Corporate Housing Solutions | Sept. 15, 2018
While the rule of thumb in investing has always been to buy homes rather than rent as a means to create wealth, that trend is changing in certain markets. Recently CNBC listed Denver as one of those markets where it has become more cost effective to rent than to buy. The article reads,
“Fast-rising home prices and higher mortgage rates have shifted the calculation to rent. The monthly costs of buying and owning a home that you occupy are up 14 percent over the past year, more than three times the annual increase in rent rates nationally, according to realtor.com. Rents are up just 4 percent. The number of local housing markets where it is cheaper to rent than buy is growing by the day.
In 16 of the 23 major metropolitan markets covered in the research, renting is a better investment than buying. These cities include Atlanta, Dallas, Denver, Houston, Los Angeles, Miami, San Francisco and Seattle. It is still, however, better to buy than rent in much of the Midwest and Northeast, with Chicago and Cleveland showing the best ownership scores.” (CNBC)
This trend is something everyone must consider before home shopping in the Denver metro area. While the housing market is hot right now it won’t stay that way forever.
In the simplest terms people may be overpaying for the cost of homes while the market is hot. Denver has been working on a variety of programs that will inevitably build more homes and stop the price gouging in the area. That means those buying right now are paying top dollar in a market that will soon begin to slide.
The better option may be to wait for some of these programs to take hold, and allow the market to right itself in a year or so. Paying top dollar is never a wise investment, in investing, you buy low and sell high, something that any homebuyer needs to consider first and foremost.
A great second option and better option currently will always be to rent a furnished house, let the market settle a bit, and then when they housing market slips that is when it would be a good time to buy, knowing you can make money down the road when you are ready to sell.