The real estate market is changing fast. As we’ve been saying for months now, the high mortgage rates are changing the way people buy and sell properties. Some areas are being affected more than others, but Colorado seems to be keeping hold on a healthy real estate market. This is continuing to drive home valuations higher, and subsequently pushing rent costs higher as well. Many buyers, especially first time homebuyers, are putting off buying a home in the Denver metro area in favor of renting – due to the costs. Let’s look at what this means for our area.
Cost of Renting
Rent in the Denver Metro Area has been rising for years. As the cost of homes rises, more individuals find it more appealing to rent. Renting does have its appeal. Maintenance costs are put on the owner, property taxes are something you don’t have to worry about, and you have the freedom to move with ease. These same benefits can also be a hindrance when things don’t get fixed and the cost of rent goes up between contracts. 2023 has seen a sharp increase in rental costs across the metropolitan area. Here is a small chart of average rental costs for a one-bedroom rental:
| City | Average Monthly Rental (1-bed) |
| Denver | $1,787 |
| Boulder | $1,798 |
| Aurora | $1,395 |
| Longmont | $1,508 |
| Fort Collins | $1,350 |
| Colorado Springs | $1,161 |
| New York City, NY | $4,317 |
| Los Angeles, CA | $2,395 |
| Austin, TX | $1,534 |
| Seattle, WA | $1,939 |
| Miami, FL | $2,600 |
| Chicago, IL | $2,020 |
Cost of Buying
Let’s takes look at what it might take to own a home in Colorado:
| Home Valuation | Monthly Mortgage Payment |
| $350,000 | $2,100 |
| $500,000 | $3,000 |
| $850,000 | $5,100 |
Based on 10% down payment, 30 year fixed mortgage, at 7% interest rate; monthly payment includes principal, interest, taxes and insurance.
What this chart doesn’t consider are the extra costs of home ownership outside the normal mortgage payments: water, electricity, and maintenance. With the median home price in Longmont over $500,000; the median price in Denver over $620,000 – we can start to see why buyers are looking at renting until something changes for them. Boulder’s median sales price is just around $850,000
We are still big proponents of buying over renting, even with these mortgage rates. With each payment you’re building equity and your future, while renting steals the money away for someone else’s benefit. On the other hand, we also understand why hopping into a mortgage that’s nearly twice as much as your rent, and adding other expenses on top of this, could seem like an unreasonable goal. Don’t be discouraged though! There are many options.
If you’re really interested in buying a home and worried about these high monthly mortgage payments, talk to your mortgage lender and local realtor. There may be ways to work out negotiating the mortgage to lower payments even with the home valuations so high. Some individuals are also striking rent-to-own deals in their contracts, which can be risky but offer a way into a home that can be affordable. When you’re ready to take a serious look at the Real Estate Market, give us a call and we can help you decide if buying is right for you.
