Denver salaries vs housing question (townhome, neighborhoods, buying)
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As a first time home buyer, I don't have 20% down. For a $350k house, that'd be $70k, or just more than a year's salary for me. That would take me years and years to accomplish with the low rate savings accounts that are available.
An ideal home would be between $150k-$200k for me, as a first time buyer. And even then I'd only have around 10% at best to put down at this moment.
Your issue is with the down payment then. If you haven't been working for a while, it's hard to buy a house even if your income is higher. Work for another 3 years and you'll have enough to buy a 300k house. That's how people buy houses. They don't expect to buy a property just a couple of years out of school. But they don't expect to get a house in Denver for less than 200k either. I can't remember the last time I saw a house of that price in Denver, much less 150k. Your income is enough to support a 300k house, and I've shown you the numbers. Whether you want to buy a house or not is an entirely different question. But I guarantee you won't have to eat ramen if you don't like its taste.
Where in Commerce City? A fair portion of Commerce City is heavily industrial - meaning you'll be in the shadow of the water treatment plant, the Cherokee Power Plant, and/or the Suncor Refinery. If it's Reunion it won't be as bad, but you'll be really close to the airport and the Adams County Landfill.
I'll admit I'm not familiar with the area.. but as long as we aren't talking 5th Ward type of of environment... well we are talking about a beginning home. Not everyone can, or should, own their own home necessarily.
As to the "metro area" idea... coming from the Houston environment, I see anything out to Evergreen/Conifer/Castle Rock/Bennet etc. as the "Denver Metro". I'm sure that doesn't jive with residents, but considering the Houston Metropolitan area stretches from Conroe to Galveston (90 miles) and Sugarland to Baytown (50 miles), that's my frame of reference. To think there isn't something within that area for a single person to find.. well like I said I don't know the area. I'm actually surprised that Boulder and those areas are considered in their own metro area.
I will agree with Lafleur on the "amount of house" issue. Our mortgage (house payment, property taxes, second mortgage payment... stupid 80/20 financing) was a mistake at 30% of my take home. We've fought to be as close to debt free as possible so my wife could quit her job and be a "stay at home mom", but that payment is still too high IMO to be adequately saving. At this point, the house is the only "debt" we have as both cars are paid for, no credit card debt, and finished paying off the student loans about 8 years ago. We managed to save back about 6 months of expenses for an emergency, plus a little chunk to help with a down payment next time to avoid that 80/20 mistake Of course that was all while she was still making big oil company (over $100k) and I was making around $70k.
I would really say that anything over 25% of your take home (not gross) for a mortgage/property taxes/insurance is too much to allow for adequate savings... but that's just my opinion after dealing with it and never feeling like we have extra cash. Looking back with that great 20/20 hindsight, if we could do it over again we would have kept renting and living like we were still in college until everything was paid off and we had a real down payment. But of course, fresh out of college we did what most do and needed new cars, wanted our first home, and a few other stupid mistakes (timeshares are the devil!!!).
I'll admit I'm not familiar with the area.. but as long as we aren't talking 5th Ward type of of environment... well we are talking about a beginning home. Not everyone can, or should, own their own home necessarily.
As to the "metro area" idea... coming from the Houston environment, I see anything out to Evergreen/Conifer/Castle Rock/Bennet etc. as the "Denver Metro". I'm sure that doesn't jive with residents, but considering the Houston Metropolitan area stretches from Conroe to Galveston (90 miles) and Sugarland to Baytown (50 miles), that's my frame of reference. To think there isn't something within that area for a single person to find.. well like I said I don't know the area. I'm actually surprised that Boulder and those areas are considered in their own metro area.
I will agree with Lafleur on the "amount of house" issue. Our mortgage (house payment, property taxes, second mortgage payment... stupid 80/20 financing) was a mistake at 30% of my take home. We've fought to be as close to debt free as possible so my wife could quit her job and be a "stay at home mom", but that payment is still too high IMO to be adequately saving. At this point, the house is the only "debt" we have as both cars are paid for, no credit card debt, and finished paying off the student loans about 8 years ago. We managed to save back about 6 months of expenses for an emergency, plus a little chunk to help with a down payment next time to avoid that 80/20 mistake Of course that was all while she was still making big oil company (over $100k) and I was making around $70k.
I would really say that anything over 25% of your take home (not gross) for a mortgage/property taxes/insurance is too much to allow for adequate savings... but that's just my opinion after dealing with it and never feeling like we have extra cash. Looking back with that great 20/20 hindsight, if we could do it over again we would have kept renting and living like we were still in college until everything was paid off and we had a real down payment. But of course, fresh out of college we did what most do and needed new cars, wanted our first home, and a few other stupid mistakes (timeshares are the devil!!!).
