These days, the number of people investing in real estate in order to diversify their financial portfolios is on the rise. In fact, people buy homes all over the country in order to enjoy the massive returns on their investments years down the line. In Denver, real estate is as good as gold, and a few recent numbers show that it’s probably even better.
What the Numbers Say
An independent broker by the name of Gary Bauer tracked the prices of Denver-area homes over a 25-year span. To do it, he took statistics directly from the Denver Metro Association of Realtors. The findings were nothing short of spectacular. At the end of 1990, the average price of all of the homes sold in the Denver area was $94,134. However, by the end of 2015, that number had soared to $363,143 – an increase of 285.8%.
According to a recent publication from Denver Real Estate Watch, the increase in home value in the Denver area surpasses increases in the value of gold during the same time frame. During the same period, from 1990 to 2015, the price of gold climbed from $383.51 per ounce up to $1060 per ounce, an increase of 176.4%. Some have argued that all gold is the same, ounce per ounce, but the housing market changes as more and more luxury homes enter the market. However, according to the Case-Schiller index, a popular index used to compare home sales, the prices of Denver homes rose some 261.9% during that same 25-year period. In fact, Denver homes even outpaced inflation during that time.
Supply vs. Demand
One of the trends that is certainly driving up the value of homes in the Denver area is lack of inventory. From 1990 to 2015, the inventory of unsold homes dropped by two-thirds. In 1990, there were 11,389 unsold homes available on the market. In 2015, there were only 4384, representing a 63% drop in overall inventory. According to experts, this is not likely to change in the foreseeable future. Denver’s population grew some 87% in that 25-year span, and since Denver is still a very popular destination city with plenty of opportunities for jobs in a variety of industries, the number of homes available on the market is slated to remain a challenge for consumers and real estate agents alike.
Investing in Denver Real Estate
Although there is no denying that people who bought their Denver homes a quarter century ago will likely see the best returns on their investments, the average prices of homes in Denver continue to climb. This means that even though luxury properties in the area are more expensive than they were only a year ago, that trend will continue well into the foreseeable future.
Anyone who purchased a home in Denver prior to 1990 has enjoyed a phenomenal gain on their original investments – even better than gold, according to industry experts. Whether this trend continues in the future remains to be seen, but for the time being, experts claim that Denver homes are still solid investments for everyone looking to diversify.