Home prices in Colorado are rather steep, and only a few towns have high enough median salaries to justify them. There is nevertheless a lot of activity in the state’s real estate market, and it’s driving prices even further. Coloradans in return get some of the best ski resorts in North America and a very favorable property tax rate.
Home prices in Colorado tend to be higher than in most other states. According to the real estate tracker Zillow, the median home value in the Centennial State is $337,000. This is quite a bit higher than the national average, which stays around $200,000. Not only is Colorado above the national average, it’s also increasing at a faster pace.
Zillow estimates that home values in Colorado are increasing at more than 9% per year, above the national figure of 7%. According to NeighborhoodScout, a website that monitors demographics, local crime rates, and home values, the appreciation rate in Colorado is roughly 10%, which the website also estimates to be the national average. The S&P/Case-Shiller Home Price Index, one of the most widely followed real estate trackers, shows significant increases in home values in the state from 2011 onwards.
Zillow calculates the median list price in Colorado to be near $400,000, more than $60,000 higher than the median value. On a per-square-foot basis, the list price is $216. This is higher than the national average of $139. The National Association of Realtors puts the median sale price across the country at more than $250,000. So Colorado is more expensive judged by several indicators.
NeighborhoodScout shows that the majority of homes in Colorado are single-family dwellings, followed by apartment complexes. The three-bedroom single-family home is the most common type of house. According to figures from the NeighborhoodScout website, the most common home price in Colorado is between $136,000 and $409,000.
The real estate monitor Trulia has a heat map on its website that shows property values from green (low price) to red (high price). Compared to the rest of the country, the Centennial State has a lot of orange and red. Only a few places in the country, such as Boston, New York, and parts of California and Florida, show equal amounts of heat. Most states are green.
According to NewHomeSource, a group of 32 home builders in the United States, there are more than 400 construction companies in Colorado that are currently building new homes. The prices of these new dwellings can range from $37,000 for a small unit in an inexpensive town up to $3,000,000 for a luxury home in a more expensive area.
The S&P/Case-Shiller Home Price Index shows a gradual advancement in Colorado home prices up until the Great Recession of 2007. A fairly modest decline begins in the spring of 2006 in Denver and continues, at a more rapid pace, until the spring of 2009, at which time prices pick back up again. They stalled in the summer of 2010, only to start upwards once again. Property values were back to pre-crisis levels as early as 2013. By Q3 of 2017 home prices across the state were nearly 50% above the prior peak.
Although it took more than seven years for the real estate market in Denver to recover, the city’s revival is more impressive than the performance of many other property markets around the country.
Take Chicago as an example. The Windy City saw home values plummet by more than 35% during the housing crisis. Denver’s home price index only declined 11% during the same timeframe. And as we have already seen, property values in Denver are now fully recovered. Chicago is still struggling to get back to pre-Recession values, more than a decade later.
The S&P/Case-Shiller National Average Home Price Index also demonstrates Denver’s above-average performance during and after the housing crisis. According to the index, it took until October 2016 for the national average to recover from the housing crisis, and the index shows only a very small increase since the Recession.
The personal finance company WalletHub analyzed the performance of the real estate markets in various American cities post-crisis. It found some cities like Newark, New Jersey still well below 2007 levels. One of the best performing cities in its survey was Denver. WalletHub noted that Denver property values have advanced far beyond 2007 levels.
According to Trulia, the property market in Colorado Springs also has delivered excellent performance. The real estate website compared home prices in 2007 to the same homes in 2017 in one hundred American cities. It found that only 34% of homes had recovered to pre-Recession prices. In Colorado Springs, 93% of homes had met or exceeded 2007 values. Such strong performance in the Centennial State bodes well for the future of real estate there.
From 1984 to 1989 homeownership rates across the state slid from 64.7% to 58.6%. Homeownership then boomed, peaking at 71.3% in 2003. This rate has since slide to 62.4% in 2016.
|CO Rank||US Rank||Metro Area||2016 Pop||2010 Pop||Change||% △|
The largest city in Colorado is Denver, and the Denver metro area is the most populated region of the state. With roughly 3 million people, it breaks into the top 20 among America’s most populated areas.
