Anyone Else Sitting Out the Denver Real Estate Market? (renter, condo)

[ironlady]

My husband and I are middle-aged professionals with a good income, stellar credit, but are renting a 1200sf condo right now. Since we have two young kids, we'd love to buy, but the real estate market around here makes us nervous. We lived in Los Angeles before and during the 2008 real estate crisis, and some of what we saw there, we see here. Of course, no one has the crystal ball that can tell you whether or not any market, especially micro-markets, are going through natural appreciation or a bubble that's about to burst. With all the bids above asking price, the love letters to sellers, I have to wonder: are we the only ones sitting it out, waiting? Anyone else?

[SkyDog77]

If you did buy, how long would you estimate owning? If 5 years, you might have a point. If 10 years, you maaaay have a point. If 15-20 years, you're insane.

[Mach50]

Originally Posted by ironlady

My husband and I are middle-aged professionals with a good income, stellar credit, but are renting a 1200sf condo right now. Since we have two young kids, we'd love to buy, but the real estate market around here makes us nervous. We lived in Los Angeles before and during the 2008 real estate crisis, and some of what we saw there, we see here. Of course, no one has the crystal ball that can tell you whether or not any market, especially micro-markets, are going through natural appreciation or a bubble that's about to burst. With all the bids above asking price, the love letters to sellers, I have to wonder: are we the only ones sitting it out, waiting? Anyone else?

What's wrong with L.A.? Yes there was a downturn but haven't prices recovered and now surpassed those bubble prices?

I sat out in Orange County in 2007 and now the condo I would have bought in Mission Viejo is 55k more than peak back then. I should have bought.

Guessing these markets is like guessing Colorado weather.

[rtloucks]

Thanks for Posting. My wife and I along with our two boys (16 and 10) are living in DC right now but have always been homeowners and will be relocating to Denver in about 5 weeks. We want to settle down there and make it home since we have family out there, but this housing market is scary. Great for sellers right now, but the idea of sustainability is worrisome. We are having a really hard time weighing out the pros and cons of owning out there right now. We tried buying 4 houses this weekend with well over asking price offers and lost every one of them and we are solid buyers that will close. Excellent credit, zero debt, maximum down payment etc. The agents are talking people into removing appraisal and inspection clauses now too. CRAZY!

Makes us not even want to relocate right now until things settle, so we may be renting there instead just to ride it out a bit. All the reports I read are saying that this will not last there. I dont think there will be a crash, but I think things will slowly decline back to a more "normal" rate. Salaries are not increasing to keep up with the real estate hike.


Good luck in your decisions.

[philberf]

We are possibly looking at relocating to Denver in a year, and we're hoping things settle down between now and then. we are looking to buy more for long-term (>10-15 years) so takes some of the sting out of it.

[ayoitzrimz]

We bought our house last winter, on the monday before thanksgiving. No competing offers, no contingencies removed, no bidding war. If I had to offer 10-20k over asking I would DEFINITELY sit the housing market out and possibly relocate somewhere cheaper. So we got lucky, and if we hadn't gotten lucky we would have likely sat out the market.

[ironlady]

Yes, even though we've played hopscotch all over this country our whole marriage, we really do want to settle down for good this time, as our kids are now starting school. But even considering that, what we're seeing out there--which rtloucks describes well--still makes us skittish.

Ayoitzrimz, that gives me hope! Maybe I should look in the dead of winter next year. Like from Thanksgiving through New Year's.

Good luck to you, too, Rtloucks and Philberf.

[mic111]

There area always advantages and disadvantages to every type of market. If the market were slow and you could pick and choose your house and negotiate on price you would most likely be under water for years if you take into account transaction costs. With the current market if you need to turn around and sell in short order you should be able to and maybe even recover realtor costs or make a profit.

When I first read skydogs msg I totally agreed as that is my old school thinking. It takes 7 yrs to make up for realtor cost and market fluctuation. Meaning you should break even on average if you own for 7 years.

Funny thing is I bought my first house here in 1995 for a song. But it needed so much work. Denver's market had been depressed all through the '80s, losing value constantly, so no one had put a penny into improving the houses. Everything I looked at was in original condition. Sold it in 2003 for about a break even price considering improvements. Probably a little less than break even. Bought our current house in 2002. Initially rose in value for a few years but in 2007 took a serious dip that it didn't recover from until a year ago or so. Now it is worth more than we put into it but probably not a whole lot more more like we would break even on improvements if you consider transaction costs when we sell. In both instances since I wasn't paying rent, breaking even was definitely winning.

I think today's buyers who are trying to time the market will likely never buy. If you won't buy in a good market, you likely will really not want to buy in a bad market. The means that the only time you might buy is in a balanced market and it never feels like a balanced market.

I never felt bad when my home was worth less than I paid. I bought it for a fair price at the time so that was all I needed to know. I also bought it so I had a place to live convenient to work that I could customize for my needs. At heart I'm a home buyer and not a renter so if I were moving here today I would still buy what I could comfortably. That is what it really comes down to. Can you afford what your buying. If so then the value of the house won't matter because you can make the payment. To me renting is the really scary thing in Denver right now. The rising rental rates are an unpredictable hit to your income.

[bowlersp]

We are also sitting it out right now. There is a great peace of mind with renting and not owing hundreds of thousands to the bankers. Money wasted? That's what the banks want you to think. Time will tell...

BTW the only people that own their homes are people that have paid it off, all the rest of home owners are "renting" from the bank. Your interest you pay to the banks is pretty much the same thing as rent. A house that costs you 300k you will most likely pay an additional 300k in interest to the bank, depending on the loan terms.

Other pro's to renting, something breaks in the home you don't have to fix it

[ayoitzrimz]

Originally Posted by bowlersp

We are also sitting it out right now. There is a great peace of mind with renting and not owing hundreds of thousands to the bankers. Money wasted? That's what the banks want you to think. Time will tell...

BTW the only people that own their homes are people that have paid it off, all the rest of home owners are "renting" from the bank. Your interest you pay to the banks is pretty much the same thing as rent. A house that costs you 300k you will most likely pay an additional 300k in interest to the bank, depending on the loan terms.

Other pro's to renting, something breaks in the home you don't have to fix it

Perfect example of confirmation bias folks. Forgot to mention the following:

1. Peace of mind that your monthly mortgage payment is fixed (assuming you are on a fixed mortgage)
2. Tax deductions
3. The freedom to choose when and how I would fix something, hire the people I like for the job, and do it as best or as worst as I'd like
4. The freedom to do whatever I'd like to my house, without getting permission
5. The security that my landlord won't raise my rents or decide to evict me for other tenants
6. paying rent for 30 years and making mortgage payments for 30 years are not the same at all. At the end of the 30 years - well you know the difference
7. As an avid dog lover, I can have my two German Shepherds secure and know that I will not have to find a place for us to live with two dogs that are difficult to find housing for
8. I can rent out a room in my house to generate passive income
9. I have some equity in a house, although not very liquid. In a pinch, I can sell it or take out money against it (neither do I plan to do, but life doesn't care about my plan)

Just presenting my own confirmation bias for owning. There are two sides for every coin. Every person must weigh all options and make an educated decision that is best for THEM. But what you shouldn't do is go and find all the evidence you can to support whatever decision you already made. Make sure you are educating yourself and keeping an open mind.