In one word, market conditions are robust. A proud member of Atlas Real Estate Group, the premier real estate investment company and brokerage team along the Front Range, I am often asked for an indication of the rental market in Colorado Springs. Here is a brief synopsis.
Market Conditions – Year over Year Rent Growth
At 11% according to Yardi®, we are top three in the nation when it comes to year over year rent growth, a finding consistent with what we see on a daily basis analyzing the market for our investor clientele. This is due to a myriad of factors, such as limited inventory, minimal construction activity and a level of population growth that has moved us up to being the nation’s 40thmost populous city and a “positive trajectory with respect to economic recovery and growth“.
Market Conditions – Supply and Demand
The result of our robust market is high prices. This is bad news for wholesalers and flippers, a business model needing margins of 25% or better to make sense. Forced to seek elsewhere for the short term ROI they need, many are flocking to markets such as Indianapolis, St. Louis and others where housing prices are low enough to generate the profit margins they need. And this is where the downside takes a sharp decline.
Stepping over dollars for pennies, their capacity for building long term wealth is severely limited, as can be seen by much lower rent growth rates of 4.3% and 2.9% respectively.
Not to mention, and though cash is truly king in the rental game, appreciation cannot be overlooked. According to NeighborhoodScout®, Colorado Springs has shown an 8% in annual appreciation rate in the last 12 months, whereas Indianapolis, IN and St. Louis, MO show 4.73% and 6.14% rates respectively.
Market Conditions – Seeking New Clients
How’s the market, you ask? Like Caribbean waters, warm and inviting. Come on in? Don’t worry, no sharks allowed.
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