13.1% Return on Denver Investments in 2011

American Monetary AssociationThe Denver area has been a historically stable real estate market for both owners and investors. Market values experienced a downward correction following the financial crisis of 2008, showed signs of stabilization as 2009 transpired, but that stabilization was short-lived, as the market experienced volatility moving out of 2009 and into 2010. Currently, approximately 35% of listings in Denver are foreclosures.

The principal value to investors of property in Colorado is its attractive cash flow relative to market prices. Denver represents a major market area with characteristics that are favorable for Investment. This cash flow offers a significant advantage to investors in Denver, since it allows them to ride out volatility in market values. The overall economics of Denver continue to be strong, making it a solid long-term investment market. Short-term price fluctuations are likely to deter some investors. However, people who understand the inherent volatility of value appreciation and the importance of cash flows for the stability and long-term viability of investment properties recognize the long-term power of a market like Denver.

The cash flow generated by properties in the Denver market give investors the power to wait for improvement in market values as the property cash flow exceeds the operating costs and mortgage. Astute investors understand that investment real estate is about much more than just leveraged value appreciation. Denver experienced a modest run-up in values from the beginning of 2001 through the end of 2006. This was a much more mild value inflation than occurred in many of the bubble markets, but was still enough to shift the mindshare of many investors onto appreciation as a source of value. Fortunately, Denver has not experienced the extended escalation in values as many other bubble markets, resulting in healthy cash flows that are expected to exceed costs by a sufficient margin for investors to gain ‘staying power’ while values in Denver regress back to fundamentals.

The American Monetary Association Team


Flickr / ercwttmn

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