Are We in a Bubble? Using Historic Trends to Predict the Future with Lon Welsh

•July 16, 2021

Are We in a Bubble? Using Historic Trends to Predict the Future with Lon Welsh

We sat down with Lon Welsh to answer our most frequently asked question: Are we in a bubble? Lon put together an array of charts and graphs containing 50 years’ worth of data to answer that question for our audience. Read the executive summary and look through the charts to see Lon’s in-depth analysis.

We sat down with Lon Welsh to answer our most frequently asked question: Is Denver in a bubble? Lon put together an array of charts and graphs containing 50 years’ worth of data that show the answer to that question is no.

While prices are rising, they are in line with historic trends and are keeping pace with the increase in per capita income. His projections for the Denver metro area over the next five years show that affordability will likely decrease but not catastrophically so. Rents will keep rising, which means now is a great time for investors to buy a home and lock in their mortgage rate. The competitive market makes it hard—if not impossible—to find the perfect deal, but that shouldn’t deter buyers. Lon’s advice is to find a property with a little cashflow, keep some in reserves, and you’ll be able to ride the wave and let time take care of the rest.

Look through the charts below to see Lon’s in-depth analysis. And if you have any questions or want help finding your next investment property, reach out to us. You can schedule a free real estate investment consultation with the link at the bottom of this post.

Executive Summary: Are we in a bubble? Will there be a crash? What will happen to home prices?

Despite the media hype, we are not in a bubble.
- Per capita income in Denver has grown at a strong pace.
- This enables buyers to afford higher real estate prices.
With realistic assumptions, prices are not likely to decline in the next five years.
Mortgage rates likely will rise, and that will not force down prices. Historically, it should not impact the number of transactions either.
Demographics, affordability, and construction prices will conspire to make the next 5 to 10 years very attractive to landlords.

Historical Context of Denver Metro Area

Home Prices

Mortgage Rates

Mortgage Payment Relative to Income

Future Projections

Future Projection – Mortgage Payment Relative to Income

How Sales Mix Impacts Average Price

how housing sales mix impacts average price home Denver

Home Size Trends

Ascent of the Renters

Home Sales Correlation with Mortgage Rates

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