So far, 2019 is looking great for real estate investing. Many cities across the US housing market have been showing strong real estate investing attributes, and Denver is no exception. The Denver housing market definitely has a track record of being one of the best places to invest in real estate throughout the years. And while high prices and low inventory in Denver dominated headlines last year, 2019 is expected to see a softening market. That’s according to the Denver Metro Association of Realtors (DMAR). But, where exactly should you buy an investment property in Denver?
Before we delve into the specific neighborhoods, let’s have an overview of the Denver housing market as a whole. If you’re still unsure of whether a Denver real estate property makes for a good investment, then keep reading. We’re going to discuss the current market trends as well as point out what makes Denver stand out when it comes to choosing a place to invest in 2019 and beyond.
Related: 10 Best Places to Invest in Real Estate in 2019
Home Prices and Inventory Trends
If you’re a Denver real estate investor, you’ll know that the city tends to have higher home prices and is a more competitive market than the average US market. However, according to both Zillow’s data and the DMAR’s Real Estate Market Trends Report 2019, the Denver housing market is experiencing significant cooling. The report shows that the price of homes for sale in the Denver metro area dropped year-over-year for the first time in seven years!
The report found that the number of homes sold in February decreased by 10.9% and the median price of homes also decreased slightly, down 1.2% year-over-year. In addition, 18% of home listings took a price cut this January, compared to 11% in January of 2018. And homes in the Mile High City are taking longer to sell – 65 days vs. 58 days. While this shift is not extreme, it still shows a positive change is underway for real estate investors looking to buy a property. This means buyers are gaining a little ground.
Experts believe this could be due to the fact that the inventory of Denver homes for sale went up this year. In fact, DMAR reported that active single-family home listings went up 26.3% and the inventory of condos went up 64.4% from a year earlier. In terms of home prices, the trend of slower price increases is likely to continue in the Denver housing market throughout the year. Jill Schafer, chairwoman of DMAR’s Real Estate Market Trends Committee, said:
Mid-year 2018, we saw a huge increase in inventory that we haven’t seen in years; that really slowed things down for sellers and gave buyers a little more breathing room.
With an increase in properties to choose from, you’re sure to find the perfect one for real estate investing in 2019. Besides, the drop in mortgage rates in March should help make home payments more affordable. Do you have a free Mashvisor account? Use our Property Finder to find lucrative Denver investment properties that match your criteria in a matter of minutes!
So, Is It a Seller’s Market or a Buyer’s Market?
According to Zillow, Denver ranks 5th on the list of housing markets seeing the biggest slowdown in 2019, behind the California metros of San Jose, San Francisco, San Diego, and Los Angeles. This shows that real estate investing conditions in Denver are favoring buyers now more than they did a year ago.
Even though the Denver real estate market is slowing down, experts say don’t be fooled as it’s still hot. Forbes ranked the Denver housing market as the #1 most competitive market in the nation – surpassing these 4 major cities in California. Yes, the process of buying an investment property is getting a little easier with less competition and fewer bidding wars. However, property buyers should know that competition is decreasing the most in the suburbs while Denver’s urban core is still a hot market.
According to DMAR’s Real Estate Market Trends Report, the inventory of Denver homes for sale has been incredibly scarce in recent years. Now, it’s just a little less so. And, generally speaking, housing markets shift from favoring sellers to buyers about every 7 years. So, the Denver housing market still favors sellers, but after six years of growth, it’s just about time for its next switch.
Related: The 2019 US Housing Market: A Seller’s Market or Buyer’s Market?
Therefore, we can say that this slowdown is all part of the normal real estate market cycle. Schafer said, “I think we’ll see more normalizing of the market; a little more balance between buyer and seller.” In short, real estate investors shouldn’t hope for lower home prices but should enjoy the time to find the best investment properties in this (slightly) less competitive market.
Top Reasons to Invest in Denver Real Estate
There’s no doubt that Denver is an expensive housing market. With the fact that it’s not a 100% buyer’s market yet, you may be wondering why it’s one of the best cities for real estate investing in 2019. Well, owning a rental property in Denver has proven that it’ll give real estate investors a good return on their investment. So, if you can afford to, here’s why you should buy an investment property in the Denver housing market this year:
#1. The Rental Market Is Growing
Denver is seeing a rapid rise in its rental market. The higher property prices in the city make the younger population more comfortable renting than owning. Additionally, the population is increasing and for many reasons. First off, the US News & World Report ranks the livability of the top 125 largest metro areas every year and, for the third year in a row, Denver is in the top three! The city also has a lower cost of living when compared to the national average.
The biggest factor pulling people to the Denver housing market is the strong job market and low unemployment rate. In addition, there are so many colleges in the Denver area. This represents a unique opportunity for real estate investors as there’s a constant stream of people who only want to rent. This explains why Denver is one of the best places to buy a rental property in a college town.
