Hi everyone! Am doing research on price and rent trends in the Cherry Creek 80231 area of Denver. I read that prices in Denver are very erratic, rising high in one month then crashing the next. Is this true? If so, how do you handle this? Also, if a property cash flows $100/month for a 3b2b condo, is it worth it? What is the price appreciation trend and rental price trend historically and future predictions for this area? Thanks
Realtor · Denver, CO · Member since 2013 · 2k+ posts · 1k+ votes
7y
Prices are not erratic. They generally follow a predictable trend based on seasonality. Prices are high in the Spring and slide into the fall as school ramps up. There is a slight uptick, and then it cools for the winter.
Without knowing what you used to figure that cashflow amount, I'm not sure if it is worth it. I personally wouldn't risk the money that you probably have lined up on a 3/2 for just $100 a month. Did you figure in CAPX, property management, vacancy, etc?
Real Estate Broker · Denver, CO · Member since 2017 · 51 posts · 29 votes
7y
@Diane Tycangco Seasonality is huge in our market here, and you could very well be saving yourself tens of thousands buying between September and January, especially with move-in ready type of homes. I had a listing go up in Aurora on Thursday morning and in 24 hours I had 40 showing requests and 5 offers already.
For me, $100 / month would not be significant enough in this situation. Do you live here in Denver? With the appreciation we see here I am a large proponent of the live-in flip or turning your primary into a rental. These strategies allow you to take advantage of the owner occ financing options and avoid capital gains taxes while allowing the appreciation we have been seeing go to work.
First off, congrats on taking a step toward investing in Denver. It's a great city with good long-term potential. In general, I'd find a good lender, figure out what you qualify for and what you want to spend. (Those two things are not always the same.) And then find a good agent who can walk you through what's going on here.
Let me ask, what about the 80231 zip code is attractive to you? I believe that's Virginia Vale or Virginia Village area. A lot of new-ish condo complexes and some neighborhoods of 1960s SFHs. It's got potential but so do so many areas around Denver so I was interested in what drew you to that specific area.
About prices ... they are pretty steady in what they do over the past five or six years. They ramp up in the spring, hit a high somewhere in the summer or late summer and slowly drop off into winter, just to start all over again in the spring. (In the last number of years, the price increases in spring/summer have far outpaced the price decreases in fall/winter, which has lead to the increase in home prices.)
Sales price increases have actually slowed quite a bit. In the spring of last year, sales prices were averaging 8-10% higher than the previous spring. (That was a trend in the couple years prior to that as well.) This spring, things changed. Sales prices in the Denver metro area are between 1-3% higher than the same months last year. That means that while prices are still going up, they're going up at a much slower rate, and the trend is flattening out.