A personal financial planner could have helped you. Your income should have been enough to quickly pay off debt and build up a good down payment.
Honestly, not having a conversation with a financial planner was probably a worse mistake than buying a car or a house.
It looks like there is a couple of things going on here. First, the OP mentioned that the salaries don't match the housing costs in the metro Denver area. I definitely agree with that as the salaries don't allow a person to buy a nice / new home unless you make over 100K. The average salary in the Metro area is between 50K to 60K and for a single person it makes it twice as hard to save up for a down payment let alone for an updated or new house that is over $350K. This means there has to be a reduction of expectations. Most people are after updated homes and do not like to buy fixer uppers that may be more affordable on their salary. Most people have to compromise with a condo or townhome and reduce their expectations. This makes it harder if they have pets.
Another alternative is to commute long distances to buy a cheap house as an example I have a friend who just bought a home in Evans which is close to Greeley a few months ago for $90,000 this was 3/2 older home with a small yard and surprisingly didn't need much work. This same house here would be at least three times more expensive depending on the location. This person's work is in Thornton about a 40 mile commute, but they only work at the office 2 days a week and telecommute for the rest of the week so it is a big advantage for him. He is making around $60K, wife is a stay at home mom with two kids and their monthly payments including insurance, property tax is around $600. This is a good example of where they are able to save up and build equity until someday they can sell this house and move to another better location. Again, I wouldn't like to do such a long commute and live in such a small city far from the big city, but for some people it is the only way to get ahead and have savings as this was a concern for some posters here.
It looks like there is a couple of things going on here. First, the OP mentioned that the salaries don't match the housing costs in the metro Denver area. I definitely agree with that as the salaries don't allow a person to buy a nice / new home unless you make over 100K. The average salary in the Metro area is between 50K to 60K and for a single person it makes it twice as hard to save up for a down payment let alone for an updated or new house that is over $350K. This means there has to be a reduction of expectations. Most people are after updated homes and do not like to buy fixer uppers that may be more affordable on their salary. Most people have to compromise with a condo or townhome and reduce their expectations. This makes it harder if they have pets.
Another alternative is to commute long distances to buy a cheap house as an example I have a friend who just bought a home in Evans which is close to Greeley a few months ago for $90,000 this was 3/2 older home with a small yard and surprisingly didn't need much work. This same house here would be at least three times more expensive depending on the location. This person's work is in Thornton about a 40 mile commute, but they only work at the office 2 days a week and telecommute for the rest of the week so it is a big advantage for him. He is making around $60K, wife is a stay at home mom with two kids and their monthly payments including insurance, property tax is around $600. This is a good example of where they are able to save up and build equity until someday they can sell this house and move to another better location. Again, I wouldn't like to do such a long commute and live in such a small city far from the big city, but for some people it is the only way to get ahead and have savings as this was a concern for some posters here.
The problem here is that the entire metro is expensive. I don't even want to live in the city necessarily, or have brand new this or that, upgraded this or that, nor do I want a $350k home (or at least what I envision a $350k home to be). I'm totally down to buy a fixer upper in a decent area. But you can't escape this, even if you venture out into the suburbs. The only mildly affordable place might be somewhere like Englewood, and maybe certain parts of Aurora. But every other suburb in Metro Denver is also inflated in pricing.
As a comparison, I could find a ton of reasonably priced homes in Metro Detroit's suburbs, which are far better off than the major city. My sister and her fiance bought a nice 3-BR home with a basement for under a $100k in my hometown, which is a few miles north of the Detroit border. There are a bunch of other cities where it would have been possible to find an affordable single-family home as well, not to mention townhome or condo.
That is not the case in Denver's metropolitan area. Arvada is expensive, Littleton is expensive, Westminster is expensive, Thornton is expensive, Broomfield is expensive, Golden is expensive, Wheat Ridge is becoming expensive (and these are your dinky, small single-family ranch homes that would be perfect for a first time buyer; good luck finding something under $250k though). I'm not even going to mention Cherry Hills, Centennial, DTC, Lone Tree, Parker, etc. Those places are outrageous, and they are far from the city core. The problem with Denver's metro is that it is small, comparably to other large metros, and there aren't any affordable suburbs to live in besides (as I mentioned earlier) perhaps Englewood and some of the ghetto parts of Aurora. That's it though. Otherwise, you have to do like your friend and live out in farm country to find something reasonable. Heck, my buddy's sister bought a house out in Dacono, which is way the heck up north, and it was over $250k.
