The Denver real estate market has been a hot topic of conversation in recent years, with skyrocketing home prices and growing demand for rental properties as more people move to the metro.
According to a recent report by Redfin, it’s cheaper to rent than it is to buy a home in the Denver metro but keep in mind real estate is cyclical. Home purchase prices have far outpaced growth in rental rates because Denver has had a historic run with home equity growth.
These equity gains are not just a thing of the past though, they are also a thing of the future.
Want to know more about this report and what it means for Denver buyers and sellers? Read on for a deeper look.
A Historic Run in Home Equity Growth
Denver’s real estate market has experienced a historic run in home equity growth, making it an attractive destination for prospective homebuyers. The city’s lifestyle and proximity to the mountains are just two reasons why people are continuing to move to the Mile High City. This influx of people and the demand for Denver properties likely won’t slow down anytime soon either.
According to Redfin, the affordability gap between renting and buying in the Denver metro is primarily due to the substantial increase in home purchase prices surpassing the growth in rental costs. This phenomenon has made homeownership particularly opportunistic for those who have invested in Denver’s real estate market in the past. But again, this trend is not confined to the past; it also holds promise for the future.
The Prospects of Future Equity Gains
For individuals considering Denver as their home, the potential for future equity gains is something to consider. If Denver continues to thrive and grow in the coming years, as it’s expected to, the trend of equity gains will likely persist. This implies that investing in real estate in Denver could not only provide a comfortable living environment but also offer a potential avenue for long-term financial growth.
Balancing Market Dynamics
Despite the allure of homeownership, renting remains a more affordable option for many individuals in Denver’s current market. The slower pace of rent growth compared to the surge in home purchase prices has created a gap that favors renting.
Denver isn’t alone in this dilemma though. In other cities like Seattle, Miami, Orlando, Dallas, Kansas City, Oakland, San Francisco, Nashville, Los Vegas, and Washington, D.C., it’s cheaper to rent than buy a home, according to Redfin.
While renting provides immediate affordability and flexibility, owning a home offers long-term benefits such as potential equity gains and stability. As the market cycle continues to evolve, prospective buyers and renters must carefully evaluate their financial situations, long-term goals, and personal preferences before making a decision. That said, if you want to build long-term equity and plan to live in Denver for 7 or more years, buying a home is a worthwhile investment.
