Why The Housing Market In Colorado is Unsustainable!

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In a massive, gentrified new house down the street, a young couple is “downsizing” from their usual mountain property in Colorado and descending on your neighborhood. Soon, the sweet old lady down the street will be robbed of her backyard sunlight due to their garage expansion. 

It’s well within their rights. They bought the lot. But their behemoth of a house is going to drive the cost of living in the neighborhood up to be sure, and potentially force out residents who have built their lives there for a decade. 

Although the median price of a freestanding home in Denver fell from $660,000 to $650,000 in June, the prices are still well above 2021. In Colorado, the statewide average is $750,143 for a single-family price, 14 percent higher than last year’s average. 

Gentrification 

According to The Bold, CU Boulder’s student publication, Denver is the second most gentrified city in the country behind only San Francisco-Oakland. The publication notes that neighborhoods now known as “The Highlands” and the “RiNo District” are drastically different in inhabitants and buildings than in years past, and due to gentrification, are now occupied mostly only by middle-to-upper-class white people. 

Not only does it force previous residents out, but often results in their lots being bought out and their buildings being torn down, which are then replaced by state-of-the-art houses for top dollar on the market. 

The average cost of living month-to-month in Colorado is $2,095 — 1.08 times more expensive than the average nationwide. The Centennial State was named the 14th most expensive state in the U.S. 

Below is a list of the most populated cities in Colorado and their cost of living averages, based on rent and utilities, groceries, transportation, price of eating out, and other factors:

  • Denver – $2,384
  • Colorado Springs – $2,033
  • Boulder – $2,346
  • Fort Collins – $2,027
  • Pueblo – $1,802
  • Grand Junction – $1,690
  • Aurora – $1,986

The average salary in Denver in 2021, for example, is $82,329, with 24 percent of income put towards rent or housing. More often than not, everyday residents are forced to pay premium prices for housing without having a Tesla in the garage or a dream luxury kitchen design, just because their neighbors have those things. 

Homeless Crisis

According to data from the first phase of Metro Denver Homeless Initiative’s annual point-in-time count for 2022, first reported by The Denver Post, roughly 800 more people are experiencing homelessness than in January 2020—a 12.8 percent increase. 

A report from the U.S Department of Housing and Urban Development shows Colorado’s chronically homeless population grew by 266 percent between 2007 and 2021, which is the most of any state in that time period. The lack of affordable housing is the number one reason for the state’s increase in homelessness. 

Those that need to spend 30 percent or more of their income on housing are considered “cost burdened,” and those that spend 50 percent or more are “severely cost burdened.” 

By the numbers, from Colorado Public Radio: 

  • Colorado’s minimum wage is $12.32 per hour 
  • Denver’s minimum wage currently sits at $15.87 per hour, but will rise to $17.29 starting Jan. 1, 2023.
  • Coloradans have to earn $27.50 per hour to afford to rent a two-bedroom apartment at fair market rent and not spend more than 30 percent of their total income
  • Roughly 150,000 households in the state were considered severely cost burdened in January 2020, and that number is expected to double soon
  • 30 percent of Colorado households make less than $45,000 annually, according to the U.S. Census Bureau 
  • The number of housing units affordable to households making $15,000 or less fell from about 105,000 to about 83,000 from 2010 to 2019.
  • Households making $75,000 or more saw the number of available units grow from about 953,000 to more than 1.5 million units from 2010 to 2019.

Those most plagued by homelessness include veterans, those fleeing domestic violence or abusive situations, families, and seniors. 

How Is Colorado Addressing the Housing Crisis?

In response to rent prices going up 13 percent and home prices increasing 20 percent in the last year, the Affordable Housing Transformational Task Force in Colorado (a group of state lawmakers, nonprofit organizations, and housing developers) introduced a record-breaking housing campaign to provide more affordable housing statewide. The $400 million of federal relief money the state received during the pandemic is being proposed to be used to tackle the state’s housing crisis. The plan must be approved by the full legislature, but if passed, would provide loans, tax credits, and grants for designated affordable housing. Below is a breakdown of how the money in the proposal would be used, first outlined by Andrew Kenney of Colorado Public Radio: 

  • $150 million for grants for nonprofits and local governments for affordable housing. 
  • $150 million for loans to support affordable housing projects and the maintenance of existing housing.
  • 35 million to support land banks, resident-owned mobile home communities and more.
  • $40 million for an “innovative housing incentive program” that will support the prefabricated housing industry, from mobile home construction to 3D printing and other technologies that can speed up construction while lowering the cost.
  • $25 million for a “middle income access program” that will support housing development for people making up to 120 percent of an area’s median income. This “missing middle” group is generally excluded from the main federal program that supports affordable housing.

But it’s still an uphill battle, despite the state potentially using funds in this proposal that would generally equal what they’d spend on housing in a decade or more. The number of homes for sale has nearly doubled in 2022 compared to a year ago, and prices are generally only moving in one direction. 

This proposal is a loud message that the state is working to combat the increasingly impossible task of their homeless and affordable housing crisis, but it may have come too late. As homeless rates and housing costs continue to substantially increase annually, the market in the state is moving towards California and Hawaii levels of unsustainable. 

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