I’m writing to point out a trend I’ve observed over the last 4 years. I think it’s a trend that will push many people out of Denver. I hope my ideas will push some friends and acquaintances off the sidelines and into the real estate game.
When I moved here from San Diego in September of 2015 I was thrilled by everything I discovered. Gas was $1.85/gallon. Income tax was a flat 4.6%. A 1-bedroom apartment in a cool neighborhood was $1,200. And you could scoop up a nice starter home for just $275,000. Coming from the evil empire of California, I felt like I struck economic gold. My hometown was insane back then in terms of costs. And even more insane now. Everything was at least double the price of Denver. I remember my girlfriend and I just broke a lease on a place about a mile east of San Diego Harbor before we moved. The monthly rent there was $3600/month with dog fees and parking. We had a household income of about $200,000 per year and somehow, we were still barely getting by. The idea of buying property was simply a pipe dream. But I really wish I would have found a way back then.
Southern California has only become more expensive and still has Denver beat by a lot, though that’s not a competition anyone should be hoping to win. But the people in those parts have accepted that the price to live there is high. In fact, a lender in LA recently told me that they’re still getting 5-10 offers on every property up to $1.5M. That's a staggering number considering how much the market here has been stopped in its tracks by a 7% rate. People there just realize that to live in cool places, one must ante up.
You may not love what I’m about to say, but remember that my goal as a Real Estate agent is to advise people on how to build wealth; I’m like a financial advisor, but my chosen investment vehicle is Real Estate. Denver isn’t cheap anymore and never will be. To avoid having to move out of this beautiful place, locals need to start adjusting to higher costs. It has some of the best weather in the country, more things to do than most places in the world and the secret is out. I’m lucky enough to have a perspective exclusively reserved for West Coasters and those from NYC: the perspective that Denver is still a deal. I have a big network here and I hear the whispers. Denver is crazy. Houses are so expensive. The Californians are jacking prices up so much.
They’re right. We are jacking the prices up. And those prices will go up again. And again. And again.
How can I be so sure? Because this situation is deja vu for me. I never thought I’d see the day when San Diego and LA got more expensive than they were 10 years ago. But those days have come. The bubble we always talked about was just an illusion based on false hope for lower cost of living. And I’m one of the people who had to leave my home because I couldn’t afford to live there. Denver is on the same trajectory. In fact, I’m sure you have at least 1 friend who has left the Mile High City for the same reason.
The truth is, a house in one of Denver’s best neighborhoods is a steal at $800.000. A mortgage of $6,000/month should be a no-brainer for two people with combined income of $200,000/year with a tax structure like Colorado’s. I know that sounds crazy, but it’s a discount compared to what it will be 5 years or 10 years from now.
Some are thinking that renting is a safe bet, but it’s not. I really believe people are going to be shocked when they see renewal notices come in the mail. Property managers and landlords are well aware of the purchase market’s current condition; “high” payments, lack of buyer engagement and low inventory. So they know that they have plenty of people cornered. They will raise rents dramatically. Some already have.
The demand here is high and the supply is low. Rates aren’t coming down anytime soon, so we all need to accept that cool places are expensive to live in. People are going to pay “the man” either way. Better to pay towards your own future than to invest in your landlord’s real estate portfolio. I tell all the people who ask; just buy something. And if you decide to buy a place, make sure you buy the nicest property you can in the best location you can. A condo or townhome may be all that you can afford, but that will someday help bring your dream of a house to fruition.
Consider me your combat journalist. I’m passing along my observations from the front line. If you’re in the market already, I commend you because you’ll realize gains over the coming years. Make sure to tell your friends to engage because life here is going to get a lot more expensive. Buying property now will hedge against future increases in your cost of living. And if they need representation, send them my way. Tell them I’m young, hip, energetic, and an absolute killer.
As always, let me know if you have any questions or if I can help in any way. Hopefully I’ll see you real soon.
-Joey
