Moving To Colorado Blog

The choice between renting a home and buying a home is not just a simple financial calculation. There are many other factors and questions.

The stereotypes surrounding buying versus renting a home are rapidly changing along with changes in the Colorado real estate market.

During the housing boom of the late '90s and early 2000s, renting a home was widely considered an inferior alternative to buying a home with rapidly increasing values. After 30 years of stability in home ownership rates, the United States tallied 12 million new homeowners between 1994 and 2004, according to Census Bureau data. In 1994, nearly 63 percent of Colorado residents owned homes. By 2004, more than 71 percent were homeowners. At that point, home ownership peaked and many people reconsidered renting.

In the Colorado real estate market, renting and buying each bring significant advantages and disadvantages. While buying a home may be attractive from a financial standpoint, there are other considerations.

Finances

Buying a home is a major investment that creates equity and brings significant tax breaks. A home also could turn a tidy profit. National real estate expert Barbara Corcoran recently predicted the Denver area will be the first housing market to recover from the housing slump. Moreover, Castle Rock home values have seen a lower rate of decrease than surrounding cities, according to Zillow. This translates to good deals in a relatively healthy market poised for an increase in values.

On the other hand, a Wall Street Journal financial expert argues for the financial advantages of renting a home. He suggests the stock market will increase faster than home values, so if rental costs are lower than mortgage payments, investing the extra money in stocks will result in better returns.

There are other financial downsides to buying a home. An exciting relocation to Colorado could be delayed by difficulty in selling a previous home. Also, a change in income or family budget could make it difficult to pay the mortgage. Renters can more easily trade up or down to meet their budget. They also won't face the threat of foreclosure.

Flexibility

Renting a home offers flexibility. Many are moving to Colorado for the outdoor lifestyle and natural beauty even if relocating means settling for a less-than-ideal job. These new residents may later find a lucrative job in the Denver Tech Center but are stuck with a long commute if they own a home. Those who are renting a home could easily move to a closer neighborhood, such as the Meadows in Castle Rock. They might also move to Castle Rock from a rental in Aurora or another eastern suburb for greater proximity to hiking trails and Rocky Mountains recreation.

Renters can also turn in their keys, move the furniture into storage and spend a month hiking the Colorado Trail or six months traveling through Europe. The responsibilities and costs of owning a home could make a spontaneous adventure prohibitive.

At the same time, homeowners have the flexibility to paint the walls, hammer in picture hooks or plant a vegetable garden without fear of losing a security deposit.

Upkeep

Some refer to renting a home as paying someone else's mortgage, but the monthly bill also includes a form of maintenance insurance. Rental contracts generally include provisions for the landlord to pay for many types of repairs. A homeowner is on the hook for all repairs and upkeep.

Stability

Many homeowners report pride and emotional satisfaction in buying a home. They may also feel like a more permanent part of a community if they own a home. 

Finally, to help make a smart decision, Bankrate.com has a simple questionnaire that helps recommend either buying or renting a home.

Written by Steve Graham