Are You Ready for Summer
Are you ready for summer? Apparently, we will not be getting spring this year. Although our lawns are turning green, our trees are starting to leaf and our Daffodils are pushing up through cold dark earth our April showers have been snowstorms. I’m a little concerned about our “May Flowers”…
One of the first expressions I ever heard about living in Colorado was, “Predicting the weather around here is for fools and newcomers…”.
Our residential market is just as complicated. Choosing homeownership is not without it’s pitfalls. It is certainly not for “fools and newcomers”. Just to name a few pitfalls; radon gas, broken sewer lines, cracked heat exchangers, encroachments, insolvent homeowners associations, resale-ability, valuation concerns in an appreciating market and more. Here’s some advice. Don’t go into this market unarmed!
Don’t Be Like Mike!
During the Great Recession, when interest rates and home prices were rock-bottom, Mike looked at dozens of homes, but failed to buy, worried he would be stuck with a home that would continue to drop in value. Fast forward to April 2014. Mike is still renting. He considered moving to a new apartment community along Denver’s southeast corridor. He found one with a one-car garage for $1,420 a month. He called back three weeks later and the price was $1,750, a 23.3 percent jump.
Last year, overall apartment rents rose by 8.9 percent, just about the same as home prices in the Denver area. How is it possible that Mike would see almost three times that increase in only three weeks? The answer is, “Renting an apartment is like buying a plane ticket”.
Increasingly, big apartment owners use software to match the price of units based on what is available and what the market will bear. Supply and demand is down to a science and is much more efficient than with the housing market. In effect, during the past five years, Mike has been paying off his landlord’s mortgage instead of his own. Given rising rents, he decided to give home buying another shot. It was an eye-opener when he learned first-hand that reports of the housing shortage were not exaggerated.
Yet, there is a silver lining for Mike and other renters who would be better off buying: they don’t have to worry about the complicated juggling act of buying and selling a home at the same time. Renters, however, shouldn’t try to buy a home on their own. With so little inventory, more than ever they need an experienced Realtor to help them map a strategy and navigate this market, where demand far outstrips supply.
Mike has learned his lesson. “I’m kicking myself,” for not buying, he said.
2014 Denver Free Days!
Looking for something to do? Check out Free Days for great Denver sights like the Denver Zoo, Denver Art Museum, the Museum of Nature and Science and more! Click Here for the full schedule.