The latest Case-Shiller home price index has been released. As it stands Denver is once again in the top of the nation for rising home prices. While the report lags by two months you will see that home prices in Denver continue to rise. Year over year from Oct 14-Oct 15 prices on average have gone up just under 11% in the Denver area.
That is great if you already own a home, but what does that mean if you don’t but want to buy a home in Denver? Well if you were budgeting for a $350K home and a year has gone by without buying, you can expect that home will cost you roughly $388K now. Given home prices in Denver continue to rise, so would the down payment on that house, and monthly payment. As example a 10% down payment would have been $35K, and now just under $39K for that home. What may surprise you more is that the mortgage payment would be roughly $175 more per month with the increase in home prices in Denver.
So where do we expect things to go from here? Is the bubble going to burst? No, honestly, how many out of state license plates do you see daily? How many cranes are all over the city? How many people are moving to Denver? The economy is doing well, and with millennial demographic and people who can work remote this is an attractive city to move to. We don’t have the ocean, such as, San Francisco (which is currently slightly outpacing Denver in (%) rising home prices), but we have mountains.
More of a normalization may be in line. What would that look like? Possibly 5-6% instead. So take those numbers and cut them in half. Meaning now the house won’t be $389K next year, but maybe $410K instead. Down payment from $39K to $41k (10% down), and payment increase about another $95/month. In line with home prices in Denver continue to rise, is the fact that Fannie Mae (and FHA & VA also) increased the loan limits as they consider Denver a high cost area to live now. With normalization we may start to see more inventory of houses on the market, not a bad thing.
Overall, to you, what does this mean if you have not bought a house? Should you think more or talk to a professional to see if it makes sense? That depends on if you are ready!
Chew on this~