With the stock market on a wild ride and the Dow Jones dropping nearly 1,000 points last week, it makes some people wonder if the local real estate market might also crash or at least “correct.”
A little history lesson on the Front Range real estate market is in order.
- In the last 40 years average appreciation per year has been 5.5%
- Highest appreciation in a single year was 15.9% in 1994
- Lowest appreciation rate in a single year was -4.0% in 1982
- In 2008 Wall Street was in turmoil, the stock market plummeted and the Dow Jones dropped 33.8%. Meanwhile real estate along the Front Range dropped only 2.2%.
Bottom line, the Front Range market has no history of crashing or even experiencing a major correction.
Why is that?
The answer is fundamentals.
Our local economy has inherent fundamentals that insulate it from big downturns.
We have an incredibly diverse economy which is not reliant upon a single industry. We have all the way from health care, to technology, agriculture, oil and gas, major universities, and financial services (just to name a few).
We are a global destination with a major international airport.
Oh, and the quality of life here isn’t too shabby.
Prices of real estate, just like prices of anything, come down to basic economic principles of supply and demand.
Because of our diverse economy and desirable quality of life, there has been strong, consistent demand for housing along the Front Range.
While there may be little bumps along the way, over the long term our market has proven that it performs.