Wondering if you can afford a home in the Denver market? The dream is still alive!
There are many factors to take into consideration such as income, expenses, credit score, and down payment. RE Colorado has an affordability calculator, giving you estimate based on your personal situation. It is something to consider using to initiate making your dream come true.
The good news from experts is that the key factors that determine housing affordability are projected to improve this year. On a personal note, the strategy is simply making the best future plans using the most current information you’ve got and spend some time organizing your financial picture. This allows you to start the process a bit more grounded, equipped with realistic numbers you know you can live with.
ENT Credit Union has published an article on how has home affordability changed in Colorado based on the criteria of 10% down payment 6% interest rate with a 30-year fixed mortgage.
The article states, “Another common rule of thumb is the 28/36 rule. According to this rule, a household shouldn’t spend more than 28% of their gross income on their total housing expense and no more than 36% on total debt payments.”
“Denver locals need to earn 38.7% more than a year ago to afford the region’s median-value home, per the latest analysis by real estate company Redfin,” reports Axios Denver.
Mortgage rates, home prices and wages will impact home affordability. Although mortgage rates shot up to over 7% last year, things are looking different today as rates are beginning to come down. The good news here is that mortgage rates are lowering as inflation is slowing down.
If 7% rates paused your homebuying plans last year, this could be the opportunity you need to get back in the game. Be sure to work with a team of experts at Katchen Company, who understand the latest on mortgage rates and can give you the best advice for the current market.
What About Prices?
Another huge factor is home prices, that have been in the headlines nationwide, over the past few years because they skyrocketed during the pandemic. Discussing home prices in 2023, Lawrence Yun, Chief Economist at NAR, says: “After a big boom over the past two years, there will essentially be no change nationally. Half of the country may experience small price gains, while the other half may see slight price declines.”
So, while prices will remain mostly flat this year, the biggest factor depends on the area you are looking at to buy into. For an educated insight into what’s happening in your local market and how prices are impacting affordability, reach out to a trusted real estate professional at Katchen Company.
Finally, what affects if you can afford a home in Denver, is wages, which have increased over time. As Mike Fratantoni, Chief Economist at the Mortgage Bankers Association (MBA), says: “Rates are expected to move lower for the year, and home price growth is expected to cool, both of which will help affordability challenges.”
So, while affordability challenges are not going away this year, current trends and projections point out that 2023 should bring some sense of relief to those considering buying a home. The word is to take advantage of the strategies you can use to help fit the monthly payment in your budget. Work with our specialized team of brokers at Katchen Company, that will help you locate an experienced lender with affordable options that will help get you into your future dream home.
You can get the answers to your in depth questions if you reach out to Ed Boyle, here is the link to his calendar to set up an appointment that will be most convenient for you.