That's the frustrating part, especially as a first time buyer. If I had a ton of equity built up from a previous home, it would probably be a non-issue. This metro area is just not a good place to be a first time buyer IMO. It's probably fine if you have a decent amount of equity from real estate from another high COL area like NYC, CA, or Chicago.
FWIW, I live in a no frills 1-BR apartment on the border of Aurora in a run down community that hasn't had an investment in it in probably a decade or more. Amenities include a broken down laundry room, a disgusting outdoor pool that is barely cleaned, and a security gate that hasn't been functional or closed in the year and a half that I've lived here. That's it! It costs me approximately $800/month and this is "cheap". And I'm like 15 miles away from downtown. There is literally nothing nice around me, unless you count the Wal Mart across Hampden. Denver's real estate market is generally very, very expensive relatively speaking. You're better off living in a place like LA, Chicago or NYC, where at least you have accessible, reliable, affordable public transit to and from the city if you can't afford to live near it.
The problem here is that the entire metro is expensive. I don't even want to live in the city necessarily, or have brand new this or that, upgraded this or that, nor do I want a $350k home (or at least what I envision a $350k home to be). I'm totally down to buy a fixer upper in a decent area. But you can't escape this, even if you venture out into the suburbs. The only mildly affordable place might be somewhere like Englewood, and maybe certain parts of Aurora. But every other suburb in Metro Denver is also inflated in pricing.
As a comparison, I could find a ton of reasonably priced homes in Metro Detroit's suburbs, which are far better off than the major city. My sister and her fiance bought a nice 3-BR home with a basement for under a $100k in my hometown, which is a few miles north of the Detroit border. There are a bunch of other cities where it would have been possible to find an affordable single-family home as well, not to mention townhome or condo.
That is not the case in Denver's metropolitan area. Arvada is expensive, Littleton is expensive, Westminster is expensive, Thornton is expensive, Broomfield is expensive, Golden is expensive, Wheat Ridge is becoming expensive (and these are your dinky, small single-family ranch homes that would be perfect for a first time buyer; good luck finding something under $250k though). I'm not even going to mention Cherry Hills, Centennial, DTC, Lone Tree, Parker, etc. Those places are outrageous, and they are far from the city core. The problem with Denver's metro is that it is small, comparably to other large metros, and there aren't any affordable suburbs to live in besides (as I mentioned earlier) perhaps Englewood and some of the ghetto parts of Aurora. That's it though. Otherwise, you have to do like your friend and live out in farm country to find something reasonable. Heck, my buddy's sister bought a house out in Dacono, which is way the heck up north, and it was over $250k.
That's the frustrating part, especially as a first time buyer. If I had a ton of equity built up from a previous home, it would probably be a non-issue. This metro area is just not a good place to be a first time buyer IMO. It's probably fine if you have a decent amount of equity from real estate from another high COL area like NYC, CA, or Chicago.
FWIW, I live in a no frills 1-BR apartment on the border of Aurora in a run down community that hasn't had an investment in it in probably a decade or more. Amenities include a broken down laundry room, a disgusting outdoor pool that is barely cleaned, and a security gate that hasn't been functional or closed in the year and a half that I've lived here. That's it! It costs me approximately $800/month and this is "cheap". And I'm like 15 miles away from downtown. There is literally nothing nice around me, unless you count the Wal Mart across Hampden. Denver's real estate market is generally very, very expensive relatively speaking. You're better off living in a place like LA, Chicago or NYC, where at least you have accessible, reliable, affordable public transit to and from the city if you can't afford to live near it.
I hope it doesn't surprise you that Denver is more expensive to live in than Detroit.
The problem here is that the entire metro is expensive. I don't even want to live in the city necessarily, or have brand new this or that, upgraded this or that, nor do I want a $350k home (or at least what I envision a $350k home to be). I'm totally down to buy a fixer upper in a decent area. But you can't escape this, even if you venture out into the suburbs. The only mildly affordable place might be somewhere like Englewood, and maybe certain parts of Aurora. But every other suburb in Metro Denver is also inflated in pricing.
As a comparison, I could find a ton of reasonably priced homes in Metro Detroit's suburbs, which are far better off than the major city. My sister and her fiance bought a nice 3-BR home with a basement for under a $100k in my hometown, which is a few miles north of the Detroit border. There are a bunch of other cities where it would have been possible to find an affordable single-family home as well, not to mention townhome or condo.
