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Mountain West Real Estate Investment Market Report: Dec. 2019

Three words that can make or break an investor – capital gains taxes. The taxes from selling your investment property range from 15 to 30 percent, when state and federal taxes are combined. Ouch, there goes your profit margins or money for future investments. So how can you, as an investor, avoid them? The 1031 Exchange.

The 1031 Exchange is a powerful tool, making it a favorite among savvy and successful investment professionals. Let’s dive into the basics of the 1031 Exchange.

What is a 1031 Exchange?

A 1031 exchange gets its name from the Internal Revenue Code, Section 1031, which allows you to avoid paying capital gains taxes on an investment property upon its sale – as long as the profits are reinvested in like-kind properties. Like-kind refers to the nature or character of the investment rather than the form; therefore, any investment property can be exchanged for another type of investment property. In theory, an investor could defer capital gains on investment properties until death, potentially avoiding them altogether.

read more about using 1031 exchanges

Market Activity

Denver, CO
Market Overview

According to Colliers International, absorption exceeded 2,000 units for the second consecutive quarter. With an increase of 4.2% year-over-year, the overall average monthly rental rate for the third quarter was $1,605. There are over 24,000 units under construction in the metro, over 25% of those are located downtown. With that, the metro vacancy rate dropped and finished the quarter at 4.9%, below 5% for the first time since third quarter 2018.

1,065
Homes Sold
$428,000
Avg. Home Price
$1,670
Median Rent
U.S Census Bureau: third quarter 2019
4.6%
Rental Vacancy Rate
0.8%
Homeowner Vacancy Rate
2.6%
State Unemployment Rate
Metro Area Unemployment
Boulder, CO
2.1%
Colorado Springs, CO
2.8%
Denver-Aurora-Lakewood, CO
2.3%
Fort Collins, CO
2.0%
Grand Junction, CO
2.8%
Greeley, CO
2.2%
Pueblo, CO
3.5%

Market Activity

Salt Lake City, UT
Market Overview

Due to the region having one of the fast-growing populations, increasing 1.7 percent year over year, Salt Lake City continues to see a rising demand for apartments. The downtown area remains as a favorable living destination. Because of the heavy population growth from metro hiring, the submarkets of West and South Jordan are also seeing strong rental demand, according to Institutional Property Advisors.

336
Homes Sold
$355,000
Avg. Home Price
$1,254
Median Rent
U.S Census Bureau: third quarter 2019
3.0%
Rental Vacancy Rate
1.3%
Homeowner Vacancy Rate
2.5%
State Unemployment Rate
Metro Area Unemployment
Logan, UT-ID
1.5%
Ogden-Clearfield, UT
1.8%
Provo-Orem, UT
1.7%
Salt Lake City, UT
1.9%
St. George, UT
2.1%

Market Activity

Dallas, TX
Market Overview

As stated in a market report by Institutional Property Advisors, constant employment growth remains as a key component to the metro’s apartment performance as roughly 790,000 jobs have been added since the start 2012, compared with almost 150,000 units. Dallas/Forth Worth will continue to lead the nation in completions this year, adding nearly 25,000 units to inventory. The vacancy rate will tighten this year, encouraging owners to adjust rents to meet the market conditions.

863
Homes Sold
$72,000
Avg. Home Price
$1,240
Median Rent
U.S Census Bureau: third quarter 2019
9.6%
Rental Vacancy Rate
1.7%
Homeowner Vacancy Rate
3.4%
State Unemployment Rate
Metro Area Unemployment
Abilene, TX
2.9%
Amarillo, TX
2.4%
Austin-Round Rock, TX
2.6%
Beaumont-Port Arthur, TX
5.0%
Brownsville-Harlingen, TX
5.2%
College Station-Bryan, TX
2.6%
Corpus Christi, TX
3.9%
Dallas-Fort Worth-Arlington, TX
3.1%
El Paso, TX
3.7%
Houston-Sugar Land, TX
3.5%
Killeen-Temple, TX
3.5%
Laredo, TX
3.4%
Longview, TX
3.6%
Lubbock, TX
2.6%
McAllen-Edinburg-Mission, TX
5.6%
Midland, TX
2.1%
Odessa, TX
2.7%
San Angelo, TX
2.9%
San Angelo, TX
2.9%
San Antonio-New Braunfels, TX
2.9%
Sherman-Denison, TX
2.9%
Texarkana, TX-AR
4.0%
Tyler, TX
3.1%
Victoria, TX
3.3%
Waco, TX
3.1%
Wichita Falls, TX
2.9%
*Rental vacancy, homeowner vacancy and state unemployment rates are from the U.S Census Bureau. Homes sold and average home price data is from Redfin.com. Median Rent data is from rentcafe.com.

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