Housing Prices in Colorado are at a new normal. Coming into the holiday season this year, the average cost of a home in the Denver Metro Area is sitting at over $600,000. This is quite a start difference from a decade ago when the average cost of a single-family home was just under $250,000. This 140% increase in the sales price of homes has made the Denver Metro Area Real Estate Market feel unattainable for first-time homebuyers, which is understandable. We are here to tell you that it isn’t impossible to buy your first home in the Denver Metro Area, it just takes some creativity, patience, and an astute Realtor by your side. Let’s discuss ways to navigate the 2023 real estate market if you’re a first-time homebuyer.
Understanding The Market.
The 2023 real estate market is heavily affected by the consistent mortgage interest rates. Since the beginning of the year, they have been hovering around 7%. Luckily the Federal Reserve has decided to maintain interest rates instead of raising them, which has allowed mortgage rates to remain at 7%. These rates seem high, compared to this previous period of low interest rates, but if we look back at the past 30 to 40 years, 7% is the average interest rate for mortgages, with the high being 36% or so. Granted, when interest rates were upwards of 25%, homes were averaging $70,000-$100,000 and the economy was in shambles. As we come to a close on 2023, the Federal Reserve seems to be willing to maintain interest rates, and with this news the housing market has decided to maintain itself as well.
What does this mean? Well, over the last two months the rise in housing prices has abated. Sellers are also a little trepid to list their homes as they’re noticing their neighbor’s properties sitting for sale for weeks on end. Buyers are taking their time before settling on a home. During this time, negotiations are becoming a key part of almost every sale. These negotiations are not necessarily bringing down the prices of homes, however. Home valuations, especially in Colorado, continue to rise, even if slower than the previous three years (which was definitely a peak in homebuying).
Should You Buy?
Property ownership is one of the most important things an individual can do to assure financial stability. With every payment into your mortgage, you’re putting money into your property. As home valuations continue to rise, that’s more money in your pocket down the line. Renting does not offer you this advantage, and with rental prices rising in tandem with property values it is becoming harder to save for your initial down payment. If rental prices continue to increase on the trajectory of this past year, renters may find themselves paying far more than they desire in the Denver Metro Area for something comparable to a home.
If you do qualify for a loan, use that loan amount as your searching parameters for homes in the area. Banks and Mortgage Offices are currently finding creative and unique ways to assist buyers with their purchase of properties. Speak with your local lenders to see what you can qualify for today. Be sure to ask about the following loan types:
- Conventional 97 Loan
- Other Government Loan Plans
You may also want to ask about co-buying a property with friends or family. Many more options may open up with co-signers on your mortgage.
Strategies For Finding Your First Home
Once you’ve secured a loan amount you’ll be able to know what you can shop for in the Denver Metro Area. The average price tag of over $600,000 seems lofty for a first-time homebuyer, but that doesn’t mean there aren’t homes in your area at your budget. You can start your search at TheWiseTeam.com or other real estate search engines. When the time comes and you’re ready to make a move, it’s best to reach out to your local realtor. If you’re in the Longmont or Denver area, we’re here for you.
With your Realtor by your side, start doing research:
- Look at different neighborhoods outside your target area.
- Investigate other realty websites and look at their listings.
- See how long homes are sitting on the market in different neighborhoods.
- Find homes that need a little TLC or repairs that you can take care of.
- Talk to friends and family to see if they know people willing to sell.
- Ask your realtor about other financial options for homebuying to brainstorm ways into your dream home.
Once you have a clear view of what you can do in the market, start making a shortlist of homes you want to do a walkthrough. At this point you should have quite an eclectic ensemble of choices to choose from. Remember: this is your first home, so embrace the blemishes and imperfections as part of the journey.
For more on tips for First-Time Home Buyers, check out our other blog here >>
Patience Is The Key To Your New Home
Please remember, we’ve seen markets like this before. Prices are high, interest rates feel high, and the options don’t always meet expectations. That doesn’t mean homeownership is unattainable. It is just a matter of time and determination. We are still seeing first-time homebuyers approved for mortgages. We are also hearing about these unique and interesting loan structures, partnerships, and success stories all over the Front Range.
For more information about the Denver Metro Area Real Estate Market trends, check out The Wise Team Blog. If you have more questions, feel free to leave a comment below or reach out to our team at 720-442-0899.