Will Denver Become Unaffordable (Edgewater: mortgage, loan, houses)

[RareLocal5280]

Originally Posted by mic111

Lucky or unlucky? Who can say which each person is until they sell. The value of the house is meaningless until you extract it. Yellowstone erupts, covers us in ash. Then we are all pretty unlucky in real estate.

The next Google, Apple, Microsoft (GAM) is started in someone's garage in the metro area and the GAM company stays put then we are all very lucky in real estate.

Buying a home does one thing. It stabilizes your housing cost to a certain extent. If you bought your house and could afford it at the time you should generally continue to be able to afford it over time. Hopefully your pay is going up but your housing cost is staying stagnant.

The market could go up or down. Rents could go up or down but a home owner shouldn't care one way or the other if they bought something they could afford.

Edited to add:

This question really isn't relevant to the discussion on the board. Why? Because the economic situation available in years past was different than it is today. No one new has access to last years prices, or the prices 3, 5 and 10 yrs ago. They have to deal with today's prices. I think that today's prices are why you see so little inventory. People who already live here can't fathom paying $400K for a house that they remember being available for $150K. As a result there is little selling to move up. Newcomers look at that same $400K house and say, it is cheaper than the $425K one down the street so I better snatch it up. Also psychologically it is hard to sell the house you bought for $150K to buy something just slightly better for $500K, even if you can sell yours for $400K.

I would say we have been more lucky than unlucky. You are 100% correct in that the money is realized till the property is sold. Many people don't have a desire to leave the metro, so its hard to capitalize on current equity because other properties have moved up at equal paces. But as a homeowner, I can say I am feeling pretty lucky that prices have gone up as much as they have and my equity along with it. The reverse could've happened and prices could be down 25%. I would say that would not be considered lucky for most home owners. I don't pretend the I was so smart that I saw all this coming 9 years ago thats why I'm in that position. That would be blind arrogance.

The reason I think the question posed is relevant is that people need to step back and put themselves in a position of being interested in moving to this market. Too many people on here don't do that, and the reality is many couldn't afford to make the move today if they had to, yet they are condescending to poster's looking to relocate. Wish they would take a step or two down off their pedestal (which many are in fact perched on due only to timing and nothing to do with their own doing).

[randomparent]

Originally Posted by RareLocal5280

..."if you were getting ready to move here, with your current job and current salary, could YOU afford the same lifestyle and housing you have now?"

Yes.

[denverian]

Originally Posted by davebarnes

cf. San Francisco
cf. NYC

Who knows?
[coastal] California has been unaffordable for 60 years.

It was quite affordable for us in the mid 90s. At that time, we rented a nice 2 bdr. apt. in central Orange County for $700 a month. Then in 1998, rents started going crazy, like they are in Denver now. So we bought a 2 bdr. 2 bath condo for $120K. At the time, that seemed like a lot of money, but we sold it for a little over $400K in 2005. For us, it was all in the timing. I think that same apartment we rented in OC today goes for arounc $1400 a month. but rents there did stabalize after about 4 years of crazy increases.

[Mike from back east]

On a national basis, the NAR reports JAN 2015 sales of existing homes dropped 4.8% from December with the suspected reason being both a lack of inventory and prices rising beyond affordability. This is a 9-month low for existing home sales.

Story from Bloomberg with a short clip video containing a chart and commentary.

Not sure the rate of new home building in the Denver area, but just in my neighborhood here in COLO SPGS, we're adding 200 new SFH ($350k-$600K) which are a one hour drive from the DTC. In many parts of the nation a 1-hour commute is often considered tolerable.

[davebarnes]

Originally Posted by Mike from back east

On a national basis, the NAR reports JAN 2015 sales of existing homes dropped 4.8% from December with the suspected reason being both a lack of inventory and prices rising beyond affordability.

prices rising beyond affordability is a bogus argument in Denver.
When a "charmer" gets 12 offers in 3 days and goes under contract for $15K (4%) over asking, that is not lack of affordability.
All real estate is local.

[Gunluvver2]

Well when Denver is filled with those horrible 1 percenters just raise their taxes to 90% and make it to expensive to live there also. Then they can take their money and their jobs and move.

[SkyDog77]

Originally Posted by Gunluvver2

Well when Denver is filled with those horrible 1 percenters just raise their taxes to 90% and make it to expensive to live there also. Then they can take their money and their jobs and move.

How insightful. Thanks for posting.

[randomparent]

Originally Posted by davebarnes

prices rising beyond affordability is a bogus argument in Denver.
When a "charmer" gets 12 offers in 3 days and goes under contract for $15K (4%) over asking, that is not lack of affordability.
All real estate is local.

Ah, so the charmer sold. Thanks for the update.

[whoisjongalt]

I hate to say it but it is a kind of "Californication". The prices skyrocket and the people who got in early luck out and the ones who show up later better have serious $$$. It's pretty irrelevant how much your house goes up unless you plan to sell and move to someplace cheaper. It's like my friends who bought their house in Malibu in 1974 for $85,000. Now its worth $5,000,000 but they aren't going anywhere so it doesn't really matter. I lucked out buying my place 2 years ago. It's gone up almost 30-40% but that doesn't really mean anything. The only real plus is the low payment that won't change.

[Gamecock2001]

The housing prices are the only deterrent that would cause my wife and I to leave. We moved out here for a promotion two years ago and love it. But with the inventory and market the way it is, we can't live in a ideal home in a nice downtown neighborhood even with decent income and no kids. With kids it would stretch us way too thin. So I would say that for young couples on their own with no rich kid trust fund, it is somewhat un-affordable, at least for what we are looking at. One more pay raise for either of us would push us into a more comfortable price range, but for now I will rent and not rush into a mediocre home I am not sure I really want.