Lady with laptop wearing glasses sitting on the floor and looking at a laptop screen

The Cost of Waiting: Buying a Home in Colorado

In Buyers, Homeowners by Doug Phelps

Talk to most anyone in the housing market, whether buying or selling, and you’ll eventually come to the conclusion that this market continues to be on fire.  Depending on the news outlet cited, the average cost of a single family home in the Denver area is nearly $700K right now; neighborhood, upgrades and other factors will cause this to vary.  As mentioned before in this blog series, the main driving force in this hot market that is pushing market values and prices up is supply and demand.  

Some buyers may complain that the housing market is too expensive right now and may have a strategy of waiting a few weeks, months or even years until the market cools down, but… that may not happen.  The Denver housing market is as robust and active as ever, and has been for quite a while! Consider the following case studies about home prices year over year for the last decade:

The Impact of Waiting

Waiting a year, or more, to buy a home in Colorado has some significant costs to it. In the last ten years, there has been some ebb and flow in the market but appreciation has increased at about 10% per year.  Since the pandemic, the appreciation rate has increased even higher, as seen in the case study below.  For buyers in the last year who became homeowners, the appreciation is a welcome increase. For those who are hopeful new buyers they can have fear about overpaying.  But truly, fear not, because homes will almost always appreciate overtime and the longer a buyer waits, the more expensive in more ways than just price it could be. And not just the home price itself but also mortgage interest rate, mortgage insurance, homeowners insurance, downpayment costs, and yearly taxes.  Buying now locks down the price and allows homeowners to start gaining that year over year appreciation and equity.  

Appreciation for golf course homes, especially for new builds along beautifully manicured fairways and greens, could have an even slightly higher price increase year over year.  Some new build communities are on average are even seeing monthly increases.  Every 30 days or sometimes less, a new build home community is implementing a price increase of thousands, that is if it’s on the market that long.  

A visual example showing YoY values in Colorado since 2012
Since 2012….

As seen in the graphic above, looking back 10 years, the historic average appreciation for the Denver Metro area has seen an average 10% increase year over year since 2012.  With this increase, in a scenario where the purchase price is $693,785, waiting one year will be a price increase of $138,757 in list value.  

This results in a higher down payment requirement, a loan amount difference, and an increase in Principal and Interest payment.

The 2022 Impact….

It’s no secret that the pandemic radically changed multiple industries.  Since May 2021, the year over year actual appreciation increase has jumped 18.3%. With this increase, in a scenario where the purchase price is $693,785 waiting one year will be a price increase of $184,547 in list value.  

This results in a higher down payment cost, a loan amount difference, and a more significant increase in Principal and Interest payments.  In fact, monthly P&I could be $681 higher in one year’s time.

Overall, the “strategy” to wait for things to change is flawed. The key is to make a move sooner than later to avoid paying a higher cost.  Buying now assurance that you will benefit from the higher than average yearly home appreciation rates.  It also ensures that you can avoid paying ever-rising costs now and in the long run.  

Are you ready to make a move right now? Are you in the market to buy or sell your home?  Call and text me at (720) 323-4176 or email me at [email protected]

Subscribe To Doug's Blog