Earlier this summer Denver was listed as one of the top 10 best markets in the country for millennial homebuyers by the National Association of Realtors. According to the association’s research, 15.7 percent of the Denver metro population in the years between 2010 and 2012 were millennials — typically defined as people born after 1982 — and the growth in private payroll jobs from May 2013 to May 2014 was 2.7 percent, contributing to an overall unemployment rate of 5.9 percent.

However, the availability of homes continues to be a problem for young homebuyers in Denver, with a 20 percent drop in inventory year-over-year in May.But the ever-increasing population of people under 35 in the area means that millennials will inevitably become part of the home-buying equation.

What is happening in Denver though is a classic case of supply and demand. Prices have skyrocketed over the last few years leaving many new home buyers, including the millenials wondering if they can afford a new home. Metro-area home values hit another all-time high in May — good news for people who already own houses but bad for businesses trying to lure workers from other cities.

The S&P/Case-Shiller Home Price Indices reported Tuesday that Denver’s home price index reached 152.58, ticking past previous highs of 150.58 in April and 148.18 in March, and up 8.2 percent from May 2013.

The Case-Shiller Index, a closely watched measure of real estate values, tracks the resale of houses in three price tiers over time and does not include condominiums. The 152.58 level means that home values in May were, on average, 52.58 percent higher than in January 2000, the benchmark month.

“If you live here and own a house, it’s great news,” said Metro Denver Economic Development Corp. CEO Tom Clark. “If you are trying to come in from the Midwest or Texas, it’s a challenge. For many folks it can be sticker shock.”

Bottom line, rising house values mean it is a great time to sell your house in Denver, but if you are trying to invest in the area, don’t expect any great deals just yet. According to data provided by Zillow, home prices averaged $253,000 in metro Denver in May exceeding the pre-recession peak.

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Too many new investors focus on national news.  Real estate is hyper-local though.  Unless you live in Las Vegas, Phoenix, Washington DC, etc. it doesn’t matter what is happening in those areas.  Your market will be different.  In fact, your market may vary from one side of town to the other.

All of that being said, we do watch what is happening around the country.  In our Market Watch series, we will share details of markets that look ripe for flipping houses.  You can compare these trends to your market and see how it stacks up.

Spokane Washington

Earlier this summer the Spokesman-Review touted how its market was thriving.  Sales of homes on less than one acre were 20 percent higher than last year, the Spokane Association of Realtors reported. Through the first half of the year, 2,469 homes were sold in the county, compared with 2,046 in 2012. The median sales price of all homes sold this year for the city in the first half was  $162,500, or 5.9 percent above last year’s $153,450. The newspaper also stated earlier this year that the market was showing sure signs of rebound, a perfect piece to the real estate investing puzzle. Home sales and prices continued to climb across the Spokane region throughout the year. The number of homes sold so far in 2013 jumped 13 percent compared to the same period a year ago. “Together, those two numbers are helping brokers feel good, that the market is coming back,” said Rob Higgins, executive officer of the Spokane Association of Realtors. Not to mention Spokane’s average home sale price is up 10 percent compared to a year ago. More good news for flippers.

Spokane was enticing enough that flipping gurus FortuneBuilders set their course for the city this fall. For weeks, a deluge of advertisements for these their seminars flooded Spokane radio stations. Call now, said the voice of Than Merrill (FortuneBuilders founder, ex-NFL player, former Flip This House star) and get two free tickets to learn how to rake in profit with very little risk. Spokane is the perfect market, he said, for house flipping. 

Again the important thing to remember is to know your market. Make sure you know what the housing market in your area is doing. Real estate is hyper-local.  You don’t have to be Alex Foley to know that Detroit and Beverly Hills are not the same.  Some markets will lag national trends.  Others will never see the wild fluctuations that ‘hot’ areas such as California, Florida, Arizona, and Las Vegas will see. But there are those isolated not-so-obvious hot spots like Spokane. Remember that flipping houses is particularly profitable when you get both Forced Appreciation and Market Appreciation.

And this just in: http://www.khq.com/story/24066288/10-cheapest-houses-for-sale-in-spokane.

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Forced and Market Appreciation

Today we are going to talk about something very important to investing in real estate—appreciation. Appreciation is the rise in value or price, of your real estate investment.  When you are flipping houses, the property can appreciate (or not) via Forced Appreciation and/or Market Appreciation.  Not understanding how both of these forces are working can turn your LLC into a 501C. So let’s look at forced and market appreciation.

Forced Appreciation occurs when the value of the property increases as a direct result from actions taken by you as the real estate investor.  This is fundamental to flipping houses where you purchase a property that is under market value and complete repairs or upgrades that increase the home’s value.  Sometimes the smallest change can add appreciation to your investment.  Painting a home is almost always one of the best returns you can get when investing in real estate.  The overall goal is to complete the required amount of work especially in the hot spots, but not to over improve the home.

Market Appreciation is a powerful market force that must be accounted for when investing in real estate.  This type of appreciation occurs due to the activities of other buyers and sellers and cannot be controlled by you as the investor.  Market appreciation is hyper-local.  So, it is important to understand the factors that affect your particular city and not get caught up with ‘national’ news.  As an example, the coastal areas tend to swing more wildly than the Midwest.  Just because Miami properties are appreciating at 10% doesn’t mean that the same is true in Tulsa.  For now, Lebron has the edge over Durant here as well.

Of the two, Market Appreciation is both the most important and most overlooked.  In the early 2000’s almost everyone flipping houses in California made money no matter how incompetent they were.  One TV show even had a guy who took the dirty carpet from his apartment and put it in the rehab property.  In the late 2000’s these types of people stopped investing in real estate as they lost the ability to sell their homes.

Obviously, the most profitable time to be flipping houses is when you both types of appreciation are working in your favor.  This is your golden ticket.  In most areas of the country, this is the current situation.  If you’ve been waiting for the right time to get started, it is now.

To lean more about today’s topic check out this link at- http://en.wikipedia.org/wiki/Real_estate_entrepreneur

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