Why Buying a Home in a Down Market Is a Smart Long-Term Investment

Jan 29

3 min read

Investing in real estate during a down market can be a strategic financial decision, even when interest rates are around historical averages. The Denver metro area, including Adams, Arapahoe, Boulder, Broomfield, Jefferson, and Weld counties, has consistently demonstrated long-term property value appreciation. Understanding market cycles and leveraging downturns can provide significant advantages for homebuyers and investors.

Understanding Real Estate Market Cycles

The real estate market moves through four primary phases: recovery, expansion, hyper-supply, and recession. A full market cycle typically lasts between 10 to 18 years, depending on economic conditions, interest rates, and supply-demand dynamics. Historically, downturns are followed by periods of strong growth, making them an ideal time to buy before prices begin rising again. Currently the real estate market is in the recession phase of this cycle.

Historical Market Performance in the Denver Metro Area

Over the past 25 years, the Denver metro area has experienced substantial home price appreciation. According to the Federal Housing Finance Agency's All-Transactions House Price Index, home values in the Denver-Aurora-Lakewood area increased nearly fivefold from Q1 1995 to Q3 2024. This long-term trend underscores the region’s resilience and strong investment potential.

County-Specific Home Price Trends

Adams County: The median home price was $510,648 as of December 2024, reflecting a 3.1% increase from the previous year.
Jefferson County: The median home price was $634,677 in December 2024, maintaining stability with no significant change year-over-year.
Arapahoe County: The median home price was $527,800 in December 2024, experiencing a slight 0.4% decrease from the prior year.
Boulder County: The median home price was $755,823 in December 2024, marking a 1.8% decline from the previous year.
Broomfield County: The median home price was $615,600 in December 2024, a 3.0% decrease year-over-year.
Weld County: The median home price was $491,686 in December 2024, showing a 5.3% increase from the previous year.

Despite short-term fluctuations, historical trends indicate strong long-term appreciation across these counties, making downturns an opportune time to buy.

Why Buying in a Down Market Is a Smart Move

Lower Purchase Prices – Economic downturns often lead to price reductions, allowing buyers to acquire homes at lower costs and/or with significant seller concessions such as rate buy-downs or seller paid closing cost.
Reduced Competition – Fewer buyers in the market mean less competition, giving homebuyers more negotiating power.
Future Appreciation – Purchasing during a downturn positions buyers to benefit from rising property values when the market rebounds.
Equity Building – Even if interest rates are higher, homeowners build equity over time, making homeownership a smarter financial move than renting.

Interest Rates: Historical Context and Today’s Market

While some buyers hesitate due to interest rates, understanding historical trends provides valuable perspective. The historical average 30-year fixed mortgage rate in the U.S. is approximately 7.72%. As of January 2025, the current rate is 7.05%, slightly below the long-term average. Though rates are higher than the historically low levels of the past decade, today’s buyers can still secure favorable deals on home prices, with the option to refinance when rates drop.

Buying a home in a down market presents an excellent opportunity for those looking to invest in real estate. The Denver metro area has proven to be a strong market over the past 25 years, with continued appreciation despite periodic downturns. With lower prices, reduced competition, and long-term growth potential, now is an opportune time for buyers to enter the market. Even with interest rates near historical averages, real estate remains one of the most effective ways to build wealth over time. If you have additional questions or would like to have a conversation about what the next move for you looks like give me a call.