Denver’s economy is diverse with a variety of engines. The city is Colorado’s capital, so naturally there is a large public sector. Private companies that employee many people include Lockheed Martin and United Airlines. Energy and mining also play a key role in the area’s economy; notable companies include Halliburton and Rio Tinto Group.
The median price in Denver for a single-family detached home is $420,000, and the average price is $490,000, according to the Denver Metro Association of Realtors. The group estimates that the average time a home is on the market is about one month. Zillow pegs the average home value in the city at $386,000.
The average condo sale price in Denver is approximately $320,000. Condos typically stay on the market an extra ten days, compared to detached single-family houses. There are about 1,200 condos on the market at any one time.
The median household income in Denver County is $54,000 according to the U.S. Census Bureau. This produces a home value-to-income ratio of 7.1, which is fairly high compared to national standards.
Aurora and Denver, both part of Colorado’s largest populated area, are growing faster than other municipalities in the state.
According to the Denver Business Journal, Denver, the city is not only popular locally, but is the second most popular city nationally to live in, behind only New York City. Other experts who rated cities consider Colorado Springs as one of the top places to live, when considering cost of living, unemployment, green spaces, and other factors. Other areas rated as desirable places by some experts for various reasons, and that might be popular at least among some groups of people for those same reasons include:
Some of the best values in real estate will be found in Pueblo County. Trulia estimates the average list price to be $218,000, while the median sale price is a much better $167,000. Zillow’s home value index for Pueblo is $141,000. The property tracker grades the city an 8.4 out of 10 for real estate health, which is considered very healthy. With a typical annual income of just under $42,000, the area has a home value-to-income ratio of 3.4, much better than Denver’s.
Schools, hospitals, and government bureaucracies are major employers in the region. Vestas Wind Systems operates the largest wind turbine factory in the world just outside of Pueblo.
Although some real estate experts point out that real estate prices in Colorado are one-third what they are in some other popular areas, like California, they also note there might be some obvious reasons prices are still above the national average. Some reasons include: the natural beauty of the state, including a mountainous area six times the size of the whole country of Switzerland, with many mountains more than 14,000 feet high; the amount of outdoor recreation available; the largest city park system in the country in Denver; a mild climate; and more than 30 major colleges and universities.
There are several ski towns in the Centennial State including Aspen, Vail, Breckenridge, Telluride, Steamboat Springs, Crested Butte, Winter Park & Keystone.
Vail is located an hour and a half west of Denver, with the local economy derived mostly from tourism. NeighborhoodScout lists the median home value in Vail at north of $650,000. Apparently, being near the slopes comes at a price. The Zillow home value index actually lists the number at north of $900,000 with an annual increase at nearly 12%. The real estate website also displays a property market health grade of 9.7 out of 10.
The tourism industry is strong in Vail, boosting median incomes to$68,000. Based on Zillow’s figure, this produces a home value-to-income ratio of 13.2, the worst figure in our survey.
As of July 1, 2016 the state of Colorado has an estimated population of 5,540,545 across 104,094 mi² yielding a population density of 52.0 people per mi² across the state.
The following table highlights the July 1, 2016 populations of cities, towns & Census Designated Places (CDP) with over 1,000 residents based on United States Census Bureau estimates. For Census Designated Places (CDP) where there was no population estimate available for 2016, the 2011-2015 American Community Survey 5-Year Estimates data was used.
All table columns are sortable. Click on the column headers to sort by that column. Click again to sort low to high. Cities with higher levels of population growth typically see the increased demand drive faster real estate price appreciation.
