Denver Real Estate Discussion / Opinion Thread (NO Data Charts) (Sheridan: cost, transportation)

[Jobster]

Originally Posted by illinoisphotographer

I have no idea what you're talking about.

Denver's economy isn't highly based on oil, and if the price of oil drops, homes aren't going to drop in value.

There are over a hundred thousand new people to the area each year. There's no shortage of buyers for the limited housing stock we have. Will it keep increasing at 10%/year like the last 3-5 years? No. I'd bet it levels off in the next year or two. We're already seeing a lot of homes fall out of contract due to appraisal prices not coming in and sellers being greedy. But I can see the entry level houses being at the $340-350k mark and staying there.

I agree.

[MZMpac]

Just to chime in with an anecdote here, my wife and I bought a house last summer in Littleton for $330k. Our mortgage is about $1900 (we didnt make a large down payment).

We gross about $140k, and between the mortgage, my student loans, and our savings goals, we are tapped out every paycheck.

Main reason why we are considering moving.

[Jobster]

Originally Posted by Stevedore

The "Oil Shock" your talking about wrecks California not Colorado. Public transportation/Rail is actually a viable option here as opposed to whatever LA is offering up these days.

An oil shock raises the price of almost everything that requires transportation.

[illinoisphotographer]

Originally Posted by Jobster

An oil shock raises the price of almost everything that requires transportation.

Sure, but that'd be nationwide, not just CO.

[illinoisphotographer]

Originally Posted by MZMpac

Just to chime in with an anecdote here, my wife and I bought a house last summer in Littleton for $330k. Our mortgage is about $1900 (we didnt make a large down payment).

We gross about $140k, and between the mortgage, my student loans, and our savings goals, we are tapped out every paycheck.

Main reason why we are considering moving.

Grossing $140k should put you in around $100k after taxes. $2k/month is $24k. Is moving elsewhere with a lower total CoL going to pay similar salaries to actually have a net increase and maintain the quality of life you currently have?

Not that I'm judging your financial situation, but it would seem like $100k/year net should be enough to cover a 2k house payment comfortably.

[Count David]

Originally Posted by MZMpac

Just to chime in with an anecdote here, my wife and I bought a house last summer in Littleton for $330k. Our mortgage is about $1900 (we didnt make a large down payment).

We gross about $140k, and between the mortgage, my student loans, and our savings goals, we are tapped out every paycheck.

Main reason why we are considering moving.

Yeah, but will you still gross $140K somewhere else?

Do you have debt besides the student loans? I make about $25K less than you, my mortgage is only $250/mo cheaper than yours, my other monthly bills total $1150, and I am left with $5400/mo for savings/investments/food/necessities/entertainment/recreation/etc.

You should have $9800/mo left pretax after the mortgage.....?

[MZMpac]

Originally Posted by illinoisphotographer

Grossing $140k should put you in around $100k after taxes. $2k/month is $24k. Is moving elsewhere with a lower total CoL going to pay similar salaries to actually have a net increase and maintain the quality of life you currently have?

Not that I'm judging your financial situation, but it would seem like $100k/year net should be enough to cover a 2k house payment comfortably.

Originally Posted by David Aguilar

Yeah, but will you still gross $140K somewhere else?

Do you have debt besides the student loans? I make about $25K less than you, my mortgage is only $250/mo cheaper than yours, my other monthly bills total $1150, and I am left with $5400/mo for savings/investments/food/necessities/entertainment/recreation/etc.

You should have $9800/mo left pretax after the mortgage.....?

It is. We are not truly tapped out, but we do save about 30% of our income. And my student loans (medical) are huge. Yyoooge.

And yes, our salaries would be about the same or higher in most places. So to make the same pay and cut our cost of housing in half?? Even with more property?? It's tough to ignore that reality even though we like Colorado.

[emm74]

Originally Posted by MZMpac

It is. We are not truly tapped out, but we do save about 30% of our income. And my student loans (medical) are huge. Yyoooge.

And yes, our salaries would be about the same or higher in most places. So to make the same pay and cut our cost of housing in half?? Even with more property?? It's tough to ignore that reality even though we like Colorado.

That's great that you are saving that much, but that's not a reasonable benchmark to say that someplace is unaffordable if saving almost 1/3 of your income leaves you without a lot of disposable income. But if Denver doesn't work for you, and you can earn the same in a lower COL area, then sure, you should move. For many people, a lower cost area means a lower salary.

[Jobster]

Wow, reading through this thread, there is some serious delusion going on. I think people don't understand how the economy works.

Interest rates are rising, the dollar is strengthening, and growth has slowed to a standstill.

What do you think will happen next? Liquidity injection? Perhaps. If not that, then what?

[MN_Ski]

Originally Posted by Stevedore

The "Oil Shock" your talking about wrecks California not Colorado. Public transportation/Rail is actually a viable option here as opposed to whatever LA is offering up these days.

A wreck in California would probably be a somewhat of a wreck for Colorado as well. A lot of home price growth is due to strong buying power from coastal equity and investment. I'm not going to make an assumption that the majority of home buyers doing the bidding are from California...but Californians do make up about 40% of in migration (according to tax data from last year).

I also just read an article saying that 25% of commercial real estate purchases are by Californian investors.

We are also in the middle of a global housing bubble. Just read all the stories about 20%+ appreciation in London, Toronto, Vancouver, and other markets in Australia and New Zealand. If one of those markets pop, it's going to cause a chain reaction to all the other markets. All of the foreign investors that bought up all the luxury stock, only to leave it sit empty as a piggy bank, will probably decide to cash out over night.

Specifically in SF and LA, if all the Chinese buyers decide to sell at once, maybe due to an economic slow down in their home country, it would surge the inventory causing a correction. The second people see prices level off, many are going to panic and sell.

Again, I don't think we will have a crash like last time, but I do believe there are some major risk opportunities that get overlooked. There are too many on the "It's different this time" side of the discussion, without realizing that there is more than one way for a real estate market to correct/crash.