We recently sat down with Pamela Primm from Ion Real Estate and Lisa Souza from The Mortgage Company on our most recent episode of our Community Program Podcast. You can listen to the podcast or find the entire transcription here. We took a few nuggets of information from that podcast to bring you this post on renting vs. buying in the Denver market.
Why Should You Buy Real Estate?
Renting vs. buying in Denver is a hot-button issue for many people, especially in the Denver area. There are many advantages to buying your own home and we’ve put together some of the top reasons why buying a home is a not only a great option but a valuable investment for your future.
- Naturally Building Equity: When you rent a home or apartment, 100% of your payment goes directly to the landlord. When you own a home, a portion of your payment is immediately building equity.
- Price Appreciation: According to a recent article in the Denver Post, over the last 20 years in Denver, the average annual increase in price for properties is 5.36 percent. With the accelerated growth in Denver over the last five years, it is averaged at 9.26 percent. Meaning, the value of your home is going to increase with time.
- Rent Prices are Skyrocketing: Denver is a popular area and there has been an extreme influx of people moving here over the last few years. Therefore, there is a higher demand for rentals as people decide if they want to buy or not. For example, according to a recent article in The Denver Post, in July the average rent for Studios and 1 bedroom apartments was approximately $1591. That’s up .19 percent over the last year.
- Additional Costs of Renting: Typically when renting, there are a number of fees on top of already high renting costs. These fees include first month and last month deposits, utilities, parking, pet deposits (that are usually non-refundable), and more.
- Tax Benefits: There are of course can be tax benefits of owning your own home. You may be able to deduct both mortgage interest and property tax payments as well as certain other expenses from your federal income tax. You should contact a tax advisor for advice on these and other potential tax benefits.
- Make it your own: For some, the biggest advantage of owning your own home is the ability to make it your own. You can decorate, plant a little garden, etc. Any little thing you do can additionally add value to your home.
Rent payments vs. Mortgage Payments
A common misconception in the field of real estate is that mortgage payments are more expensive than rent payments, and that is just not the case. As an example, you may pay around $2000 in rent for a 2 -3 bedroom apartment here in Denver. For about the same monthly mortgage payment, including property taxes home insurance and mortgage insurance you could potentially buy a $300,000 single family home.
Even though there are advantages to buying over renting in some cases, many people are frightened by the thought of buying their own home, even if they can keep their costs about the same. They don’t know what area to look in, what they can afford, how they will pay for it, and what the process is. Next week, we will begin discussing the process of buying a home from obtaining the loan, to what areas you should be looking in.