|Rank||Geography||County||2016 Pop||2010 Pop||Change||% △||Land mi²||Pop Den mi²|
|2||Colorado Springs||El Paso||465,101||416,427||48,674||11.69%||194.54||2,390.77|
|3||Aurora||Arapahoe, Adams & Douglas||361,710||325,078||36,632||11.27%||154.73||2,337.68|
|6||Thornton||Adams & Weld||136,703||118,772||17,931||15.10%||34.84||3,923.74|
|7||Arvada||Jefferson & Adams||117,453||106,433||11,020||10.35%||35.14||3,342.43|
|8||Westminster||Adams & Jefferson||113,875||106,114||7,761||7.31%||31.55||3,609.35|
|Highlands Ranch CDP||Douglas||104,432||96,713||7,719||7.98%||24.26||4,304.70|
|13||Longmont||Boulder & Weld||92,858||86,270||6,588||7.64%||26.19||3,545.55|
|20||Littleton||Arapahoe, Jefferson & Douglas||46,333||41,737||4,596||11.01%||12.98||3,569.57|
|21||Northglenn||Adams & Weld||38,982||35,789||3,193||8.92%||7.41||5,260.73|
|22||Brighton||Adams & Weld||38,314||33,352||4,962||14.88%||19.98||1,917.62|
|Security-Widefield CDP||El Paso||34,836||32,882||1,954||5.94%||13.64||2,553.96|
|Dakota Ridge CDP||Jefferson||33,580||32,005||1,575||4.92%||9.28||3,618.53|
|Ken Caryl CDP||Jefferson||33,021||32,438||583||1.80%||9.72||3,397.22|
|Pueblo West CDP||Pueblo||30,440||29,637||803||2.71%||70.43||432.20|
|Columbine CDP||Jefferson & Arapahoe||24,709||24,280||429||1.77%||6.65||3,715.64|
|27||Erie||Weld & Boulder||22,803||18,135||4,668||25.74%||17.18||1,327.30|
|28||Windsor||Weld & Larimer||22,776||18,644||4,132||22.16%||24.44||931.91|
|Cimarron Hills CDP||El Paso||16,746||16,161||585||3.62%||6.06||2,763.37|
|36||Johnstown||Weld & Larimer||15,389||9,887||5,502||55.65%||13.52||1,138.24|
|Fort Carson CDP||El Paso||14,742||13,813||929||6.73%||8.71||1,692.54|
|39||Superior||Boulder & Jefferson||13,155||12,483||672||5.38%||3.96||3,321.97|
|Black Forest CDP||El Paso||12,918||13,116||-198||-1.51%||100.65||128.35|
|Cherry Creek CDP||Arapahoe||12,087||11,120||967||8.70%||1.68||7,194.64|
|The Pinery CDP||Douglas||11,384||10,517||867||8.24%||10.36||1,098.84|
|Castle Pines North||Douglas||10,360||10,360||0||0.00%||9.01||1,149.83|
|Roxborough Park CDP||Douglas||9,859||9,099||760||8.35%||9.23||1,068.15|
|Woodmoor CDP||El Paso||8,427||8,741||-314||-3.59%||6.27||1,344.02|
|Twin Lakes CDP||Adams||6,698||6,101||597||9.79%||1.65||4,059.39|
|64||Cherry Hills Village||Arapahoe||6,585||5,987||598||9.99%||6.21||1,060.39|
|Gleneagle CDP||El Paso||6,470||6,611||-141||-2.13%||2.42||2,673.55|
|Orchard Mesa CDP||Mesa||6,385||6,836||-451||-6.60%||3.88||1,645.62|
|67||Berthoud||Larimer & Weld||6,368||5,105||1,263||24.74%||11.43||557.13|
|Stratmoor CDP||El Paso||6,035||6,900||-865||-12.54%||2.83||2,132.51|
|Air Force Academy CDP||El Paso||5,864||6,680||-816||-12.22%||9.99||586.99|
|71||Lochbuie||Weld & Adams||5,719||4,726||993||21.01%||3.74||1,529.14|
|Dove Valley CDP||Arapahoe||5,600||5,243||357||6.81%||3.73||1,501.34|
|76||Manitou Springs||El Paso||5,317||4,992||325||6.51%||3.16||1,682.59|
|Shaw Heights CDP||Adams||4,760||5,116||-356||-6.96%||0.7||6,800.00|
|Battlement Mesa CDP||Garfield||4,689||4,471||218||4.88%||11.57||405.27|
|Castle Pines Village CDP||Douglas||4,504||3,614||890||24.63%||4.97||906.24|
|84||Monte Vista||Rio Grande||4,266||4,444||-178||-4.01%||2.59||1,647.10|
|88||Basalt||Eagle & Pitkin||3,921||3,857||64||1.66%||1.98||1,980.30|
