Denver Housing Market 2022: 10 Best Neighborhoods for Rental Investors

The Denver housing market has performed exceptionally well in 2021 but will it continue to be scorching hot in 2022? 

Denver Housing Market 2022: Will It Be Good to Investors This Year?

Denver CO is ranked as one of the country’s top 10 best cities to live in. There are plenty of things to go around for people of all ages—kids, yuppies, families, and even retirees. The plethora of readily available family-friendly activities throughout all four seasons make it a great place for residents, tourists, and in-migrants. 

It is also what makes the Mile High City attractive to real estate investors. On top of being a friendly city, its public transport system and utilities are some of the best in the country. However, are these enough to make investing in the housing market Denver worth it?

Denver Housing Market Forecast 2022

Denver is a metropolitan area located in the central part of the country in the northern region of Colorado. At the time of this writing, the Denver metro population is roughly 2,897,000 which is a slight increase of 1.22% from 2021’s 2,862,000. 

Its growing population can be attributed to the city’s mix of urban and outdoor vibes with its modern refinements and natural surroundings perfect for outdoor adventure. It is known for its world-class cultural and tourist attractions, thriving arts and music scene, exceptional gastronomic offerings, and craft and microbreweries.

It also features three sports stadiums that house football, basketball, baseball, and hockey games, which makes the city a great destination for different types of sports fans.

The city is also home to a lot of open-minded individuals, which is why Denver has made several forward leaps in the past few years, including decriminalizing the recreational use of cannabis. It is a relatively young city with a median age of 36.5 years. 

All of these things combined make Denver attractive to tourists and in-migrants. 

Related: Colorado Housing Market Forecast 2022

Reasons to Invest in Denver in 2022

Since Metro Denver is one of the more popular destinations in the US, is the Denver housing market worth real estate investors’ time and attention? 

One of the best places to live in the US. Denver has been a constant top performer as one of the country’s best places to live in for the past few years now. Because it is such a great place for people from all walks of life to live in, there has been a constant high demand for real estate in the city. Whether you look for a single-family home, multifamily property, or duplex for sale, there’s no denying that the housing market in Denver is hotter than ever. 

Diverse and growing economy. Even before the pandemic, Colorado is one of the very few states that have construction as one of its top industries. Construction being an essential business is one of the things that made Denver bounce back from the pandemic. The city is also known to be one of the largest tech markets in the US with some of the best tech talents. The job opportunities arising from both industries, plus the booming hospitality industry, are what keeps attracting out-of-towners to move into the Mile High City. 

The average salary of people living in Denver is $61,540 per year, a lot higher than the national average of $53,490. On the flip side, the cost of living in Denver is also slightly higher compared to the rest of the nation. The Denver median house price is over $100,000 above the national median of $529,354. However, despite the higher housing costs, the high demand for property goes to show that folks are willing to pay upscale prices just to live in Denver. 

Population growth. Jumping off the previous points, because Denver is such a great place to live in with a thriving economy, more and more people up and leave their towns and cities to relocate to this metro area. Denver is one of only 14 cities that experienced a growth of over 100,000 in population. Its population grew about 20% over the past decade with no signs of slowing down any time soon. This influx of people will continue to drive housing demand up. 

Strong tourism. With lots of things to do and different sights and sounds, Denver CO has always had a strong tourism industry. While the pandemic has disproportionately caused US tourism to drop, some locations performed better than others. Before the pandemic, Denver has been constantly hosting over 17 million visitors annually. The numbers dropped to 13.3 million in 2020 but have picked up in 2021. This upward trend is expected to continue as a result of the ease of travel restrictions. 

Airbnb is legal. If you’re one of those people wondering how to invest in real estate in Denver, you might want to consider starting an Airbnb business because it is legal in the Mile High City under certain conditions, namely: 

• Property owners need a license to operate a vacation home rental business;

• Only the primary residence can be rented out as a vacation home;

• Property owners need to prove that the home being rented out is their primary residence; and,

• Owners should comply with and maintain operational standards as set forth by the city and county of Denver and Airbnb.

Related: 20 Cities with No Airbnb Issues

Will House Prices Go Down in 2022?

Given all the different reasons stated above, it now makes perfect sense why the Denver housing market is one of the hottest markets in the US. Low-interest rates and buyer demand have resulted in a total of 63,684 properties sold in 2021. According to the Denver Metro Association of Realtors, more homes were sold in 2021 than in any previous year. 

However, despite the high demand for properties in Denver’s real estate market, it has seen a decline of 5.26% in new listings throughout the year. The year 2022 started with only 1,477 active listings on the market, a far cry from its normal of over 12,000 listings. To put it simply, that’s ten times less than the normal inventory during this time of the year. 

Because of the high demand and low inventory, Denver housing market predictions 2022 all lead to double-digit appreciation this year. If that’s the case, then it will be the first time since 2015 and 2016 that the city will see back-to-back double-digit appreciation. 

January 2022 saw Denver off to a start as a sellers’ market, with most neighborhoods having properties that don’t go over 100 days on market. Typically, the Denver housing market experiences a 70% increase between January and December. However, this year was quite unusual as it only saw a 31.04% increase from December 2021, a down of 17.77% from the previous year. 

According to Mashvisor’s data, the median property price for Denver in January was $450,868, which is a huge jump compared to December 2021’s $404,710. As of mid-February 2022, the median property price for Denver is already at $535,549. Between January and February, the nearly $85,000-jump is already a clear indication of what’s to come for Denver real estate. So, if you’re a real estate investor in search of the cheapest real estate in US territory, the Mile High City might not be the place for you. 

