Top 3 front range real estate investments in Denver

The pandemic has wreaked havoc on the economy, but surprisingly real estate throughout the front range has held up considerably better than almost anyone predicted.  With the economy still in tatters, what 3 cities in the Denver Front Range are the the best real estate investments in Denver to weather the storm?  Why will these three cities outperform others?

What are the 3 primary drivers of appreciation in our current economic cycle?

There are three primary drivers of long-term appreciation coming out of the recent pandemic crisis.  Each of the factors will influence future appreciation.  One of the big changes since the virus struck is that we have seen a migration from extremely dense areas to more “suburban” type locations.

1. Inventory/Supply: The best real estate investments in Denver have one thing in common, lack of supply.  This is due to high building costs, lack of land, and lack of water for large scale developments.  This trend will continue and likely accelerate as land becomes even more scarce.
2. Knowledge workers: The post pandemic economy is built on a flexible work force of highly educated knowledge workers. Areas that will excel have an abundance of highly educated and well compensated residents.
3. Desirable locations: The pandemic has brought a new era of work from home. No longer is commute the primary factor in where one works, lifestyle is the new decider.  Fortunately, Colorado scores very high on the lifestyle factor, but three cities stand out in this category.

Which Colorado front range cities will outperform?

There are three cities that initially come to mind that each have very low inventory, a large percentage of highly educated knowledge workers, and desirable locations.  Each of these locations was very desirable before the pandemic and their desirability has only increased.

1. Boulder: Boulder is consistently at the top of the list in Colorado for its highly educated workforce. Building in Boulder county is very restrictive further decreasing the supply.  At the same time the amount of parks, trails, open spaces, etc. is impressive and highly coveted.  Even though the average home price is above 850k, there is still considerable demand for the area.
2. Fort Collins: Fort Collins also scores very high on percentage of knowledge workers with the Colorado State University Campus. Furthermore, the median home price is around 450k.  Fort Collins is known for it’s quality of life with miles of trails and small town feel, but yet close enough to Denver.
3. Evergreen: Evergreen has long been a destination for highly paid knowledge workers that want a small-town feel, but an easy commute into Denver or the various suburbs. The median home price is around 750k and there is very little inventory and little ability to increase inventory with any large-scale developments.  Evergreen also scores very highly on quality of life with miles of trails and open space, yet a very short commute into Denver.  Another plus is that Jefferson county property taxes are considerably lower than Denver county and the schools are some of the best in the state.

Summary:

Investing in real estate is easy when everything is going up, the real test comes when the economy doesn’t go as planned.  The pandemic has created a mess of the economy with thousands unemployed and more businesses closing every day this will ultimately ripple through real estate.  Fortunately, in every crisis there are places that outperform others.  Boulder, Fort Collins, and Evergreen are worth looking at for long term real estate investments in Denver. They will perform better than the market in times of distress.

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Written by Glen Weinberg, COO/ VP Fairview Commercial Lending.  Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in Bloomberg, Businessweek ,the Colorado Real Estate Journal, National Association of Realtors Magazine,  The Real Deal real estate news, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.

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