|Todd Creek CDP||Adams||3,879||3,768||111||2.95%||9.84||394.21|
|West Pleasant View CDP||Jefferson||3,830||3,840||-10||-0.26%||1.49||2,570.47|
|Castle Pines CDP||Douglas||3,614||3,614||0||0.00%||4.97||727.16|
|El Jebel CDP||Eagle||3,526||3,801||-275||-7.23%||5.33||661.54|
|Lincoln Park CDP||Fremont||3,222||3,546||-324||-9.14%||3.76||856.91|
|Ponderosa Park CDP||Elbert||3,211||3,232||-21||-0.65%||14.54||220.84|
|Strasburg CDP||Adams & Arapahoe||3,027||2,447||580||23.70%||20.8||145.53|
|Acres Green CDP||Douglas||2,921||3,007||-86||-2.86%||0.6||4,868.33|
|101||Palmer Lake||El Paso||2,637||2,420||217||8.97%||3.09||853.40|
|Holly Hills CDP||Arapahoe||2,560||2,521||39||1.55%||0.57||4,491.23|
|103||Bennett||Adams & Arapahoe||2,488||2,308||180||7.80%||5.56||447.48|
|Colorado City CDP||Pueblo||2,249||2,193||56||2.55%||13.7||164.16|
|108||Center||Saguache & Rio Grande||2,234||2,230||4||0.18%||0.83||2,691.57|
|Coal Creek CDP||Jefferson, Boulder & Gilpin||1,894||2,400||-506||-21.08%||9.39||201.70|
|Leadville North CDP||Lake||1,815||1,794||21||1.17%||2.55||711.76|
|119||Idaho Springs||Clear Creek||1,746||1,717||29||1.69%||2.17||804.61|
|Perry Park CDP||Douglas||1,727||1,646||81||4.92%||8.55||201.99|
|123||Del Norte||Rio Grande||1,598||1,686||-88||-5.22%||1.01||1,582.18|
|Alamosa East CDP||Alamosa||1,576||1,458||118||8.09%||3.61||436.57|
|Cascade-Chipita Park CDP||El Paso||1,561||1,655||-94||-5.68%||13.5||115.63|
|130||Mountain Village||San Miguel||1,415||1,320||95||7.20%||3.38||418.64|
|Indian Hills CDP||Jefferson||1,380||1,280||100||7.81%||4.68||294.87|
|Aristocrat Ranchettes CDP||Weld||1,275||1,344||-69||-5.13%||1.86||685.48|
|Pine Brook Hill CDP||Boulder||1,263||983||280||28.48%||2.92||432.53|
|Aetna Estates CDP||Arapahoe||1,165||834||331||39.69%||0.13||8,961.54|
|Floyd Hill CDP||Clear Creek||1,153||998||155||15.53%||5.27||218.79|
|Upper Bear Creek CDP||Clear Creek||1,143||1,059||84||7.93%||3.79||301.58|
Annual Estimates of the Resident Population: April 1, 2010 to July 1, 2016
Source: U.S. Census Bureau, Population Division
Release Date: May 2017.
Residents of Colorado have a variety of loan options available to them. Fixed-rate loans are common, including terms of 10, 15, 20, and 30 years. Adjustable-rate mortgages (also known as ARM loans) can be found as well. An interest-only option is available, too.
The most popular type of mortgage in the Centennial State is the 30-year fixed rate loan. Homeowners choose this term because it produces a low monthly payment. However, because the mortgage lasts three decades, the total amount of interest that must be paid throughout the life of the loan is far higher than with a 15-year mortgage. Switching to a shorter term can literally save hundreds of thousands of dollars just in interest.
ARM loans are also common because they have lower initial APR’s than 30-year fixed loans. However, the interest rate on an adjustable-rate mortgage can change (that’s why it’s called an adjustable-rate loan). Typically, the rate goes up after a certain number of years. For example, a 5/1 ARM loan has a fixed rate for 5 years, and then the rate changes once every year for the remaining term. There are also 3/1, 5/1, 7/1, and 10/1 ARM loans available in Colorado.
