Colorado real estate market, no end in site?

[Mark Ferguson]

I while back I posted about the possibility of selling some of my rentals and investing in a new market. I am located in Northern Colorado and our prices have doubled in the last four or five years, making it really tough to cash flow. My thoughts were to sell a few properties here and reinvest that money in a new market. 

I have two of my rentals under contract and set to close in the next couple of weeks. 

• One I bought for $88,000 in 2012, put about $15,000 of repairs into it and it is listed for $199,900 now. 
• The other I bought for $120,000 in the beginning of 2015, put about $15,000 of repairs into it and it is listed for $179,900. 

Earlier this year I felt that the market in Denver and Colorado may be nearing it's peak. We have plenty of land and once prices get closer to what they can build at, it seems natural that inventory would increase and prices would stabilize. I talked to my local planning and zoning office in Greeley and they actually said there are less building permits being issued in 2016 than there were in 2015. Of those that are being issued, more of them are multifamily that ever before. I am in a town that is 60 miles from Denver and not exactly a urban environment. I personally don't think people want condos or apartments, they want houses. With less houses being built, new construction prices are rising just as fast as existing homes. 

I am starting to think that the single family home market may not be slowing down soon, if they cannot create more inventory. That is the problem, too many people want houses and there aren't enough. The state has talked about creating programs to help first time home buyers, but that will only increase demand. I do not see how that will help the supply/demand problem. The state and local Realtor association was proud of a bill that would create a savings account for home buyers that would accrue interest tax free with Colorado, not the Feds. That plan would save a whopping $30 a year for most people that use it. 

I am curious what others are seeing in Colorado. Are they starting to build more and if so, is it multi or single family? I am a little worried about the number of multifamily projects being built, especially around here. I don't think our market has as much demand for multi as the developers do. 

[Travis Sperr]

The Denver market is wild - inventory is the lowest ever, prices are rising quickly and competitive bidding is guaranteed on just about anything under $400k. 

New construction is happening all over the suburbs and the builders can't deliver houses fast enough. I disagree that the houses are not affordable to local residents because the data says differently in the pace the houses are selling.

Infill new construction of town homes inside Denver's urban core is everywhere with projects typically selling out before completion. Million dollar plus houses are selling at higher volumes than ever. 

There are no market indicators to show this market will slow in the near future. No inventory, higher quality borrowers, low unemployment and rents that won't slow - Not to mention it is Colorado, who doesn't want to live here. I feel like the potential issues will be affordability (not yet because rents and prices continue to grow) or the cost or construction out pacing the values (starting to see that now on the town home products - lack of skilled labor)