Young Professional Moving to Denver (Golden, Center: rental, neighborhoods, calculator)

[ALStafford]

Having moved here as a not-really-young professional, I have to admit, I'm often confused by the "just buy something" statements that get thrown out here regularly. I wonder how many people relocating can do that. Doesn't purchasing a home require a significant amount of cash available for a down payment on a home purchase? Don't most lenders want 5-10% minimum for a down payment? For a 1-br condo, that can be nearly $10,000. I don't know many young people starting out that can afford that. And add moving expenses on top of that, and, depending on the property, other necessary items to buy (lawn mower, washer/dryer, perhaps kitchen appliances depending on what conveys with the home), it can be a significant amount that can take a significant amount of time to save up. Granted, I haven't been in the house-buying world for a long, long time (late 90's in fact), I've been renting around 10-12 years, so I don't know if the rules have entirely changed. But back when the ex and I bought a house, we needed 5-10% down, and our realtor was recommending looking at property that was no more than 2.5X our combined gross income. If a new graduate is making $75,000/yr to start (and I know very very few people starting in my industry that make anywhere near that...that's what you make with 5-10 yrs. experience!), that still puts a home at under $200,000. Which, for a decent place in Denver, is not much.

So, maybe this is more a real estate question than a Denver-specific question, but I really don't understand the chourses of "just buy!" whenever one of these moving threads comes up.

[farscapesg01]

Originally Posted by ALStafford

Having moved here as a not-really-young professional, I have to admit, I'm often confused by the "just buy something" statements that get thrown out here regularly. I wonder how many people relocating can do that. Doesn't purchasing a home require a significant amount of cash available for a down payment on a home purchase? Don't most lenders want 5-10% minimum for a down payment? For a 1-br condo, that can be nearly $10,000. I don't know many young people starting out that can afford that. And add moving expenses on top of that, and, depending on the property, other necessary items to buy (lawn mower, washer/dryer, perhaps kitchen appliances depending on what conveys with the home), it can be a significant amount that can take a significant amount of time to save up. Granted, I haven't been in the house-buying world for a long, long time (late 90's in fact), I've been renting around 10-12 years, so I don't know if the rules have entirely changed. But back when the ex and I bought a house, we needed 5-10% down, and our realtor was recommending looking at property that was no more than 2.5X our combined gross income. If a new graduate is making $75,000/yr to start (and I know very very few people starting in my industry that make anywhere near that...that's what you make with 5-10 yrs. experience!), that still puts a home at under $200,000. Which, for a decent place in Denver, is not much.

So, maybe this is more a real estate question than a Denver-specific question, but I really don't understand the chourses of "just buy!" whenever one of these moving threads comes up.

I'll agree that the idea of young professionals moving and just buying a house is rather odd. When we graduated from college and found our first jobs in Texas, we rented a year before buying a small house for the two of us. Unfortunately, as jobs changed the commute was crazy and we sold the house 7 years later just breaking even and bought our second house with no money down (did an 80/20 loan that I would never do again and never recommend to anyone...).

My comment on mortgage vs rent is because the rental prices seem ridiculous for the Denver area. $1200+/month for a 2 bedroom house in the Centennial area for example is crazy, and for those young professionals starting out it makes it almost impossible for them to save money over the course of a few years to afford that down payment on a house. A single bedroom apartment for a new college grad starting out looks to be running almost $1000/month, and I'm not sure I know of anyone other than doctors and lawyers who start out making $80k a year out of college that could afford that and still save anything... not to mention paying off any student loans/etc.

Heck, as someone making almost $100k and looking at moving to Denver, even if they extend an offer I'm not sure if we will be able to afford it without the wife going back to work for additional income. To keep things into perspective for us, keeping our monthly house payment to around 25% of my take home would mean a total mortgage+tax+dues of around $1250 a month for a family of 4 (min. 3 bedrooms, prefer at least 4 for a spare/office since I work from home some and am a tech geek with my home servers/test lab/etc.) which so far isn't looking too realistic. Granted, 25% leaves some wiggle room, but anything over 30% and we're basically tossing out any plans for retirement savings.

[SkyDog77]

West Wash Park and Baker are between Downtown and the Tech Center, have lots of young people and are highly desirable in my opinion.

[lurtsman]

Originally Posted by ALStafford

Having moved here as a not-really-young professional, I have to admit, I'm often confused by the "just buy something" statements that get thrown out here regularly. I wonder how many people relocating can do that. Doesn't purchasing a home require a significant amount of cash available for a down payment on a home purchase? Don't most lenders want 5-10% minimum for a down payment? For a 1-br condo, that can be nearly $10,000. I don't know many young people starting out that can afford that. And add moving expenses on top of that, and, depending on the property, other necessary items to buy (lawn mower, washer/dryer, perhaps kitchen appliances depending on what conveys with the home), it can be a significant amount that can take a significant amount of time to save up. Granted, I haven't been in the house-buying world for a long, long time (late 90's in fact), I've been renting around 10-12 years, so I don't know if the rules have entirely changed. But back when the ex and I bought a house, we needed 5-10% down, and our realtor was recommending looking at property that was no more than 2.5X our combined gross income. If a new graduate is making $75,000/yr to start (and I know very very few people starting in my industry that make anywhere near that...that's what you make with 5-10 yrs. experience!), that still puts a home at under $200,000. Which, for a decent place in Denver, is not much.

