Battling Denver's Rising Rent

Denver is a great place to live. Colorado is a great place to live. There’s so much to do and a great deal of opportunities. Not only that, but we have the Rocky Mountains as a backdrop on the horizon and over 300 days of sunshine per year. Additionally, Colorado has some of the best world-class skiing the country has to offer... but it all comes with a price. These critical items combined with a great labor market has brought tens of thousands of new residents into the state. As a result, there has been an increased demand for housing that has pushed up prices of homes. Rental prices have skyrocketed as well. So now what?

Do you sit back and accept the fact that your monthly rent at $2,000, or $2,500+ is simply the cost of living in Colorado or do you do something about it? It’s easy to vent about things that are out of our control (like high rent). It gets frustration out of our system, but there is something you can do if you choose to act. Real change comes from action.

Why keep paying rent when you can buy a house? You might think, “I don’t have the money to buy right now” or “Why would I buy a house when prices are at all-time highs”. Unfortunately, we can’t control the cost landlords charge for rent. You can choose to not renew your lease and move, but as rent is high across the entire city that may result in just adding on costs and the inconvenience of having to move for little-to-no gain. Or you could actually renew your lease and take the higher expense... but maybe the best move is to truly consider purchasing a home.

For the majority of Americans, a home is their single biggest asset and their single best investment. At some point in your life, a savvy investor has probably mentioned that real estate is a safe place to build wealth... and it is! Over time, your investment will be worth more than what you paid for. Just look at the Denver housing market! In addition to locking in your monthly housing expense, a home helps hedge against inflation.

Many people are unaware that it’s easier to buy a house than what one would think. The old notions of having to be at the same job for many years and have at least 20% saved up for a down payment are truly out-of-date. There are many programs that help buyers whether they’re a first-time buyer or not. Buying a home with little to no money down is truly an option that many people are unaware of. The two biggest factors in buying a home today are the ability to repay the loan and what your credit history reflects.

So back to the question of, “Why buy now when housing is at an all-time high?”.

As mentioned before, real estate is a pretty safe investment as well as a hedge against inflation. Yes, in the short-term we don’t know what tomorrow will hold but when you buy a home you don’t typically expect to have to sell it tomorrow either. Buying a home should be thought of as a way to build wealth, hang our hat, raise a family, and enjoy life on our terms. These and many other reasons are why so many people choose to buy a home over renting and paying someone else’s mortgage.

Currently the housing market is among the all-time best affordability rates in U.S. history. With wages on the incline and interest rates near all-time historic lows, many have found it is actually cheaper to buy than rent!

Protecting Your Wealth

So what to do if you buy and something unexpected happens to the market such as a short-term crash or correction? What if you want to sell when that happens?

One of the many perks available to our clients is down payment protection with our exclusive Home Safe Down Payment Guarantee™.  In very simple terms, what this does is protect your down payment from being lost due to a housing market correction.

For example, the average price of a home in Denver was recently quoted at $453,000. For most buyers (unless you qualify for VA benefits), a minimum down payment would be 3%, or $13,590. With a market correction, that $13,590 would be a substantial loss to a seller – but when you work with US, that down payment would essentially be insured from loss! By removing the risk of losing money while also gaining control granted by home ownership, there’s no reason to not at least consider buying a home in Denver’s red hot housing environment.

We hope this article helps ease your mind when it comes to making the decision to convert from renter to homeowner in Colorado. As always, if you have questions specific to your scenario that was not addressed above, feel free to reach out and one of our personal mortgage advisors will be happy to answer any and all questions you have.