We’ve all swerved around them on side streets, these railroad cars with the tops cut off and construction debris poking out. Locals register their disdain by sneaking rubbish into them on Sunday evenings and flinging in bags of dog poop on morning walks. Rolloff dumpsters around Denver are often an annoyance and unsightly, but we had an itch that needed to be scratched:
Are rolloff dumpsters a leading indicator of home sales?
Certainly, a dumpster in front of a new build is a lynch pin between development and the real estate transaction.
There is construction waste when building a home.
That waste goes into a dumpster.
Eventually the home is completed and someone buys it.
But what about when these show up in front of older homes? We wondered whether these dumpsters (not in front of new construction) were indicative of a near-term home sale or just homeowners finally getting around to that remodel they’ve always talked about.
This data will take some time to bake, and we are now just waiting to see if these homes do hit the market soon; the amount of days from dumpster appearance to market-ready; and what percentage are just home improvements. While we won’t know if our hypotheses are correct for a while, we are seeing what we believe is strong indication that these homes are soon destined for market.
DENVER ROLLOFF DUMPSTERS: OUR APPROACH
We approached this with simple rules and assumptions.
- We selected Denver’s Highlands neighborhood as our snapshot area. Big, but contained, between 26th Avenue and I-70, Sheridan and I-25. Four quadrants that were all similarly-sized.
- We took the snapshot within one week, June 7-13. We chose this time period because we thought of doing this, like, the week before. Not much science to the time selection.
- One of our assumptions is that most people, if not all, are looking to maximize their home’s market value at sale, and, as a result, they will do some improvements to the home ahead of putting it on the market, whether light or heavy improvements.
- Dumpsters only give us a visual indicator of heavy construction.
- If a home had a dumpster in front, we took a photo and logged the data. (Photos at the bottom of our data page.)
- We logged new construction vs remodel.
- We compared the sales data of the home with a dumpster. Our hypothesis is that more time between the last sale and this remodel, the more likely it is headed for the market.
- We drove a 2014 Chevy Volt. We did use a little gas on the longer days, but overall, least environmental impact we could manage in a car.
(Go here to read more about how we collected data and other background on our methods.)
DATA WE COLLECTED
From June 7-13 in the Highlands area above 26th Avenue we captured the following data:
Residential Dumpsters: 108
New Construction: 48
West Highland: 32
If Highlands is not a familiar neighborhood, know that it is still pretty hot 20 years later. Here is a map of Highlands. The magma of this volcanic real estate market was Highland Square at 32nd & Lowell, and the lava flow has not stopped in any direction, has jumped major streets, school districts, even an interstate. Highlands (also referred to as Northwest, Northside, Highland, The Highlands, and the list goes on…) has a big halo, and with 108 homes in varying stages of remodeling and construction as well as an additional 95 homes on the market in this area (which is on the low side right now), it’s pretty easy to predict that this area is hot and will continue to be without riding around taking photos of dumpsters like crazy people.
And if you are in the market for a dumpster, we have broken out the various dumpster rental companies along with their pricing and contact information.
From the above data we collected, we then wanted to combine these data with their historical home sale data to add another dimension. We have made a few assumptions here.
- If the most recent home sale was less than two years (with some wiggle), then we noted them as unlikely to be flipping. Our assumption is that the capital gains tax for less than two (2) years of occupation was a big enough detractor. If they HAD NOT sold in the last two (2) years, we considered these homes as being “in the zone” of possibility.
- We did not look deeper into public records to figure out if the buyer was a developer or otherwise likely to sell. That work certainly can be done; we just chose not to for this round.
- If a home had not been sold since at least 2011, we labeled these as red hot. The assumption is that people switch homes on average every seven years, which is some cave wall math taking average American life expectancy (78.6) and dividing it by the average number of moves in a lifetime (11.3). This was our line of judgment between likely vs very likely to come on market.
- We made some other judgment calls that aren’t that interesting but easy to understand if you saw the chain of title or the home itself.
Of the 60 homes that have a dumpster and are ostensibly being remodeled and not just throwing out CD collections, 41 of these homes—68%—had their last sale more than 2 years ago. And of those 41 homes, we have labeled 31 (75.6%) of them as being red hot and likely, if our predictions are correct, destined for the market after these renovations are complete.
West Highlands was the hottest with 17 homes in the zone and 14+ being red hot for market. We have “14+” here because we couldn’t make up our minds about one specific home, but also couldn’t include it as red hot, but there’s a chance it is.
Berkeley has 10 in the zone and 8 red hot; Highland 9 and 6+; Sunnyside 5 and 3, respectively.
If our predictions are accurate (or close), this cluster of homes is about to come online at a much needed time for desperate buyers. Further, if the larger trend of Dumpster + (x avg days) = house for sale, then maybe these behemoth parking problems are a leading indicator of a housing market heating or cooling in the Front Range, Denver Metro, or even down to a city block.
These may seem like small numbers, but if these represent the greater dynamics at play across Denver, or the Front Range housing market more broadly, we could be in for an even steeper rise in real estate prices. Right now there is a shortage of homes across the metro area in general and The Highlands specifically when compared to the number of buyers. And this piece by Slate, reveals how housing markets are being even more depressed by various factors resulting in people moving less often. Everyone has heard the local horror stories of competing against multiple offers, escalation clauses, and cash buyers. With a limited inventory of homes that competition will grow more fierce, and knowing how to predict which homes are coming on market , such as with this crazy idea we had about dumpsters, are the kinds of things you have to do to create an edge.
Christopher has been been in the Real Estate industry for 8 years and has had the opportunity to close over 1,000 deals while acting as the Managing Broker for thousands more. Christopher is passionate about continuing to find ways to simplify, maximize, and serve Trelora’s clients exceptionally well and spends his time building teams to deliver high levels of service. When not doing real estate Christopher can be seen training for marathons and ultra relays with his 2 year old daughter, eating pizza, and drinking a steady stream of Diet Coke.