but it’s not.
Think of landscapers. For years during the economic downturn, landscaping companies saw almost zero demand for their services. No homes were being built, no one had equity, and in a grim economic environment the last thing homeowners struggling to stay current on a mortgage were going to do was spend money on planting trees or building a deck.
Today, however, think of the abundance. According to real estate research firm Hanley Woods, more than 12,000 single family detached homes will break ground in the Denver metro area in 2017. That’s 12,000 homes that need plumbing, electrical work, concrete foundations and driveways and, yes, landscaping.
So here’s the skinny of it… there’s more work out there than most companies can handle, and builders selling retail products under time-sensitive conditions go to the front of the line. If you’re paying $650,000 for a new home, does it make that much difference to the builder if installing a new driveway costs $4,000 or $6,000? Probably not.
But if you’re a homeowner looking to replace a failing piece of concrete, there’s sticker shock.
I recently sold a home built in the 1970s that needed tuckpointing work on the brick exterior and the chimney. Nothing extensive, just patching some holes where the mortar had deteriorated over time and freshening up a few areas on the south side of the home that had taken decades of direct sunlight.
My regular tuckpointing company was scheduling more than six weeks out, which didn’t work for this property… and so I began searching for other vendors. Long story short, the first company bid the job at more than $2,800. The second company, a two-person operation with solid online reviews and evidence of insurance… said they could knock out the job in one day and bid $850.
I recently had a client who purchased a new home call me asking for a landscaping referral. A maple tree which the builder had planed in his front yard had died and he wanted it replaced. Landscaper number one bid $1,700… and landscaper number two bid $575.
Stories of this nature are everywhere. When contractors have more work than they know what to do with, they can price inflate all they want and chances are they will find someone willing to pay it.
Another buyer of mine recently closed on a resale home which had the water heater replaced as part of the inspection negotiation. A few days after he moved in, he noticed a valve was leaking and he asked for my help. We called the plumbing company which installed the unit back out to fix it. Long story short, turns out the plumber really wasn’t a plumber at all. He was a bartender who had been hired by the plumber to help keep up with the overwhelming demands of the business.
Needless to say, we weren’t happy. I called the owner of the company and had him send out another plumber - a real one - to fix the valve. I’m assuming the bartender turned plumber is installing another water heater with a leaky valve somewhere in the metro area as we speak.
The point is… do your diligence. Check referrals. Double check your pricing. And realize that in a market as hot as Denver, competent people are going to be in high demand.