Pueblo Property Prospects: Why Buying A Home Here Is A Smart Move

Pueblo, Colorado is a steadily growing area with a lower cost of living compared to nearby Colorado Springs and Denver. The city has a strong economy, transitioning from industrial to technological fields, and has a growing military presence. Pueblo's real estate market is becoming more competitive, with increasing prices and a tightening inventory.

The median price for a single-family home in Pueblo reached $310,000 in 2022, a 19% increase from the previous year. However, the cost of entry is still lower than other nearby areas. Pueblo offers a range of housing options, from beachfront condos to mountain single-family homes.

Investing in real estate in Pueblo has its advantages and disadvantages. On the one hand, the area's growing economy and increasing home values can lead to potential appreciation and equity building. On the other hand, there are factors like high acquisition costs, possible depreciation, and the challenge of timing the market correctly.

Overall, buying a home in Pueblo can be a good investment, especially for those seeking a lower cost of entry and the potential for long-term growth. However, it is important to carefully consider your financial situation and do thorough research before making any decisions.

The pros of buying a home in Pueblo

Affordability

Pueblo has a lower cost of living compared to other nearby areas such as Colorado Springs and Denver. This means that the cost of buying a home in Pueblo is substantially lower than in other areas. For example, in 2022, the median price for a single-family home in Pueblo was $310,000, while in Colorado Springs it was $470,000 and in Denver, it was $635,000. This lower cost of entry makes Pueblo an attractive option for investors and homebuyers.

Steady Growth

Pueblo's economy and population are steadily growing. The city's economy is transitioning from industrial entities to technology-focused fields, attracting interest from aerospace and technological industries. The infrastructure and available land in Pueblo also make it an appealing option for businesses. The population of Pueblo has been steadily increasing over the past 20 years, indicating that people want to live in the area. This steady growth makes Pueblo a viable option for long-term home-buying investors.

Housing Options

Pueblo offers a variety of housing options, including beachfront condos, mountain single-family homes, townhouses, and vacation homes. Whether you are looking for a short-term rental or a long-term residence, Pueblo has something to offer. The city also has a range of neighbourhoods that appeal to different types of renters, such as the downtown and Riverwalk areas, which are being revitalized.

Rental Potential

The lower cost of living in Pueblo makes it an attractive option for renters, particularly those looking for more affordable rental housing. This can be a good opportunity for investors as they can target this pool of tenants. Additionally, there is a substantial spillover of the tech industry from Colorado Springs to Pueblo, and military personnel and their families often move to Pueblo for more affordable housing. These factors can increase the demand for rental properties in Pueblo.

Tax Benefits

Owning a home in Pueblo can provide certain tax benefits. For example, homeowners can deduct mortgage interest and property tax payments from their taxes. These deductions can result in significant savings for homeowners.

The cons of buying a home in Pueblo

Pueblo, Colorado has a lot going for it. However, there are some drawbacks to consider before buying a home in the city. Here are some of the cons of buying a home in Pueblo:

• City Infrastructure: Pueblo's infrastructure is in need of upgrades. The city's utility services are outdated, and there are challenges with adopting new technology. This can impact the daily lives of residents and the ability of the city to attract new businesses and adapt to changing economic and social opportunities.
• Unemployment Rate: Pueblo's unemployment rate is higher than the state and national averages. The city's job market is stagnant, and the shift towards more specialized and technologically demanding careers can make it challenging for older workers or those with less training to find employment.
• Public Education: The quality of public education in Pueblo is cited as a weak point when compared to other cities in Colorado. The Pueblo County Education District could benefit from improvements, although there are some well-regarded charter and private schools in the area.
• Crime Rate: Pueblo has a high rate of crime, including violent and property crimes. The presence of guns and gang violence contributes to this issue. Certain areas of the city are particularly associated with higher rates of crime, and substance abuse is also a concern.
• Cold, Snowy Winters: Pueblo experiences cold and snowy winters, with temperatures ranging from the teens to the 50s and an average of 25 inches of snow.
• Spring Windstorms: In the spring, Pueblo can be subject to strong winds due to extreme air pressure differences between the mountains and plains. These windstorms can be damaging and destructive.

While Pueblo offers many positives, such as its affordable cost of living, beautiful natural scenery, and cultural attractions, it is important to consider these potential drawbacks before making a decision to buy a home in the city.

The potential for home appreciation in Pueblo

Pueblo, Colorado has seen a steady increase in its real estate market, with a median home price of $310,000 in 2022, up 19% from the previous year. This is a significant increase, but the cost of entry is still lower than nearby areas such as Colorado Springs and Denver. Pueblo's Housing Price Index (HPI) has been consistently lower than that of Colorado Springs and the national average over the past 10 years, making it an attractive option for investors.

The city's economy is also growing and diversifying, with recent interest from aerospace and technological industries due to its infrastructure and available land. This growth is driving a construction boom in the area, with projects that could create 17,000 new dwelling units, more than double the amount approved in any year since 2003.

