Historically Low Interest Rates No One Wants to Give Up
Let’s admit it – we got spoiled. The historically low interest rates of 2021 made buyers anxious to find a home, and homeowners dropping everything to refinance their higher-rate mortgages. Now, no one really wants to let go of these rates by selling their current home, only to start a new loan at least 4-5% higher. For instance, on a $500,000 home purchase at 2.5% mortgage interest rates, principle and interest is about $1,876 per month versus a 7% interest rate that puts the monthly payment at $3,160 per month. Plus, you still have property taxes and property insurance on top of that, which have been significantly increasing as well. That’s a big increase to the monthly mortgage payment, and simply not enough reason for homeowners to move.
Homebuyers Created Their Ideal Home During COVID
When life drastically and suddenly changed for us all, many homeowners had to make a decision. Do I move or do I stay and improve my home? Those who took the 2nd option just a few years ago, and put money and time into making their home a place that would work for them long-term, are now not wanting to give it up. Whether they added on, renovated, or simply rearranged to make their home fit their lifestyle, it extended their time in their current house by meeting their needs. Plus, the money homeowners put into renovations may not necessarily be recouped in a sale of the home, so they might as well enjoy their recent updates!
Cost of Living Has Increased, Including Colorado Homeowners Insurance
Nationwide, homeowner insurance rates has surged in the last few years, and “the price of reinsurance nearly doubled between 2018 and 2023, and this cost was largely passed on to homeowners,” according to Realtor.com. Some stats show Colorado was one of the worst affected states, with nearly 49% increase from 2023 to 2024 (NyPost.com Feb 2024). Not to mention the cost of everyday goods, services, and entertainment that have left us scurrying to find recipes made without eggs and alternative entertainment that’s more affordable. We’re all feeling the pressure of inflation and the financial pinch which requires balancing our spending. Moving can be an expensive journey, especially when there are unplanned costs. Many homeowners are choosing the safe route of staying where they are, even if that means making other sacrifices.
Affordability of Moving Back To Colorado
If a new job opportunity comes up out-of-state and you want to give it a go for a year, you may not want to sell your Colorado home. As the market changes and homes in Colorado continue to appreciate in value, there’s a chance you might be priced out of the market and not able to afford to come back. In 2022, the median home price in Colorado was 51% higher than the national median home price (Cost of Living in Colorado, RamseySolutions.com)! That means the odds are you’ll be paying less to purchase a home elsewhere in the United States, but returning to purchase in Colorado might be undoable if your job doesn’t work out. So instead, people are choosing to rent their homes, keeping another home off-market as options for current home buyers.
Granted, every story is different and homeowners may have other reasons for holding onto their homes, but Colorado homeowners specifically have to consider these factors in their decision to put their home up for sale in the current real estate market.
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