That is not the case in Denver's metropolitan area. Arvada is expensive, Littleton is expensive, Westminster is expensive, Thornton is expensive, Broomfield is expensive, Golden is expensive, Wheat Ridge is becoming expensive (and these are your dinky, small single-family ranch homes that would be perfect for a first time buyer; good luck finding something under $250k though). I'm not even going to mention Cherry Hills, Centennial, DTC, Lone Tree, Parker, etc. Those places are outrageous, and they are far from the city core. The problem with Denver's metro is that it is small, comparably to other large metros, and there aren't any affordable suburbs to live in besides (as I mentioned earlier) perhaps Englewood and some of the ghetto parts of Aurora. That's it though. Otherwise, you have to do like your friend and live out in farm country to find something reasonable. Heck, my buddy's sister bought a house out in Dacono, which is way the heck up north, and it was over $250k.
That's the frustrating part, especially as a first time buyer. If I had a ton of equity built up from a previous home, it would probably be a non-issue. This metro area is just not a good place to be a first time buyer IMO. It's probably fine if you have a decent amount of equity from real estate from another high COL area like NYC, CA, or Chicago.
FWIW, I live in a no frills 1-BR apartment on the border of Aurora in a run down community that hasn't had an investment in it in probably a decade or more. Amenities include a broken down laundry room, a disgusting outdoor pool that is barely cleaned, and a security gate that hasn't been functional or closed in the year and a half that I've lived here. That's it! It costs me approximately $800/month and this is "cheap". And I'm like 15 miles away from downtown. There is literally nothing nice around me, unless you count the Wal Mart across Hampden. Denver's real estate market is generally very, very expensive relatively speaking. You're better off living in a place like LA, Chicago or NYC, where at least you have accessible, reliable, affordable public transit to and from the city if you can't afford to live near it.
Do you know the #1 reason why you can get a house in metro Detroit for around 100k? Because it's Detroit. Honestly the only thing Detroit and Denver have in common are the first two letters of the city name.
Denver's a desirable metro area with a fairly diverse economy, relatively low crime, and low unemployment. Detroit, OTOH, is a rustbelt cesspool with a 12% unemployment rate, crime through the roof and a 40-60% poverty rate. I'm sure the 'burbs are nice, but it's the blighted poster child for urban decay right next door that's bringing everything else down.
I hope it doesn't surprise you that Denver is more expensive to live in than Detroit.
Of course, and I'm not talking about Detroit proper. I'm talking about the suburbs, which are significantly nicer. But I'm betting you've never stepped foot in either, whereas I've seen and lived in both worlds. The suburbs of Detroit are some of the nicest, but there are also affordable "blue-collar" type suburbs. Which is my point. Denver doesn't seem to have these kinds of suburbs, which would be ideal for a first time buyer.
Do you know the #1 reason why you can get a house in metro Detroit for around 100k? Because it's Detroit. Honestly the only thing Detroit and Denver have in common are the first two letters of the city name.
Denver's a desirable metro area with a fairly diverse economy, relatively low crime, and low unemployment. Detroit, OTOH, is a rustbelt cesspool with a 12% unemployment rate, crime through the roof and a 40-60% poverty rate. I'm sure the 'burbs are nice, but it's the blighted poster child for urban decay right next door that's bringing everything else down.
I bet you've never been to the Metro Detroit area, and yet you speak as if you're some sort of knowledgeable person on it. The suburbs and the city are two competely different realms. If you have ever visited it, you would see this interesting dynamic at work. Some of the Detroit suburbs are very, very nice. But as I pointed out to AmFest, there are also nice, working-class suburbs that are more affordable to common folk and first time buyers. That is not so much the case in Denver Metro. You either gotta make bank or you sacrifice financial well-being for lifestyle (think ski bums and potheads). There is not much in between.
I bet you've never been to the Metro Detroit area, and yet you speak as if you're some sort of knowledgeable person on it. The suburbs and the city are two competely different realms. If you have ever visited it, you would see this interesting dynamic at work. Some of the Detroit suburbs are very, very nice. But as I pointed out to AmFest, there are also nice, working-class suburbs that are more affordable to common folk and first time buyers. That is not so much the case in Denver Metro. You either gotta make bank or you sacrifice financial well-being for lifestyle (think ski bums and potheads). There is not much in between.
So, you can't afford Denver. It happens. Not everyone can afford it. Maybe make an effort to move to another city then that you can afford. Is it fair? not really but that is the reality. In this life you don't get what you deserve only what you can afford. With that reality in mind, while you are still young is the time to experiment with other cities and find somewhere that has what you are looking for. And as a heads up, that dynamic is everywhere - either gotta make bank or sacrifice something for something else. Not exactly earth shattering news man.
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Of course that was all while she was still making big oil company (over $100k) and I was making around $70k.
