Denver’s Housing Market

Brian Morrison

As a real estate investor, my partners and I plan to bring 28 new homes to market this year in Denver and Golden. Our projects can take as long as two years to get approved through the city municipalities. Exposure to the market can be positive or negative for us depending on fluctuating home prices, so it is important to forecast how the market will perform once we are ready to sell.

I am less interested in predictions made by news sources and more interested in the facts. If I see an article that says “Prediction: Denver will have the hottest housing market in 2016” by Fox News, I am not going to put any faith in it. We are bombarded with these kinds of articles in Denver, but I urge you to look at the hard data.

Here are some of the factors that help us forecast the future of Denver’s housing market…

• According to the S&P/Case-Shiller Index, Denver saw an average home resale-price growth of 10.9% from November 2014 to November 2015.
• At Brixton Real Estate, our average home sales price rose by 9.2% from 2014 to 2015, and we are currently on track for a 9.3% increase from 2015 to 2016.
• According to the recent US Census, Denver’s population jumped by 101,000 from July 2014 to July 2015.

So we know there is an increase in demand and home prices in Denver, but what about a housing bubble? I don’t think we will see a repeat of the housing crisis in 2008 because we have much more regulation on mortgages now than we did before. If you have applied for a mortgage recently, you know what I mean. You may be asked to provide your elementary school grade cards as part of the approval process!

I think a real concern Denver has right is the inequality in the rise of housing prices and current incomes. As Denver continues to attract new people, home pricing will continue to rise due to demand, but incomes are not rising with it. This is part of the reason why we have changed our investment focus from $850k-$1.2M houses to $500-$600k multi-family structures in the past year and a half.

Overall, I think Denver’s housing future is bright with some possible corrections due to lack of affordability because incomes are not increasing at the same rate as home prices and interest rates will most likely go up this year. The growing population and increasing demand is what makes Denver a unique market right now, and I am certainly glad to be a real estate investor here!