Pueblo also has a lower unemployment rate than Colorado Springs, and its population has been steadily increasing, indicating that it is a desirable place to live. All these factors contribute to the potential for home appreciation in Pueblo.

The city's transition to becoming more business-friendly, along with its abundance of water resources, further enhances its investment potential. Additionally, the local government's efforts to attract more investors, such as the proposed vacant property tax, could boost the real estate market and make it more attractive to buyers.

While there are challenges, such as a higher unemployment rate compared to Colorado Springs and the national average, and a riskier market, the overall trends indicate positive potential for home appreciation in Pueblo.

The costs of buying a home in Pueblo

Property Prices

The median home price in Pueblo has been steadily increasing. As of March 2024, the median home price reached $310,000, up 19% from the previous year and 8.7% from the beginning of the year. This increase in prices reflects a broader trend in Colorado, with nearby areas like Denver also experiencing record-high prices. Pueblo's median sale price is 37% lower than the national average, making it a relatively affordable option for homebuyers.

Closing Costs

When purchasing a property, it's essential to factor in closing costs, which typically range between 2% and 5% of the home's purchase price. These costs include various fees and charges associated with the real estate transaction, such as loan origination fees, attorney fees, and property taxes.

Repairs and Renovations

If you're considering buying an older home or a fixer-upper, be prepared for potential repair and renovation costs. The extent of these costs will depend on the condition of the property and the scope of work required. It's recommended to get a professional inspection before finalising the purchase to identify any significant issues and get an estimate of the repair costs.

Property Taxes

Property taxes in Pueblo vary depending on the assessed value of the home and the location within the city. It's important to research the specific tax rates for the area you're interested in purchasing.

Homeowner's Insurance

As a homeowner, it's crucial to protect your investment with adequate insurance coverage. The cost of homeowner's insurance can vary depending on the value of the home, the location, and the coverage limits you choose. Be sure to shop around and compare rates from multiple insurance providers to find the best policy for your needs.

Maintenance and Utilities

Once you've purchased your home, remember to budget for ongoing maintenance and utility costs. Maintenance expenses can include routine tasks like landscaping, minor repairs, and seasonal upkeep. Utility costs can vary depending on the size of the home and your personal usage, so it's essential to consider these ongoing expenses when planning your budget.

In conclusion, while buying a home in Pueblo offers a lower cost of entry compared to other areas in Colorado, there are still various costs to consider throughout the process. By researching property prices, understanding closing costs, and planning for ongoing expenses, you can make a well-informed decision about purchasing a home in this growing market.

The tax benefits of buying a home in Pueblo

• Mortgage Interest Deduction: You can deduct the interest you pay on up to $750,000 of mortgage debt ($375,000 if married and filing taxes separately). This deduction is particularly beneficial in the early years of your mortgage when you pay more interest.
• State and Local Property Tax Deduction: You can deduct state and local property taxes in the year you pay them. The deduction is limited to $10,000 per year ($5,000 if married and filing separately).
• Mortgage Points Deduction: If you paid discount points when taking out your mortgage, you can usually deduct them in the year you pay them. Each point equals 1% of your loan amount and lowers your interest rate.
• Private Mortgage Insurance (PMI) Deduction: If you put down less than 20% on a conventional loan, you may be able to deduct PMI payments. However, this deduction is subject to income limits and may not be available to higher-income earners.
• Home Office Deduction: If you run a business from your home or use part of it exclusively and regularly for business purposes, you may qualify for the Home Office Deduction. This deduction can be claimed by both homeowners and renters.
• Medically Necessary Home Improvements: As part of the medical expenses tax deduction, you can deduct the cost of medically necessary home improvements. This includes modifications like widening doorways, installing ramps, or adding railings.
• Capital Gains Tax Exclusion: If you sell your primary residence, you may be exempt from paying taxes on the first $250,000 of profit ($500,000 if married) if you've lived in the home for at least two of the last five years.
• Retirement Fund Withdrawals: The IRS allows you to use retirement funds to buy a house without incurring the usual tax penalties. Typically, early withdrawals from retirement accounts are subject to income tax and a 10% additional penalty.
• Residential Energy Credit: You can claim a tax credit for energy-efficient improvements to your home, such as installing solar panels or wind turbines. This credit ranges from 22% to 30% of the improvement cost and is valid until December 31, 2023.
• Alternative-Fuel Vehicle Refueling Property Credit: If you install refueling infrastructure for an alternative-fuel vehicle at your home, you may be eligible for a tax credit of up to $1,000 or 30% of the installation cost, whichever is lower.

Remember that tax laws and regulations can change, so it's always a good idea to consult with a tax professional or refer to the latest guidelines from the Internal Revenue Service (IRS) to ensure you're taking advantage of the most up-to-date tax benefits available to homeowners in Pueblo, Colorado.

Frequently asked questions