To Rent or To Buy in 2023
Are you looking to move somewhere in the Denver metro area and aren’t sure whether to buy or rent, we’ve got some numbers to run through to help you make that decision. Let’s look at what’s happening in Denver.
The average home in Denver is selling around $580,000. With interest rates sitting around 7% for a mortgage loan and around 10% down payment, that would bring the monthly payments of a 30-year fixed mortgage to around $3,500 a month.
The average rental of a 2 bedroom unit (apartment or home) is around $2,200 a month, according to Zillow.
When owning your own home, you are beholden only to you and your finances. If something needs to be replaced or fixed, you can move as quickly as you desire and find the perfect replacement if needed. Everything from windows, carpets/flooring, appliances, or even building sheds, garden beds, or a carport are all up to you. In many cases, doing little improvements over time can help increase the value of your home as well, allowing for your time and effort to become an investment.
With rentals, you don’t have to worry about being the one to fix or maintain the property. If anything goes amiss, you call up the property manager and they’ll take care of it in a timely fashion. When you’re renting, you can also feel more flexible about remaining at that property. If you find something closer to work/school, or a place that’s more affordable, then you’ll have an easier time moving. With the costs of rentals being lower than a new mortgage payment, you can more easily work on saving up for a down payment, or other large life expenses.
If you’re the owner, all the maintenance costs and responsibilities fall on you. This can be quite pricey and sometimes when you least expect it. If your mortgage payment is already taking up a large portion of your monthly income, a sudden multi-thousand dollar expense can become quite a problem. Life can also require big changes, like a longer drive to work or even a move out of the city. Owning a home, especially in the upcoming housing markets, could create an issue with moving in a timely manner. Increasing property taxes, costs of utilities, and inflation on supplies and materials for renovations and projects can all become a burden and may be the impetus for selling.
When renting, any number of issues could become a stressor. The time within which a problem is resolved by the landlord can always create stress, depending on the level of severity. Renters are also subject to market variation in rental prices. Neighbors can also be a nuisance in some rental situations. Then there’s also the factor of availability, which can be widely variable depending on the market.
What People Are Doing:
The general trend in the 2023 market is to find a comfortable and affordable rental in the desired area of a future purchase. This allows the prospective buyer to save up money while feeling out the real estate market, laying roots and foundations in the community, and feeling out whether the area is right for them.
Wise Team Recommendation:
If you’re in a position financially to purchase a property then we advise you to move forward with securing your mortgage at the lowest interest rate possible. The future of interest rates is uncertain, but we can be sure they won’t be going down dramatically anytime soon. In the meantime, median home values continue to rise at a marginal rate, making monthly payments higher. We also recommend putting a down payment closer to 20%-30% upon purchase, rather than the 3%-10%. In most cases, this is unrealistic; but this will allow for a reduction of nearly $1,000 a month for a mortgage payment and save hundreds of thousands of dollars over the lifetime of the loan.
To learn more, get in touch with us to discuss your best options in the current real estate market. The Wise Team will help find the perfect place for you!