#2. Appreciation Rates Are Strong in Denver
Denver continues to enjoy a strong real estate appreciation rate compared to the national rate as home values rarely fall. According to NeighborhoodScout, Denver real estate appreciated 103.25% over the last ten years (an average annual appreciation rate of 7.35%). This puts the city in the top 10 nationally for real estate appreciation! The main reason for this is that there has been little inventory. Thus, investment properties in Denver are almost always growing in value.
A smart real estate investor would not miss out on this growing, appreciating real estate market in 2019. Start your search with Mashvisor’s tools today to quickly find a profitable rental property for sale in the Denver housing market.
#3. It Is Relatively Landlord-Friendly
The state of Colorado is relatively landlord-friendly compared to the West Coast. For example, you don’t have to give tenants notice that you’re entering the rental property under certain circumstances. There’s no limit on late fees and you can quickly begin evictions if your tenants haven’t paid the rent. There are no state laws that prevent landlords from rekeying the locks after evicting tenants.
If tenants violate the lease, you can give them a formal 72 hours’ notice to correct the issue or move out. If they don’t comply, then you can go to court and the sheriff will give the tenants 48 hours to move out before forcing them out. All of this will help protect your real estate investment in Colorado, whether it’s in the Denver housing market or other cities.
Related: Colorado Housing Market 2019: Why and Where to Invest
Mashvisor’s Denver Housing Market Statistics
Now that you know what makes Denver a top city for real estate investing in 2019, take a look at some specific data computed by Mashvisor’s Investment Property Calculator. This tool uses both traditional and predictive analytics along with real estate comps to help you make smart investment decisions based on highly reliable figures. It’s the ultimate tool for any real estate investor as it eliminates the need to do market analysis as well as investment property analysis manually. To learn more about our product, click here.
- Median Property Price: $513,096
- Price/Square Foot: $296
- Price-to-Rent Ratio: 20
- Traditional Rental Income: $2,096
- Airbnb Rental Income: $3,117
- Traditional Cash on Cash Return: 2%
- Airbnb Cash on Cash Return: 3%
- Airbnb Occupancy Rate: 61%
As you can see from our data, Denver homes for sale can be very profitable – especially when rented out as Airbnb short-term rentals. However, this leads us to an important question that you need to ask before investing in Airbnb…
Are Airbnb Investments Legal in Denver?
Airbnb is legal in the Denver housing market, but buying an Airbnb investment property can be difficult for a real estate investor. The city’s Airbnb law restricts short-term rentals to only your primary residence. This means that you have to live on site if you want to rent out on Airbnb in Denver. This primary residency provision on short-term rentals still allows accessory spaces like basement apartments or carriage houses to be rented out as much as possible. If you’re a Denver real estate investor looking for a primary residence anyway, buying one and listing it on Airbnb can be a profitable investment in 2019. Just be sure to check with the Airbnb laws and regulations before making a purchase.
Best Neighborhoods in the Denver Housing Market 2019
Of course, whether you’ve decided to invest in traditional rentals or Airbnb rentals, your success depends on the investment location. So, let’s answer the first question asked at the beginning of the blog: where exactly should you invest in Denver? Here are the best neighborhoods in Denver where it makes sense to buy a rental property for a good return on investment:
Chaffee Park
- Median Property Price: $375,958
- Price/Square Foot: $261
- Price-to-Rent Ratio: 17
- Traditional Rental Income: $1,852
- Airbnb Rental Income: $3,145
- Traditional Cash on Cash Return: 2%
- Airbnb Cash on Cash Return: 5%
- Airbnb Occupancy Rate: 66%
Rosedale
- Median Property Price: $529,900
- Price/Square Foot: $354
- Price-to-Rent Ratio: 24
- Traditional Rental Income: $1,808
- Airbnb Rental Income: $2,805
- Traditional Cash on Cash Return: 2%
- Airbnb Cash on Cash Return: 4%
- Airbnb Occupancy Rate: 54%
Gateway – Green Valley Ranch
- Median Property Price: $388,600
- Price/Square Foot: $183
- Price-to-Rent Ratio: 19
- Traditional Rental Income: $1,686
- Airbnb Rental Income: $2,932
- Traditional Cash on Cash Return: 2%
- Airbnb Cash on Cash Return: 3%
- Airbnb Occupancy Rate: 56%
West Colfax
- Median Property Price: $594,666
- Price/Square Foot: $373
- Price-to-Rent Ratio: 21
- Traditional Rental Income: $2,388
- Airbnb Rental Income: $3,873
- Traditional Cash on Cash Return: 2%
- Airbnb Cash on Cash Return: 3%
- Airbnb Occupancy Rate: 62%
To start looking for and analyzing the best investment properties in your neighborhood of choice in the Denver housing market, click here.
The Takeaway
There are many reasons why the Denver housing market is going strong in 2019 and expected to remain this way for years to come. Due to the market slowdown, real estate investors will like investing in Denver homes for sale this year better as it won’t be as frenzied. Prices are still strong, interest rates are low and they’re probably going to stay there. So, it seems that it’s the perfect time to buy an investment property!
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