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Colorado’s Gold Rush 2.0: The Real Estate Edition

Kyle Spearin
4 min read
Colorado’s Gold Rush 2.0: The Real Estate Edition

During the late 1850s, a gold rush brought tens of thousands of people to the Colorado territory. They came from across the United States to the centennial state with hopes of striking gold and providing wealth to their families for generations to come.

Just 150 or so years after this great migration to Colorado, people again began flocking to the state. With this massive population boost came tremendous prosperity in many different industries, including the real estate market.

The median home price in Denver in 2011, according to Zillow, was roughly $234,000.Even with the onslaught of tough times across America and job loss during the COVID-19 pandemic, real estate prices in Denver have continued to climb.

That same home in 2020 could be sold for $466,000 and is anticipated to appreciate by another 6.4% in 2021. Real estate investors may feel outpriced in this market, given the Denver metro home prices and population increase.

Little do these investors know, another gold rush is currently underway in a city not named Denver or its surrounding suburbs.

Follow Route 25 south for an hour and you will come to the city of Colorado Springs. Here, the workings of another Colorado gold rush are underway. Known for its plethora of natural landmarks such as Garden of the Gods and the prestigious United States Air Force Academy, this city has much to offer real estate investors.

Like those who moved to Colorado seeking prosperity during the gold rush, you too can be a trailblazer in this city of limitless upside.

car driving down interstate 36 in Colorado toward the city of Boulder with mountains in distance

What’s the Draw?

Attractive to Millennials

As previously noted, Denver is all the rage, particularly amongst millennials. Upon arrival, this demographic sets their eyes on living in posh neighborhoods throughout the city, usually renting to enjoy the proximity to great restaurants, bars, and the like. But when millennials begin to settle down, they find that Denver is expensive relative to other cities in the region.

Millennials seeking to purchase their dream homes are moving instead to Colorado Springs. Between 2010 and 2015, Colorado Springs saw a 14.7% increase in the millennial population. As this number continues to grow, so too will the demand for real estate.

Related: What to Do If You’re Located in an Expensive Real Estate Market

Driving through this city of close to half a million people, it becomes apparent why so many are relocating. Like most places in Colorado, there’s plenty to do outdoors such as hike at Cheyenne Mountain, wander Garden of the Gods, or get a leg workout at the Manitou Incline. It also has a flourishing downtown area with a variety of restaurants and bars to choose from.

Most importantly, Colorado Springs has home prices that are more affordable than the Denver metro area.

Rather than paying a median price of $466,000, homeowners and investors can expect to pay far less. The median home price is about $337,000, according to Zillow, with estimates of appreciating by 7.8% in 2021. Regardless of your real estate investing strategy, this significant discount on homes, plus high appreciation as icing on the cake, can be quite enticing.

Good School Districts

School districts are a common metric used by investors to rate neighborhoods. In general, the better the school district, the more desirable the area. Given the competition among parents trying to send their children to the top schools, home prices tend to rise in these districts.

Colorado Springs has some of the best school districts in the entire state. According to Niche.com, the Cheyenne Mountain school district is ranked first overall in the area, while the Academy school district is rated tenth.

When you compare the quality of schools in this city to those in places like Aspen, which also have highly rated schools, then look at the price of housing, it’s easy to understand why parents want to live there. People are already catching on to this and home prices continue to rise as a result.

Wide Angle View Of High School Students Sitting At Desks In Classroom Using Laptops

Strong Employment Numbers

As an investor, having employed tenants and people who can pay back debt are crucial considerations. One way to determine this at a larger scale is to look into the employment statistics. Even with COVID-19, Colorado Springs boasts low unemployment numbers compared to the rest of the United States.

Across the United States, unemployment in August was about 8.4% compared to just 6.3% in Colorado Springs. This provides a certain degree of insulation against an economic downturn. Much of that has to do with the nature of employment found in the city.

The United States military is the largest employer in Colorado Springs. Fort Carson, the Air Force Academy, and Peterson Air Force Base make up about one-fifth of the jobs.

Related: Point-Counterpoint: 6 Pros of Investing Near Military Bases

Landlords who rent to primarily Section 8 tenants do so because of the guaranteed check every month from Uncle Sam. In many ways, the same logic can be applied to military-related jobs; even in the event of a recession, the United States government isn’t going out of business.

The state of Colorado has also become known by the moniker “Silicon Mountain.” This refers to Denver as well as Colorado Springs. Given the emerging tech market, large software companies such as Hewlett-Packard also have high employment numbers.

With people becoming accustomed to remote work, cities with lower costs of living will become more and more popular. Technology is also a safer bet for investors than most other industries due to our continued reliance upon it for just about everything.

A stable job market makes Colorado Springs a place investors should consider.

Final Thoughts

Colorado becomes increasingly more popular with every year that goes by. As people continue to get priced out of the Denver market, they’re seeking other places to live. Colorado Springs fits many criteria for investment opportunities.

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Have you considered investing in Colorado Springs or a similar city?

Tell us where you’re looking in the comments.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.