Our current thoughts
Predicting the future is obviously an inexact science, but currently this our take on it: get out! That may be a bit strong of a statement, and there can be many reasons a condo in the right area of Denver may make sense for you and may have future appreciation potential, but hear our current opinion of condos in Denver below.
From a pure return on the investment outlook for condos currently, in Denver, they are returning poorly as investments on a monthly basis. There are areas and specific pockets that are immune to this statement. We are referring mainly to condos priced over $250K close to Denver. Oftentimes high HOA’s are accompanied with condos as well, which intensifies the lowered rate of returns on this property class.
Competition in the condo space is increasing
Let’s go into why the return on investment has plummeted over the last few years. Competition has been the main factor affecting rental pricing. There are many apartment that look just like condos to prospective tenants on the market today. These new buildings have all the amenities that tenants are looking for: rooftop pools, workout facilities, business centers, etc. This has driven modern renters away from older style dwellings that can be great places to live, but hard investments to make money on.
Record numbers of apartments have been built in Denver over the last 10 years, and a good article on this can be found on Colorado Public Radio’s website. Websites such as Zillow and Apartments.com can be great for checking density of available properties on the market. Looking at areas around Denver such as: Cheeseman Park, Capitol Hill, Highlands, and RINO really show off the glut of available properties.
For investors looking to buy in these markets, we strongly recommend using due diligence in the process, as returns and potential appreciation can be at risk in 2019. The age of buildings should be closely analyzed as well. When issues with large buildings come up, they can be immensely expensive. Buildings such as the Brooks Tower at 1020 15th St have been hit with special assessments upwards of $40K depending on unit size.
There are exceptions
For current homeowners of condos in Denver there may be non-investment reasons to hold onto your property. Every person and property has stories behind them and your story or property may exclude you from these broad statements. Maybe the building is perfect for you and your lifestyle. In situations where you may be moving away for only a few years and coming back, this may affect your decision-making process as well. There is the potential to hold onto your property long term and come out ahead, as Denver is getting more and more crowded.
This article looks mainly at the short-term outlooks with our given knowledge of the current market conditions. The rent versus buy equations in parts of the country (including Denver) are leaning more towards renting, and a good article can be found on SmartAsset.com. If you are a current homeowner (especially of a Denver condo) and are considering holding it as an investment, it may be a good time to consider selling as well.
As a homeowner, and if you are considering holding onto your property, another interesting post you may like goes into the effects of capital gains on your property after you move out of your home. Talk to your Top Properties Agent or CPA for more information on the topic.