Should You Buy a House in Denver, Colorado in 2017?

With steadily rising home prices, and a recent drop in mortgage rates, many Denver residents are now asking the question: Should I buy a house in Denver, Colorado in 2017? Here’s one way to look at it.

Last week, the mortgage-buying corporation Freddie Mac reported that the average rate for a 30-year home loan fell to its lowest point of 2017. On average, borrowers last week were locking in rates just under 4%.

Home prices in Denver, meanwhile, continue to rise. This means that those who postpone their home purchases until later in 2017, or early 2018, will likely encounter higher housing costs. So one could argue that now is a great time to buy a house in Denver, as we head into summer of 2017.

Should I Buy a House in Denver in 2017?

Should you buy a home in Denver this year? There is no simply “yes” or “no” answer to this question. It’s the kind of question that must be considered on an individual basis, due to the many variables involved.

But for many would-be buyers, current conditions in Denver are ideal for buying a home. Here are some recent real estate market and mortgage trends to help you decide if you should buy a home in 2017.

1. Mortgage rates recently sank to a yearly low.

Mortgage rates are lower now (May 2017) than they were at the start of the year. But there’s no telling how long they’ll stay in the current range. The average rate for a 30-year fixed mortgage fell to 3.95% during the week of May 25, 2017. That’s a decline of 25 basis points from the start of this year, when 30-year rates were averaging 4.20%.

Looking forward, however, analysts expect rates to inch upward between now and the end of 2017. In its May forecast, the Mortgage Bankers Association predicted that the average rate for a 30-year fixed home loan would climb to 4.6% by the fourth quarter of 2017.

So from a mortgage rate perspective, now could be a good time to buy a house in Denver, Colorado.

2. Denver home prices are still rising, but at a slower pace.

The Denver real estate market generated a lot of headlines over the last couple of years, mainly because of rapidly rising home prices. According to the real estate information company Zillow, the median house value in Denver rose by 10.3% over the last 12 months alone (as of May 2017).

And while prices appear to be slowing down, they’re expected to continue rising for the foreseeable future — to some degree. This outlook is the result of strong demand but limited inventory. It too makes a case for buying a home sooner rather than later.

As for the whole rent-versus-buy question, consider this. Earlier this year we did a real-world cost analysis that showed renters in Denver could buy a house without increasing their monthly housing costs. (See: renting versus buying in Denver)

3. Prices are rising fastest at the lower end of the market (starter homes).

Steve Danyliw, Chairman of the Market Trends Committee at the Denver Metro Area Association of Realtors, recently told Forbes that home prices in Denver are rising faster at the lower end of the pricing spectrum. This is noteworthy because it’s where first-time buyers tend to shop.

According to Danyliw:

“It now appears that we are entering a ‘high plateau’ as prices will continue a gradual leveling. Part of the reasoning for the high plateau is the dramatic increase in the prices of low-end properties.”

First-time buyers who are wondering if they should buy a house in Denver in 2017 or 2018 should pay close attention to this trend. Houses in the metro area will likely be more expensive next year than they are now. Here’s more advice for first-time buyers.

Get a mortgage payment estimate: Knowing how much you might pay each month will help you determine if now is the best time to buy. We can give you a personalized mortgage rate quote, along with a breakdown of your estimated monthly payments. Please contact us to get started.