However, just because real estate prices aren’t cheap doesn’t necessarily mean that the Denver real estate scene is not worth checking out. It will all boil down to one’s investment goals and capabilities. There are great opportunities to make a good profit and get a decent return on investment in the Denver market. It’s just a matter of having enough resources, getting the right property, and having the right investment strategies.

10 Best Neighborhoods in the Denver Housing Market for Rental Investors

When it comes to real estate investing, finding the right investment property in the right location makes all the difference in the world. Experienced investors know how crucial a role location has to play in any investment decision. This is why most serious investors take time to perform due diligence before coming to a decision. 

Finding the right property will require looking at the right data and gathering as much information as you can about the market, so you can perform a proper investment property analysis. For this reason, thousands—if not millions—of investors look for the right real estate investing tools to help them with their decision-making. A website like Mashvisor increases an investor’s chances of success by providing the most accurate market information and data as well as access to investing tools like a rental property calculator. Investors who use a website like Mashvisor are more likely to make better and more confident investment decisions. 

To help investors navigate through the Denver housing market, we have created a list of top neighborhoods that are ideal for rental property investments. We used Mashvisor’s latest data to come up with these lists. 

One important thing to note is that these neighborhoods are ranked not according to cap rate but according to cash on cash return rates. While a cap rate is a metric often used by investors to determine a property’s profitability, a cash on cash return rate takes into account the financing method used to acquire a particular property since not all have the ability to make a full cash payment. 

Another thing investors should consider is how Denver has become such a sellers’ market based on high housing demand and low inventory. With a one-year forecast of 15% to 22% increase in prices this year, serious investors who have the financial capacity to invest should start considering moving a bit faster. 

To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.

Top 5 Neighborhoods for Traditional Rentals

Here are the top five Denver neighborhoods, according to Mashvisor’s latest data, that are the most ideal for long-term traditional rentals: 

1. Elyria Swansea

• Median Property Price: $445,000
• Number of Traditional Listings: 2
• Traditional Monthly Rental Income: $2,530
• Traditional Cash on Cash Return: 4.33%
• Price to Rent Ratio: 15 (medium)
• Walk Score: 67

2. Sun Valley

• Median Property Price: $848,000
• Number of Traditional Listings: 4
• Traditional Monthly Rental Income: $4,275
• Traditional Cash on Cash Return: 3.79%
• Price to Rent Ratio: 17 (medium)
• Walk Score: 56

3. Cheesman Park

• Median Property Price: $207,500
• Number of Traditional Listings: 284
• Traditional Monthly Rental Income: $1,188
• Traditional Cash on Cash Return: 3.21%
• Price to Rent Ratio: 15 (medium)
• Walk Score: 64

4. Civic Center

• Median Property Price: $875,000
• Number of Traditional Listings: 9
• Traditional Monthly Rental Income: $3,515
• Traditional Cash on Cash Return: 2.78%
• Price to Rent Ratio: 21 (high)
• Walk Score: 91

5. Central Business District

• Median Property Price: $500,500
• Number of Traditional Listings: 0
• Traditional Monthly Rental Income: $2,270
• Traditional Cash on Cash Return: 2.67%
• Price to Rent Ratio: 18 (medium)
• Walk Score: 96

Top 5 Neighborhoods for Short-Term Rentals

According to Mashvisor’s database, the following are the neighborhoods within Denver that offer the best Airbnb cash on cash returns based on Airbnb comps: 

1. Elyria Swansea

• Median Property Price: $445,000
• Number of Airbnb Listings: 68
• Airbnb Monthly Rental Income: $6,076
• Airbnb Cash on Cash Return: 9.92%
• Airbnb Daily Rate: $183
• Airbnb Occupancy Rate: 62%
• Walk Score: 67

2. Cheesman Park

• Median Property Price: $207,500
• Number of Airbnb Listings: 50
• Airbnb Monthly Rental Income: $2,174
• Airbnb Cash on Cash Return: 5.40%
• Airbnb Daily Rate: $170
• Airbnb Occupancy Rate: 62%
• Walk Score: 64

3. Sun Valley

• Median Property Price: $848,000
• Number of Airbnb Listings: 198
• Airbnb Monthly Rental Income: $6,879
• Airbnb Cash on Cash Return: 5.39%
• Airbnb Daily Rate: $162
• Airbnb Occupancy Rate: 77%
• Walk Score: 56

4. Belcaro

• Median Property Price: $760,000
• Number of Airbnb Listings: 76
• Airbnb Monthly Rental Income: $6,094
• Airbnb Cash on Cash Return: 5.26%
• Airbnb Daily Rate: $194
• Airbnb Occupancy Rate: 70%
• Walk Score: 45

5. Civic Center

• Median Property Price: $875,000
• Number of Airbnb Listings: 361
• Airbnb Monthly Rental Income: $5,523
• Airbnb Cash on Cash Return: 3.88%
• Airbnb Daily Rate: $130
• Airbnb Occupancy Rate: 81%
• Walk Score: 91

Related: How Much Can I Make on Airbnb Calculator? The Complete Guide

The Final Verdict: Is Denver a Good Place to Invest in?

All of the movement in and around Denver indicates that people like living and visiting the Mile-High City. Because of this, the demand for housing and short-term rentals continues to go on an upward trend, which makes investing in the Denver housing market a logical and sound choice for real estate investors. But don’t just trust our word for it. Do your own research and crunch the numbers with the help of Mashvisor. 

To get access to our real estate investment tools, click here to sign up for a 7-day free trial of Mashvisor today, followed by 15% off your subscription for life.