Market Conditions in Denver>Question Details

Jeff, Other/Just Looking in Denver, CO

Is it cheaper to buy or rent in Denver?

Asked by Jeff, Denver, CO Mon Aug 22, 2011

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22
Karl Lueders (720)971-8267’s answer
I'm working with two buyers right now who have asked the same question. Since money is the question, the answer is... depends: depends on how much your down payment is; depends on how much you plan to spend and it ultimately depends on whether you can't rent an equivalent property in the neighborhood you like for less. My guess is that if you can get the numbers right on your purchase, it will be decidedly more cost-effective to buy than rent this year, and for the foreseeable future.
0 votes Thank Flag Link Thu Sep 27, 2012
Jeff,
great question, I wrote a blog about "timing" of the market. Might be something that would help you out.

http://blog.house-guy.com/when-is-it-a-good-time-to-buy-real…

best of luck.

In terms of property values and interest rates right now, Denver does seem like a good place to BUY, instead of renting.
0 votes Thank Flag Link Mon Aug 29, 2011
Considering there is NO VACANCY (zero effective rate and 2.6% actual) in Denver area rental houses right now, prices are climbing fast and furious for rentals. Here are two resources you might find helpful, a recent article from the Denver Business Journal and a blog post from yours truly. Hope this helps:
http://www.bizjournals.com/denver/news/2011/08/25/vacancy-ra…
http://theprivatemarket.com/q2-2011-income-property-statisti…
0 votes Thank Flag Link Sat Aug 27, 2011
Here is a helpful article on the subject from Forbes magazine:
http://www.forbes.com/sites/steveschaefer/2011/08/16/u-s-cit…
0 votes Thank Flag Link Fri Aug 26, 2011
There is a chart below for web resources. It's from Trulia so you can trust it :)

The other issues are psychological and financial in nature. If you have a stable job/income source the it's best to buy. Think about the scene from trading places "BUY,BUY,BUY"

As an investor I can't buy anymore. I have over 10 properties. I'd love to sell you one, I'd love to rent you one. Let me tell you this as renter your rent will be going up for several years. That is the reality. If you are a homeowner and you lock into a 30 year fixed your payment will not be going up.

Which makes more sense to you?
0 votes Thank Flag Link Tue Aug 23, 2011
While Denver is not the best on the index comparing cost to buy vs. rent, it is on the cusp, leaning a bit toward purchase. With interest rates at historic lows and prices continuing to be depressed, affordability is at a very high level. Factor in the incredibly low vacancy rate (less than 5% metro wide) which is pushing rental rates upward, and I believe a very strong case can be made for it being cheaper to buy vs. rent.
The question of whether you SHOULD buy, however, is a different one, and there are many factors that should be considered (job stability, how long you plan on staying in the area, cash for down payment, etc.) before proceeding forward.
Best of luck.
Chuck Strauss
Your Castle Real Estate
720-318-7598
denverhomeguru@gmail.com
0 votes Thank Flag Link Tue Aug 23, 2011
Jeff,

In most cases it is not only cheaper, but a better use of your money to purchase rather than rent. You will pay a mortgage whether you buy or rent. Either yours or someone else's. I have some detailed information that will help with your question. Just shoot me an email if you wouldn't mind me sending you that info.

Robert McGuire
Your Castle Real Estate
Direct - 303-669-1246
http://www.rmcguire.yourcastle.org
0 votes Thank Flag Link Mon Aug 22, 2011
Here is a great chart detailing the answer to your question:
http://insights.truliablog.com/vis/rent-vs-buy-q3/

Relative to other metros, Denver is significantly cheaper to Buy vs. Rent.
Web Reference: http://www.jonrroberts.com
0 votes Thank Flag Link Mon Aug 22, 2011
Dear Jeff,

Owning is cheaper than renting right now.

• Although some renters believe that renting is “maintenance
free,” they are actually paying for maintenance in their rent
– whether they need it or not.

• Renting offers you no equity, no tax benefit, and no
protection against regular rent increases.

Call me and I can show you a chart that puts this information into numerical values so that you can see this information in terms of dollars.

Call me at 303-856-8980. I will be glad to share this information and answer questions free of charge and for no obligation.

Thanks,

Ethan Besser

Ethan Besser
Broker Associate
Keller Williams - DTC
Cell: 303.856.8980
0 votes Thank Flag Link Mon Aug 22, 2011
My tenants are paying $1195 per month, and if they bought that house they'd pay about $1050 per month. Of course, they'd have to do their own repairs.
0 votes Thank Flag Link Mon Aug 22, 2011
Jeff,

That is a great question that you will want to put some thought into. Two things very prevelant right now. There are good prices on real estate, and interest rates are low. So from a financial perspective yes. However, you as an individual need to do a financial analysis for your personal situation. Only then will you feel if it is right or not.

There is a great little known tax credit for qualified first time home buyers called a Mortgage Credit Certificate that can actually make it that much more advantageous to own right now. You can also buy houses right now and finance in the cost of remodeling to potentially build some wealth. There are also great options for home loans as well depending on your credit score, and financial position.

Most importantly you have to feel it is right, but my advice is to talk to professionals. If you's like to chat and pick my brain let me know.


