In Denver's tight housing market, does it make more sense to rent or buy?

DENVER -- If you’re going to pay $1,000 or more a month to rent an apartment in Denver, would you be better off buying instead?

A quick search of Craigslist finds no shortage of apartments renting for well over a grand in the Mile High City.

Do a little more searching, and you’ll find some condos and townhouses selling in the $100,000 to $200,000 range.

Depending on your financial situation, your monthly payments on a mortgage for one of those properties could potentially be less than the cost of rent for a similar apartment.

Take this listing for a 487-square-foot studio condo in West Washington Park, for example. Its listed price is just under $165,000.

Angela Smith with the HomeSmiths Team at Keller Williams Realty says that’s a rare find in Denver’s tight housing market.

The median price for a 1-bedroom home in Denver has been steadily rising and currently stands at about $250,000, according to real estate website Trulia.

The HomeSmiths mortgage calculator estimates a 30-year fixed-rate mortgage with 20 percent down and an interest rate of 4.5 percent would have monthly payments of about $847 per month for the West Washington Park condo.

Many similarly-sized studio apartments in the area rent for around the same amount, if not more.

Smith said that from her perspective, buying always makes better financial sense than renting, since you’re making an investment and building equity.

“Renters are just paying someone else’s mortgage or someone else’s loan,” Smith said.

With home ownership, you’re adding to your financial portfolio, Smith said, noting that the average homeowner has a net worth about 45 times greater than the average renter.

Not everyone can secure a mortgage on a home, however. Smith said renting might be a better option for people who don’t have credit or those who can’t get someone to cosign on a loan.

Renting can also be a better option for those who are new to the city and those who aren’t ready for a long-term investment.

Smith said now is a great time to buy, since interest rates are incredibly low – averaging between 3.5 and 4 percent on a 30-year mortgage.

Of course, there can be drawbacks to buying, such as added costs. If something breaks, you’re the landlord so you’re responsible for repairs. There are also property taxes to pay and sometimes homeowner’s association fees.

With a rental, you’re often responsible only for rent and utilities.

There are many factors that play into a decision on whether to rent or buy, and the New York Times has a great tool on its website that can help you weigh all those variables.

In the end, the decision is a personal one and there’s no right answer for everyone.