Colorado- New to Investing, market outlook

19 Replies

Hi, I am very new to the concept of real estate investing and I am doing all I can right now to learn and grow so I can begin investing when I move to Colorado in the next 3-5 years. I would love to get some insight or data about the housing markets in the areas surrounding Denver or even about good markets throughout the state. When I move next I would like to buy a Du/triplex with an FHA loan using a 203k for repairs if needed. I know that Denver is a hot spot right now but I would like to move near there for work and school. I am open to buying in cities that are within 45 minutes from central Denver. I know that it is hard to forecast for 3-5 years out but I would like to wait until the economy takes a dip before buying. Any information about the surrounding areas, recreational or real estate orientated would be really useful. I am very new to investing in general so I appreciate any advice offered. Also, I would love to start a networking base before moving to a new area to make the transition smoother so I will provide a little bit of background on myself. I am a financial specialist working at a PEO. I love hiking, skiing, bike riding and basically any physical outdoor activity. I am in my mid 20's and I am looking to go back to grad school for my CPA after I move to Colorado. I am pursuing FIRE and I would like to use my work income alongside rental real estate and frugality to get me there. I am excited to meet people in the area and learn more about what Colorado has to offer.

-Courtney :)

Hi Courtney, welcome to BP. The market right now is in a shift and in 3 to 5 years could be in several different areas. Businesses and people are still moving here and that should continue for the foreseeable future. When the roads get more congested people may slowly stop moving in.  

As it gets closer to the time you move here we can get a little more accurate on the market and what areas are feasible. 

Also, the newer neighborhoods don't have many duplexes or triplexes and zoning is primarily for SFH.

@Courtney Gibson  Have you considered Colorado Mesa University in Grand Junction? I provided a link below which says a CPA / Master degree is available. 

I am only asking because most of what you desire is actually here - but we are on the other side of the Rockies. Much more manageable market... world class "outdoor" destination. We have better weather and cheaper prices too.

@Teri S. Awesome! I am very open to move where the best opportunities are in the state. I am thinking Denver because the company I work for now has a location there but I am open to moving around in career or colleges. I appreciate the help!

@Courtney Gibson Welcome to BP!

What makes you think the market will dip in 3-5 years? That's way to far out to predict the market. Nor should you try to predict. There are way smarter people than all of us who try to predict the market and fail! I'll send you a link to a Real Estate Trends webinar recording which will give you great perspective on the market from a 40+ year point of view.

@Chris Lopez statistics show well have the next recession within 2-5 years from now, I didn’t mean a dip in Colorado specifically but moreso the entire economy. It shouldn’t be a relatively large recession but things will be different 3-5 from now due to the bubbles we see today and I would like to get in when the business cycle sees that dip. I appreciate the help and yeah I really look forward to moving to Colorado!
@Chris Lopez , I think a lot of economists agree the markets in general are overvalued right now, backed by how far along we are into the business cycle. Besides that you have a lot of housing market bubbles, the yield curve coming close to Inversion, the consumer/ student debt problem, generally low wage growth, and the whole tariff thing does not help.

What you listed really aren't bubbles. The dot-com crash was a bubble. The housing market 10+ years ago was a bubble. What housing markets are in bubbles right now? Look at Denver, since 1989, every year, except for two, has always been the most expensive year. Prices are at record highs currently, but that's not an indicator of a bubble.

I also take what economists predict with a HUGE grain of salt. 3 years ago, many were saying that we'd see a correction in 2-3 years. It's like the safe prediction window. A broken clock is right twice a day... eventually economists predictions become true as well. 

I'm not predicting to know what's going to happen. I just don't time the market. I focus on what i have control over.

@Chris Lopez yeah I was just explaining why I said the market would be down 3-5 years from now. And like I said the markets, in general, are overvalued. There was a correction this year in February though... it’s not really timing a market thats just the business cycle. The 3-5 year timing works out for me either way. I really was not looking to have a discussion about this part of the post. Advice about Colorado is much appreciated though!

Hi Courtney, 

Welcome to BP and hopefully to the Denver Real Estate investing community when you decide to move here. I've lived here in Denver for a few years now, my wife and I invest in Denver real estate through house hacking and we've had success with cash flow and appreciation on our properties. 

I would be happy to connect and share any tips or advice on your future real estate endeavors. By the way @Chris Lopez is well respected and knowledgeable in the Denver real estate community - a great person to have as a connection and I highly recommend his podcast. 

@Courtney Gibson Gotcha. Yea, I didn't mean to hijack your thread. I really enjoy discussing finances, economics, etc. It's my gossip! :)

If ever have questions on Denver, let me know. I'll be happy to pass along what I can. Don't forget to bring a humidifier when you move out here!

@Brad Fletcher thank you for the kind words!

Yesterday I got back from a week long canoe trip on the Green River. Catching up today.

@Brenton Kasselder - You bet! I'll send you a link now. Check your BP inbox.

@Marland McKinney - Thank you for the podcast compliment. I learned a lot from Chris during our interview. I'll send you link as well.

Originally posted by @Courtney Gibson :
I think a lot of economists agree the markets in general are overvalued right now, backed by how far along we are into the business cycle.  

Above sounds rather generalized to me. As of Q1 2020, I see just 8 out of all U.S. real estate markets at the state level overvalued >10% vs historical price/income relationship. The rest of the U.S. states being under- to fairly valued. 

Stocks (S&P 500) currently driven to a large extent by tech (even top 5 tech), the latter being harder to value. That said, can look up Hussman Funds margin-adjusted CAPE for a decent metric of stock valuation. Also Price/Revenue ratio, Tobin's Q. 

A market being 'overvalued' is not super intuitive as not driven by prices only, one needs to be cognizant of relative growth in the respective benchmark/comparison variable.

@Courtney Gibson Colorado is the 4th most overvalued U.S. state as of Q1 2020 (13% overvalued vs. historical price/income at the county-level). Denver, despite being the strongest performer in price terms (2007 peak-Current price change of 79%) is though fairly valued at ~0% valuation. Aurora, Lakewood, Thornton some large cities there which are ~15% overvalued.