Home Payments Are Soaring

Aldo Svaldi wrote a story last for The Denver Post citing a Zillow study completed in May that showed the monthly payment on a typical metro Denver home was 55% higher than it was 12 months earlier. The “typical” payment is now $3394 a month according to Zillow.

Is Zillow’s percentage correct? I reviewed median prices of all sold properties May 2021 and May 2022 and I reviewed average mortgage rates for both months. With 20% down the monthly payment is 50% higher, rising from $1804 to $2712 a month. OUCH!

But, is renting making you money or building your wealth? NO! Let’s say you purchased a home for $500k and home value appreciation slows to our 51-year average of 6.50% this means your home appreciated by $32,500 or roughly $2700 a month. Plus on a $475k loan at 6% in 1 year you will have paid principal of over $5700 in the first year. Thus in total your wealth may increase by nearly $40k and this would not happen if you remain a renter.