The question we’re currently asked the most as real estate professionals by friends, colleagues, and clients who are still renting is whether it’s too late to buy a home. “Are we heading for a downturn?” “Are we too deep in the market cycle to buy?” “Did I miss the boat?” For those of you who read my newsletter, the following will sound familiar—but it bears repeating: predicting the real estate market favorably is extremely difficult (maybe even impossible) and those who try most often fail. So, instead of trying to predict the market, look at current factors like the ones below to see if home ownership is right for you.
1. You should buy a home when you feel it’s the right time in your life to do so. Are you getting married? Sick of paying skyrocketing rents? Looking for a bigger place for you and your family? Want your own backyard for the kids to play in? Want to be part of a neighborhood community? Plan on staying in one place for a number of years? Want to build long-term wealth? These are the types of questions you should ask yourself when considering whether you want to buy a home. 
If you answered yes to most of these questions, it might be the right time for you to buy a home.
One important statistic to keep in mind is that the average rental household in the U.S. has a total net worth of only $5,000. In contrast, the average homeowner has a net worth of $225,000 — that’s 45 times more than those who rent! There’s no doubt that over the long term, home ownership is the tried and true path to wealth accumulation and financial security.
2. Interest rates remain near record-lows, but they won’t stay that way forever. No one knows when rates will rise (remember, you can’t predict the market!), but eventually they will. Though home prices have risen in the past several years, the record-low interest rates have made them relatively affordable — especially compared to renting. However, once interest rates do rise, the window of home ownership affordability will begin to close for many potential buyers. Those who miss their opportunity to buy a house while interest rates are so low will inevitably regret it down the road.
3. The main reason the average homeowner has so much more personal wealth than the average renter is that, over time, homes appreciate in value. Over the past 45 years, homes in metro Denver appreciated on average 6.3 percent per year. If you buy a $200,000 home, you can expect over the long term its value to rise about 6 percent every year. This means you’d make $12,000 in appreciation the first year, an additional $12,720 the second year, another $13,483 in the third year, and on and on. An important fact to note is that in only 4 of the past 45 years did prices actually fall in metro Denver. If you want to build wealth for yourself instead of paying someone else’s mortgage, your best bet is to take advantage of these numbers and buy a home for the long term. Get in touch with us if you’re interested in discussing what’s right for you in our current real estate market.
