Guest Blogger: Andrew Scripter, Fairway Independent Mortgage
Don’t Worry Denver home prices will continue to rise.
In 1998 my wife and I were deciding where to move: Southern Cal or Boulder.
She had been accepted to UC Santa Barbara and CU boulder.
As the only non-graduate student in my household, my job was to decide where. After a few short phone calls (I had close friends in both areas) the choice to me was clear: Boulder (area).
The phone calls I made (no internet back then) revealed what locals already knew: the average price of a home in Westminster was about $140,000 whereas I could expect to pay closer to $400,000 on the Golden Coast.
Today, the home we purchased in Westminster is valued around $400,000. And the area we considered in Santa Barbara? Hold your breath…. home prices regularly approach $1,700,000.
You say it will never happen in Denver? As a student of economics I say why not? Home prices are a product of one phenomenon: Supply vs Demand.
Like stocks and bonds the Real Estate market in America has become an international market.
This is not good for real estate ‘bears’.
As the current global monetary system opens and expands literally millions of new millionaires are being produced around the globe. And every single one of these business people wants to own Real Estate in America.
So would I. Rule of Law, strong property rights, and comparatively clean drinking water make American Real Estate an important asset in any well-diversified portfolio.
These savvy buyers are first driving up the prices in the most desirable locations on the west coast. This price pressure inevitably pushes inland and drives prices in ‘Tier Two’ cities like Denver higher and higher. These buyers don’t ask about interest rates and they don’t haggle over pricing.
Make no mistake about it, whether we like it or not, this global economic phenomenon is real. International demand for American residential property is growing and driving prices in your neighborhood up.
So expect prices to keep climbing beyond anything us locals deem “reasonable”.