So, maybe this is more a real estate question than a Denver-specific question, but I really don't understand the chourses of "just buy!" whenever one of these moving threads comes up.

Hey ALS,

I thought I'd respond in regards to the costs and conveyances. Lenders require, for people with good credit but no VA deals, 5% down. In the Springs, that means you can get a house for around 230k with about 12k down. Have the seller pay closing costs so it can be wrapped into the mortgage. Put in your offer the appliances that you want conveyed. Everything in our kitchen except for the coffee maker came with our purchase. We didn't buy a lawn mower the first year, because we didn't need it. This year we watered more and purchased a mower. Moving expenses, done properly, can run under $1300 for moving a two bedroom household across the country, when excluding the cost of gas in the vehicles you transfer. There's feasible way for me to project whether a household has one or two vehicles or how fuel efficient they are. Depending on the definition of young, that isn't too much. Young financially prudent people with good jobs (key point there since most are ****ed in the economy) will be able to put that away within a year. In the Springs, you can get a fairly nice Condo for 120k. A large two bed two bath with a good view. You'd need about 6k at closing plus the 1.3k to move your crap, so around 7.3k outside of your normal living expenses. When you first bought, you bought in much higher interest rates and thus the multiplier on gross income was lower. It is now entirely possible, and sometimes prudent, for a young couple to buy at four times their annual income. We were bank approved to buy at over 5 times annual. While that seems incredibly high, in the form of monthly cash flows on a 3.375% rate (no longer available, but that's what I locked) and with low insurance costs (thanks usaa) and low property taxes (thanks Colorado Springs, CO) it still comes in at a reasonable portion of monthly income with a substantial amount of the payment going towards principal. Granted, I bought more house than I needed. However, I knew at that point I could afford to buy precisely the house I actually wanted for the long term, and there was no knowing how rates or prices would move, but I figured up was the most likely scenario.

PS. The monthly income ratio banks are using 40% of monthly income to total monthly mortgage cost. Some banks only offer lower percents, but a customer can shop around and find one that is happy to offer 40%.

[UKWildcat1981]

My buddy just moved to Colorado and he says rents can get expensive in Denver.. 1500-2000 a month for a nice apartment/condo in a nice area. If you come from California or NYC that will be nothing but that seems kinda pricey. Denver is the trendy hot new city now sort of like what Atlanta was 10 years ago and Austin Texas was 5-8 years ago. I would love to move to Denver.. I like their weather and scenery but it could get pricey. I might move to Arizona instead. Good Luck with your move and God Bless.

[Mystery123]

Are you American or from outside?
If the latter, DTC surrounding is the place.
If former, pretty much anywhere in the Denver area as suggested above.

[bluescreen73]

Originally Posted by farscapesg01

I'm not sure how accurate those calculators are. I know they are taking a median into account, but the numbers just don't match up. For instance it says there is only an 8% housing increase from Houston, TX to Denver. However, taking a house similar to mine (2500 sq ft, 4 bdrm, 3 bath) and trying to find a comparable house in the Centennial, Littleton, etc.) area and 8% difference would mean finding something in the $235 range... which I haven't been able to find yet not to mention the sq ft ranges don't even come close. Going further south to the Castle Rock area the sq ft for a comparable number of bedrooms/baths is closer (I'm guessing newer construction) but no where near the 8% difference claimed by the calculator...

Rent is even crazier... it seems to be cheaper to just buy a home and pay a mortgage than rent if you need more than 1 bedroom...

They could be factoring property taxes into the calculation. Having lived in Texas I know first hand how that state bends you over a barrel when it comes to property tax.

[farscapesg01]

Originally Posted by bluescreen73

They could be factoring property taxes into the calculation. Having lived in Texas I know first hand how that state bends you over a barrel when it comes to property tax.

Yeah, but Colorado makes up for it with a state income tax. Doing some quick calculations I figure the reduced property taxes will be offset by the state income tax so those are a wash and the only real difference will be mortgage for the higher house cost.

[whoisjongalt]

To live anywhere you'd want to live (ie. NOT the distant suburbs), you will have to spend more than $1000/ mo, even for a studio. Either plan on spending at least $1400 or get a roommate.

Rents in Denver are 'very unaffordable,' says Zillow - Denver Business Journal

[dnvrsoul]

Originally Posted by whoisjongalt

To live anywhere you'd want to live (ie. NOT the distant suburbs), you will have to spend more than $1000/ mo, even for a studio. Either plan on spending at least $1400 or get a roommate.

Rents in Denver are 'very unaffordable,' says Zillow - Denver Business Journal

Yep...a woman from work moved from Minneapolis and she lives in Capital Hill-she told me her rent in MN was $800 and she is yuppy all the way...the cheapest she found was $1100 and she has 696 square feet...
If you want to live in Denver ...you will pay dearly.