Recent Denver real estate studies show that until the last year, new Denver Metro real estate listings sold in a matter of weeks in many areas. Denver home prices escalated at a record pace. Financing a home purchase in the Denver Metro area was rarely a problem -- money was easy and interest rates were low. Few Denver Metro area buyers wanted to miss the opportunity to make fast money in a market that seemed to defy gravity.
What a difference a year makes. Now, the appreciation rate is running at a snail's pace, and declining in some areas. According to the National Association of Realtors, the median home price nationally declined a little over 1 percent in August from a year ago. This trend is expected to continue in the Denver Metro area through the end of 2006. Consequently, many Denver real estate buyers who were anxious to buy last year are standing on the sidelines, waiting to see what happens next.
Remarkably, there are still areas where the demand for new listings still exceeds the supply. In the desirable Highlands, Washington Park and affordably priced homes in Highlands Ranch, for example, offers are made quickly.
Regardless of whether you live in a Denver area where there's plenty for sale or if you are still battling other buyers for too few listings, it's time to return to the basics when considering a home purchase.
HOUSE HUNTING TIP: Until recently, Denver Metro home buyers bought not with an eye to a quick profit but in order to gain control over the place where they lived. As a Denver homeowner, you don't need the landlord's permission to make modifications to the property to suit your needs. You aren't at the mercy of a landlord who might raise the rent or ask you to move. Now there's no guarantee that you'll find a place to rent in a neighborhood where you'd like to put down roots. Also, Denver rents are rising after years of lackluster performance.
Additionally, Denver homeowners tend to take a serious interest in preserving and enhancing the quality of the neighborhoods in which they live. Renters tend to be transient.
The tax benefits of home ownership shouldn't be overlooked. While restrictions do apply, Denver homeowners can claim a deduction for mortgage interest and property taxes from their federal income tax returns. This effectively lowers the cost of home ownership for taxpayers who itemize deductions.
There are several other good reasons why this could be a good time to buy Denver Real Estate. One is that there is, in general, less competition from other buyers than there was a year ago. It's now possible to negotiate with sellers if the list price seems out of line. Another factor in your favor is that interest rates have recently eased and are still at historically low levels.
Of course, a risk of buying now is that Denver home prices could decline from their current level. David Lereah, NAR's chief economist, recently speculated that we will "probably see prices dip temporarily below year-ago levels as the market works through a build up in housing inventory."
So, why not wait to buy until Denver home prices start climbing again? That's certainly an option, if you can find a suitable rental. However, it's impossible to time the market. We'll know that prices have bottomed out for the cycle only after they have resumed their ascent.
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