By Katie Bassett, Trulia (A verified Guest Post)
Dwindling home inventory and a surge in home prices have created a daunting cloud over those living in Denver. Instead of exploring home buying options, many Denver residents continue to write monthly checks to their landlord and throw money into the renting abyss, without seeing any investment gain.
If you've found yourself in this quandary, now is the time to change your perception. While buying a home in Denver may seem counterintuitive in the current economic landscape, there are multiple factors that actually make buying a home in Denver favorable. Instead of teetering on the home buying fence, wary of market conditions, those interested in living in Denver should take advantage of the situation and jump into the housing market now before it's too late.
The Story Behind the Shortage of Homes
Home inventory is a national problem that continues to stumble at a staggering rate. According to Trulia's Inventory and Price Watch report, nationwide inventory of all homes dropped 5.1 percent over the past year. Even more challenging is the extreme drop in starter home and trade-up home inventories, dropping 8.7 percent and 7.9 percent, respectively, over the past year. Meanwhile premium home inventory only fell 1.7 percent.
The various factors that account for low home inventory at a national level are as follows:
- Investors purchased a vast amount of the foreclosure homes during the financial crisis of 2008 and converted these properties to rental units, resulting in fewer properties listed to buy.
- The prices of home segments - starter, trade up, premium homes - continue to deviate, making it more difficult for families to move up, whether it be from a start to a trade up or a trade up to a premium.
- Markets experiencing a rampant recovery since the financial crisis in 2008 are experiencing lower available inventory. On average, inventories drop the most in markets whose values have exceeded 105 percent of its pre-recession value.
Denver Housing Inventory
Denver is experiencing a similar trend in home availability. Despite this development, Denverites, especially first-time homebuyers, should move into the market now.
John Skrabec, Brand Manager of Live Urban Real Estate, says "Denver is going through a monumental transformation. It's essentially becoming a new city, and for life-long residents like myself, its happening right before our eyes." Skrabec reminds home buyers that's its not too late to jump in. "Metro Denver, especially the popular city-close neighborhoods, will never be the same. We're becoming a 'tier one city' - and commonly being compared to cities like Seattle, Miami, Boston and San Francisco."
The top four reasons to take action:
- According to Chicago Fed President Charles Evans, economic indicators are strong for additional interest rate hikes In the last year, Denver mortgage rates have increased from a low of 3.25 percent to a current rate of 3.82 percent.
- It is cheaper to buy than rent in Denver even for homebuyers aged 25 34. Assuming these buyers will have a 10% down payment; it is 36 percent cheaper to buy a starter home than rent in Denver.
- Denver inventories will most likely continue to shrink and prices will continue to rise. Denver's overall inventory is valued at 136 percent of its pre-recession value, well in excess of the 105 percent benchmark for too strong of a recovery.
- Traditionally home listings increase in the spring and summer months, making it a perfect time to begin the search as a new homeowner. See all of Live Urban current listings here.
Don't let unnerving market trends handicap your plan to buy a home in Denver. Now is the time to take the plunge and search for your new dream home. Contact a Live Urban broker today. Happy hunting!
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