Ray Williams
Branch Manager
Summit Home Mortgage

303.779.0591 x101

http://www.denvers203klender.com
0 votes Thank Flag Link Mon Aug 22, 2011
If you have the money for a downpayment (3.5% down FHA) and plan on being here for at least a little while, or would be willing to rent your place out if you moved, then I think it makes much more sense to but then to rent. If it were more expensive to own than rent you would not see the amount of investors there are buying up rental properties.
What it comes down to is with the lowest prices, and interest rates in many years, can you afford to not take advantage?
For more information, or just to talk about your uniques situation feel free to contact me, or check out my website for first time home buyers in denver
0 votes Thank Flag Link Mon Aug 22, 2011
Obviously, every situation will be different. Right now, with rates as low as they are, if you have enough money for a 20% down payment you will find your mortgage much less than what rent would be on a comparable property. Denver's vacancy rates are around 2% right now, so rent is creeping up. When you factor in distressed properties (i.e. short sales, foreclosures, etc.) you will find even better deals. Now, most short sales are going for about 96% of market value. You can still find great value throughout the city, just not the crazy deals of a year ago. Where are you considering in Denver?
0 votes Thank Flag Link Mon Aug 22, 2011
I just sold a home last month to a family in the Harvey Park Neighborhood for $200,000. They were paying $1200/mo in rent and their payment with a no down VA loan was $1250/mo. The Buyers figured when their rent came up again they would pay that much for rent. That also does not include the deduction and savings on your taxes for writing of home interest and taxes.
This is good example of how with home prices and mortgage rates having come down and rents going up there is an opportunity to own a home for less than renting.
0 votes Thank Flag Link Mon Aug 22, 2011
I just sold a home last month to a family in the Harvey Park Neighborhood for $200,000. They were paying $1200/mo in rent and their payment with a no down VA loan was $1250/mo. The Buyers figured when their rent came up again they would pay that much for rent. That also does not include the deduction and savings on your taxes for writing of home interest and taxes.
This is good example of how with home prices and mortgage rates having come down and rents going up there is an opportunity to own a home for less than renting.
0 votes Thank Flag Link Mon Aug 22, 2011
Obviously the answer would be to buy, I agree with that. However, I have been able to save my clients thousands of dollars off the purchase price as they are renting. i will show you how this can happen with the right house and right seller. Please contact me to discuss further. There are still deals out there even if you are thinking about renting.
Web Reference: http://www.meadowsagent.com
0 votes Thank Flag Link Mon Aug 22, 2011
Jeff,

This depends a lot on your budget, the part of town you're looking in and the size of place you need. That being said, with interest rates where they are (just over 4% on a 30 yr fixed) and rents on the rise, chances are that in most parts of the city it's cheaper to buy. If you have average or better credit, you can most likely qualify for an FHA loan and pay 3.5% of the purchase price as a down payment, and there are conventional loans that can go as low as 3% down (normally 5%) with some lenders.

We have renters stopping by our office in Lower Highland almost every day asking about available rentals, but units rent very quickly since this part of town is so hot. If you're planning on being in the city for at least 4-6 years, my feeling is that you're better off buying while rates and prices are so affordable. If your horizon is short term, you'll need to be extra aggressive and have all your paperwork and referrals ready in order to rent a good place quickly.

Best,

Nate Holler
ONE Realty, LLC
720-635-5741
0 votes Thank Flag Link Mon Aug 22, 2011
Many people have either lost homes to foreclosure or no longer have the work history or credit to purchase so they are now in the rental market. Basic supply & demand is causing rents to increase. Prices of homes in the Denver Metro Area have softened over the past few years. Based on these factors, it is cheaper to purchase a home than to rent and recent statistics have shown this to be true. Of course, your credit and general finances will play a part in the cost of purchasing a mortgage. But if you have good credit & finances, you are better off purchasing.
0 votes Thank Flag Link Mon Aug 22, 2011
Jeff -

Of course most real estate agents will say that you should buy... but there are a couple of factors you should consider:

How long are you planning on staying in the home/rental? If you're only going to be around for a couple of years, you're probably better off renting since you'd have costs to pay when you leave. If you're going to be there for 3+ years, then buying is more attractive.

What type of home and location within Denver? In some areas, rental rates are much higher than the mortgage payment on the same property.

Do you have some money for a down payment? The up front investment is generally more on a purchase.

BUT... if you are in a stable situation where you're going to stay in the property for a while, and you have money for a down payment, you are almost always BETTER OFF BUYING. The tax advantages of owning a property, combined with currently low prices and ridiculously low interest rates make it a great time to buy.

If you'd like to talk specifics, and decide which option is better for you personally, call or email me and I'd be happy to discuss your situation.

Michael Kearns
RE/MAX Alliance
303.598.3468
michael@kearnsteam.com
0 votes Thank Flag Link Mon Aug 22, 2011
Differrent parts of town and types of houses make it hard to generalize. So, to generalize, cheaper to buy in most cases. 3 bed 3 bath, older home rents for $1200 -$1500 month, depending on the neighborhood. If you could buy it at $150K, it's even-steven or cheaper to buy.
0 votes Thank Flag Link Mon Aug 22, 2011
Hello Jeff!

That depends on your loan and your lender. I think it is better to buy. Call or email me and I will put you in touch with my lender.

Thanks,
Derrek Patrick
303-470-9880
derrek.patrick@coloradohomes.com
0 votes Thank Flag Link Mon Aug 22, 2011
It's far and away cheaper to buy. With rent all you do is give away your money and in the end have nothing to show for it. You can't even deduct rent from your taxable income. With owndership you have your initial equity, appreciation, tax advantages, freedom to change your space as you see fit, and if you're the type, pride of ownership. http://www.holbenhomes.com
0 votes Thank Flag Link Mon Aug 22, 2011
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