Why Is Real Estate So Expensive In Colorado? (2024)

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Why Is Real Estate So Expensive In Colorado? ›

The cost of living in Colorado is high, which drives up the prices of homes. Colorado is known for its picturesque scenery, diverse terrain, and welcoming atmosphere, and these factors all contribute to the growing cost of living within the state.

Real estate in Colorado commands high prices for a variety of reasons. The state's heightened cost of living, strong demand for homes driven by its natural beauty and economic stability, limited housing supply, high real estate taxes, and above-average mortgage rates all contribute to the pricey market.

Best case prices will be down around 10% year over year in 2024. Although inventory will remain tight as rates keep people locked into their houses you should see it start to increase as the economy softens. Keep in mind, even with a 20% increase, Denver will still be up over 30% since the pandemic buying spree.

New York, Washington, Colorado, California and Hawaii are among the most expensive states, while the most affordable include Mississippi, West Virginia, Arkansas and Oklahoma. Hawaii is the most expensive state to live in, according to new cost of living data from doxo, an online bill payment service.

The median sale cost of a home in Colorado roughly doubled over the last ten years. Not only are the costs prohibitive, the housing supply is low, rent is increasing at alarming rates, and households are being pushed out of the neighborhoods that they have called home for generations.

A research group found Denver had the highest Cost of Living Index score among five Colorado cities. Meanwhile, Pueblo and Grand Junction were the least expensive cities to live in. The Cost of Living Index is based on a few categories, including housing and grocery items.

“Colorado's severe housing shortage is hurting families and communities in every corner of the state with Colorado now having the fifth highest housing costs in the country,” said Austin Blumenfeld, Executive Director of Centennial State Prosperity.

Housing scarcity in Colorado has created a seller's market, with almost 30% of homes in Colorado selling above list price in April of 2024 due to low inventory. Home prices have also increased by more than 40% in Colorado over the previous five years.

This indicates that the Colorado real estate market is pretty much competitive. The average months of home supply are 4 months YoY. A market with fewer months of supply indicates a seller's market. However, in July, the number of homes sold increased by 2% year-over-year.

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Pueblo tops the list with a median home price of $275,000, making it the most affordable city in Colorado. Located just 45 miles from Colorado Springs, Pueblo offers a blend of history and culture. Residents enjoy attractions like the Historic Arkansas Riverwalk and the Sangre de Cristo Arts Center.

Hawaii is the State with the Highest Cost of Living

The sunny state of Hawaii is the most expensive state to live in, with an average annual cost of living of $55,491.

The demand for Colorado real estate is high, due to the state's natural beauty and outdoor recreation opportunities. Colorado is a highly desirable state for real estate investors, due to its immense natural beauty and great variety of outdoor activities.

Economic Outlook Rank

Colorado is currently ranked 17^th in the United States for its economic outlook.

From thriving job markets and diverse lifestyles to a strong community and vibrant culture, Colorado offers a unique blend of experiences. Whether you're drawn by the state's natural beauty or its booming industries, Colorado is more than just a destination—it's a journey, an adventure, and a place to call home.

Buying real estate in Colorado is generally considered a good investment opportunity. Rental properties in Colorado can generate continuous passive income while also being profitable long-term investments thanks to rising home values.

One of the most robust long-term real estate investments in the U.S. historically is Colorado. In 2023, Colorado continues to be a seller's real estate market, with forecasters expecting prices to rise. The Colorado housing market still has home shortages despite an increase in the number of homes for sale in 2022.

Many Coloradans pay higher than average taxes, even adjusted for income. Despite effective tax rates being lower than average, the rapid increase in home values in Colorado over the past decade has made an impact. Colorado has the 27^th lowest median property tax payment in the nation.

Just a few weeks after an Aspen ranch sold for $77 million, earning the accolade as Colorado's most expensive home ever purchased, another transaction has swooped in to steal the title.