Denver Home Prices Up 20.3% Since Last Year
The Case-Shiller Home Price Index for the entire year of 2021 was released on February 22, and the average year-over-year home price in the Denver area increased by 20.3%. This index tracks the prices of single-family, existing houses, that have sold in arms-length transactions. It does not track new construction, condos, or properties that were sold in non-arms-length transactions. A non-arms-length transaction is a sale that occurs between two parties who are somehow related (parents selling a house to their children, for example).
What does this 20.3% increase in price mean to you, and what should you do about it? Here’s what you need to know.
Denver Home Prices
First of all, how much is 20.3%? Here are some examples of how much homes prices have increased in the last year.
Price on January 1, 2021 = $200,000. Price now = $240,600. Price increased by $40,600.
Price on January 1, 2021 = $300,000. Price now = $360,900. Price increased by $60,900.
Price on January 1, 2021 = $400,000. Price now = $481,200. Price increased by $81,200.
Price on January 1, 2021 = $500,000. Price now = $601,500. Price increased by $101,500.
Price on January 1, 2021 = $600,000. Price now = $721,800. Price increased by $121,800.
The price increases represent the amount of money homeowners have made on their houses in the past year. Regardless of the price of your house, if you owned a house in the Denver area for the past year, you made a lot of money.
This raises two questions. Will the price increases continue, and what should you do with the extra money you made on your house?
Supply & Demand
Housing prices are determined by one thing only, and that is supply and demand. If more people want to buy houses than there are people willing to sell them, house prices will continue to go up. In the Denver area, there are no indications that the shortage of houses will go away anytime soon. Builders are not building many houses because the cost of building materials is much more expensive than it was before the pandemic, and Denver is a very attractive place to live for many people. It’s beautiful, the weather is nice, it’s close to all kinds of recreational and entertainment opportunities, and it’s high on the list of places that many people who are affected by global warming want to live.
Regarding what to do with all the money you have made by owning a house for the past year, here are some of the more common things our clients are doing with their new-found wealth.
What To Do With Your Wealth
With inflation increasing, short-term interest rates will soon be raised by the Federal Reserve, meaning credit cards and personal loans will have higher interest rates. If you have significant credit card or personal loan debt, you may be able to pay off all of those debts with the equity you have in your house. It’s not uncommon for people to have hundreds or even thousands of dollars of credit card and personal loan payments due each month. By consolidating those debts into your mortgage, your mortgage payment may go up a bit each month, but the overall amount you have to pay can go way down. If you can lower your monthly bills by hundreds or thousands of dollars each month, that’s the same as getting a tax-free raise of that amount.
Some people would like to start investing in real estate by purchasing a second home or a rental property. You can use the equity you have in your current house for the down payment on an additional house.
If you have been planning to remodel your house, you can use the equity for those projects.
Really, you can do anything you would like with the money you have made on your house.
Refinancing Your Mortgage
Refinancing a mortgage is easy, and the best part is that it doesn’t cost anything to find out if it makes sense to refinance. All you have to do is contact us and we will get you going in the right direction. If refinancing doesn’t make sense for you, we will tell you that, too.
Be smart with your money. Contact us today.