I just moved here to the states but I've already done many real estate investment in my homeland country. currently live in Denver, CO, which has hot market nowadays but I'm thinking to move to La,CA. what's you opinion?

Hi Hooman. To be honest, you're likely way more experienced than I am in real estate if you've done many in your home country. Based on Uhaul moving trends and migration patterns, it seems many are moving out of California and many are moving into Colorado in general. In this case, you might be able to find better deals in California because people want to leave there so there are more sellers than in Colorado. Keep in mind a big part of these migrations might be non-homeowners looking to move to other places with lower taxes and cost of living, so there being more sellers in California might not be the case. You still have to do your due dilligence.

@Hooman Arasteh

Welcome to BP! Denver is a HOT market right now, the hottest it's ever been, actually. There are less than 2 weeks of inventory (smallest amount on record), we're seeing offers 10-20% over asking, no inspection, cash appraisal gap. You get the idea - it's tough to get under contract.

That doesn't necessarily mean to look elsewhere. Projections are for the Front Range population to double by 2050, so the appreciation wave will likely continue. With a strong, varied economy and young population, I expect Colorado to remain a very healthy market for the foreseeable future.

And, there is no guarantee you will find an easier market elsewhere. I am hearing from agents all over the country that they are experiencing the same thing we are here in Denver. It's because there is so little inventory with people not listing their home due to COVID fears and mass migration from the new remote worker economy. With the freedom to work from home, people are ranking quality of life as the top factor in choosing where to buy a home.

You may find a softened market in California. I live in Denver and am looking for my next investment here. I like to invest locally where I know the neighborhoods, have insights into the real estate market, and have my team of builders and contractors already set-up. Plus, I like to use owner-occupied loans to get the best interest rate and downpayment terms. I house hack: I buy homes that have a separate living space and entrance. Then, I rent out the other space. $25k down payment on a $500k that will rent for $2000/mo while I live for free (or almost free)? It's the best cash-on-cash investment I know of.

That's my opinion.

@Peter Pham

Thanks for you information. It was useful.

@Chris Freeburg

Thanks for you information. let’s discuss it a little bit. I believe it’s just like 2 way street, although you don’t have enough inventory here to buy good but on the other hand it means that you have a hot market when in comes to sell or rent your property. Do you think that can cover the loss that caused by lowing inventory? 

@Hooman Arasteh First, I question that you can't buy "good" here. Yes, the market has gotten much more expensive and competitive. I think that just reflects the value of real estate right now, especially in Denver. It's just supply and demand. I believe in the long-term, the market will only continue to appreciate.

Real Estate might be cheaper elsewhere, but there is also a cost to that trade-off. Personally, I like to invest where I live. I know the market, I know the neighborhoods, I have a team and network of contractors set up here. I know what I'm getting into, which saves me time, and the relationships I have established only continue to become more valuable over time. I lose the value of that knowledge and network if I invest elsewhere. If you live in Denver and believe in its long-term potential to continue to grow into a major US metropolitan area, it might make sense to invest here.

I'm not sure what you mean when talk about "loss". Are you predicting a drop in prices? I don't expect the market to drop. As the vaccine rollout continues, more homes will come on the market (this WILL happen, even though it seems hopeless right now, this crazy-competitive market will NOT last forever). However, when there is more supply, I don't expect prices to drop. There is just too much demand and too many people moving to Colorado or being born here. The demand will continue and it will take a LONG time for new builds to ramp up enough to feed the supply.

Many people wonder about an impending foreclosure crisis. The data just does not show that either. Most homeowners were put into forbearance (a payment plan), and most have paid on time. Very few (5% of all those on forbearance, and 0.27% of ALL homeowners) are behind on their payments. Even if ALL of those homes came on the market tomorrow, that would still only be less than a month of inventory. We're at 2 weeks of inventory, so it's just not enough to meet the demand

I think the market will slow down and will not be as competitive in the Fall as it is right now (it is truly brutal out there right now and buyers are paying a premium), but I don't see this market will get cheaper. Here's another way to think about it: Homes appreciated about $100k in the last 1-2 years. That market seemed "expensive," just like this one does, but those buyers gained a lot of equity.

Warren Buffet always talks about getting time in the market, not timing the market. For whatever dings his golden reputation may have taken in the last few months, I think that's real wisdom.

I agree with you. If I decided to invest in LA I would moved there too since I prefer to invest where I live for those reasons you mentioned. About that loss I meant since the inventory is low you need to pay 10-20% higher which means loss for us as a buyer, but we can regain it later when we rehab and want to sell it as a seller. 

@Hooman Arasteh

Buying almost anywhere in Denver right now is an appreciation play unless you do a more "creative" rental model. A rent-by-the-room house hacking model can bring in good cash flow. To a lesser degree, so can a medium-term rental model for traveling nurses and remote workers who are coming to Denver.

To your direct question: Will you recover the extra costs you spent to get into this market? Yes ... if you hold long enough. I think this year is going to be more of the same, unfortunately. With continuing low interest rates, coastal migrants with more money, and Millennials -- a bigger generation than the Baby Boomers -- now coming into prime home-buying age, we are going to continue to see high demand. Denver's on the map now. And long-term, I don't see prices taking a serious downturn for the foreseeable future. Could something happen in the next few years? Sure. But long-term, Denver appears headed the direction of Seattle or San Francisco.

@Hooman Arasteh - you might consider looking at Colorado Springs. @James Carlson saw the potential and is doing a lot of work with investors there, and I've expanded to that market as we anticipate Denver market conditions pushing more savvy investors there. 

@James Carlson

Totally agree. if you want to vote : Denver or LA ?

@Hooman Arasteh

Haha. I mean L.A. is pretty great. Weather's awesome year-round. And you're always going to have demand there. But Denver's pretty awesome as well. You've got amazing hiking closer to you than you do in SoCal. You've got skiing. Denver's food and bar scene, while maybe not L.A.'s, is pretty damn good. And the prices, as of now, are cheaper. We continue to get tech money coming in. And the whole "vibe" of certain areas is just awesome. (If you're a native, you may hate how "city" Denver has become, but if you're coming from SoCal or New York, and like it there, you'll be pleasantly surprised with what you find here. Plus, our beer's better. ;)

Are you buying for a pure investment? Or are you looking for a primary residence? (Or a touch of both -- maybe a home with an ADU for rental potential or at least a home zoned to allow an ADU build?)

I'd echo what @Tyler Howell said. If you're looking for a pure investment in a city with a slightly better entry point, Colorado Springs is interesting. It's one of the few metro areas that saw rent appreciation in the last year when places like Denver were stalling out or dropping a touch.

Good luck!

Denver without a doubt. People seem to be fleeing CA. 

What @Chris Freeburg said! If anything, there will, at some point, be a mellowing of the market. But there are too many other factors to consider right now. It's not just interest rates, or COVID migration, or construction costs/lack of new construction. All of the above. Short of the zombie apocalypse, I think the odds are slim to none that prices will go down much. Anywhere. It's been like this for the last 10 years in the Seattle/Puget Sound market, even after all the Chinese cash buyers went away. 

Thank you all for the information and your opinion. @James Carlson @Megan Shay @Tyler Howell