Insider: Two Birds, One Home – The Dual Benefits of Home Purchasing

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Insider: Two Birds, One Home – The Dual Benefits of Home Purchasing

The desire to invest in real estate makes sense. Whether you are investing to simply enjoy your own home, make a quality financial investment, or for the satisfaction of accomplishing both objectives, today’s continued low interest rates and Colorado’s position as a top place to live in the country, make a home purchase decision one that can satisfy both personal and financial goals.

In general, purchasing a home will always make more economic sense than renting for the long-term. Studies show that Americans can break-even on a home purchase in less than two years across 70% of U.S. metro areas thanks to low interest rates and healthy home value forecasts according to Zillow’s Breakdown Horizon analysis. However, home ownership does not come without risks. Buying may not make sense if you might be moving out of state in the next two years, and ultimately one’s purchase depends on personal lifestyle goals and financial situation.

Understanding where you fit into the real estate purchasing puzzle will help you determine if now is the right time for you to buy or sell your home. By investing in a property today, you will be accomplishing two goals with one home purchase; the benefit of personal home ownership, and a solid investment for your future.

Many people, particularly Millennials, will typically rent until they have been employed for several years and feel comfortable that their future earning potential looks promising. They spend months balancing the idea of making their first real estate investment as opposed to a care-free world of flexibility and very little responsibility. Let’s face it; buying a home is a very adult-like decision. Most younger adults would like to purchase a home at some point, but are staying in school longer, getting married later in life, paying off student loans, and living with parents longer (in hopes of saving money).

In 2015, 31% of 18-34 year olds were living with their parents, according to the Demand Institute (a non-profit think tank). And 2015 was the first time in almost 10 years that first time buyers made up 30% of home sales.

There are two other demographics playing dominant roles on the buy-side of residential real estate and will play a key part in providing necessary inventory (homes for sale).

The Gen-Xers are in their prime earning years seeking good neighborhoods for their families. They can economically provide more for themselves. Although the number of younger households are increasing, the number of households headed by someone 50 or older has grown the fastest- The Baby Boomers (52-70 years old). These households are moving for many diverse reasons including: less maintenance, proximity to family, recreation, employment, dining, sporting and cultural events, new lifestyle opportunities, downsizing, and even upsizing. They are in more of a position to afford what sounds good to them.

In 2014, a Merrill Lynch retirement study showed that nearly half of all retirees (49%) did not down-size and 30% actually moved into larger homes. The primary reasons were to have ample space for family and friends to visit and they wanted more common space for entertaining. The 51% that did down-size preferred to trade-in square footage for more luxury features and a wider range of amenities.

According to a recent CoreLogic report, prices appreciated 6.3% nationwide in 2015 while national economic reports range from 4.5% to 6% projected for 2016. Zillow recently projected which cities will be in the top ten markets for 2016. Topping the list were cities that have great job growth in the tech industry. Denver was #1 followed by Seattle and Dallas at #3.

It is extremely difficult to “steal” a property in Denver’s healthy market. However, the good news is that by purchasing a new home that you are excited about, you will have made a solid investment, plus earn the long-term benefit of enjoying your own home.

LIV Sotheby’s International Realty compiles monthly, quarterly and year-end reports to help consumers make better real estate decisions, whether purchasing or selling a home. To access current market reports visit www.coloradomarketreports.com. To service all of your real estate needs visit www.livsothebysrealty.com.

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