Interest-only loans are available in Colorado, although they are less common. Under this scheme, payments are applied for a fixed number of years to interest only, meaning that the principal does not go down. Typically, it is for 3, 5, 7, or 10 years, just like the ARM loans. Once the target date arrives, the mortgage is re-amortized with a variable rate, and all future payments are applied to both interest and principal. This increases the monthly payment, of course. Banks that provide these loans normally require a 20% down payment. They also want to see debt-to-income ratios less than 40%, although many factors are considered on a loan application. These numbers are expected with any credit score.
The piggyback loan is another type of mortgage available to Colorado residents. This is simply two mortgages in one. The piggyback loan can eliminate the need for private mortgage insurance by covering 80% of the home's value with the first loan, while the second loan helps to pay for part of the down payment. This mortgage is a good way to avoid the standard 20% down payment, which is required by most private banks issuing loans.
Relatively high real estate prices around the Denver metro area make a large portion of loans jumbo mortgages, as they exceed the conforming limit. As of 2020 the conforming loan limit across the United States is set to $510,400, with a ceiling of 150% that amount in areas where median home values are higher. Jumbo loans typically have a slightly higher rate of interest than conforming mortgages, though spreads vary based on credit market conditions. Here are the conforming mortgage limits in different areas of the state.
|County||Metropolitan Area||1 Unit Limit||2 Unit Limit||3 Unit Limit||4 Unit Limit|
Borrowers who don’t qualify under these standards might find better deals through government programs. The Veterans Administration, for example, assists former members of the armed forces in acquiring necessary financing. A VA loan is sponsored by a private home loan company, although the VA insures the mortgage. Remarkably, the VA does not require any down payment.
The Federal Housing Administration also provides mortgage services. Unlike the VA, the FHA does require a down payment, although it is only 3.5% with a credit score of 580 or higher. Borrowers with lower scores can still get by with only putting 10% down, half the amount a private-sector mortgage company requires. The FHA does require insurance premiums on any loan that has a down payment less than 20%.
USDA loans can help people with low incomes in rural parts of the state qualify for a subsidized low-interest loan.
The state government operates the Housing Choice Voucher Program in conjunction with the Department of Housing and Urban Development. There are a variety of housing options available to low-income families through the state’s program.
Homeowner's insurance policies typically do not cover flooding. Most of the state of Colorado is considered to have a very low flooding risk. Montrose county has a low flooding risk. Boulder, Clear Creek, Eagle, Fremont, Gunnison, La Plata & Rio Grande counties have a moderate flooding risk.
Home buyers with mortgages in high-risk areas are required to buy flood insurance. Most flood insurance policies are sold by the United States federal government through The National Flood Insurance Program. Under-priced flood insurance in high-risk areas act as a subsidy to wealthy homeowners.
The NFIP does not charge nearly enough to cover the expected costs of its liabilities. The assessments are not sufficient to build any buffer to cover an extraordinary year, such as what occurred with Hurricane Katrina in 2005 or Hurricane Sandy in 2012. Because homeowners don't incur the full cost of building in a flood zone we end up with more houses there than if homeowners incurred the full cost of the flood risk, which exacerbates the government's costs in the next disaster.
Homeowners who live in lower risk areas & are not required to purchase flood insurance heavily cross-subsidize homeowners who are in areas where floods are more common.
Colorado has a low earthquake risk, with the risk jumping to moderate along the central portion of the area of the state near the southern border. Standard rental and homeowner insurance policies typically do not cover earthquake damage, though they usually cover losses caused by fires which resulted from an earthquake. You can supplement your homeowner's insurance with an earthquake policy.
The eastern portion of the state is considered to have a moderate tornado risk. A basic homeowners policy should cover financial damages from tornadoes.
Hail damage is common across the eastern half of the state. Damage from hail is typically covered by home insurance policies.
According to the largest newspaper in the Centennial State, The Denver Post, home owners in Colorado pay one of the lowest property taxes in the nation. In 2016, the effective tax rate assessed against single-family homes was just 0.52%. This is less than half the national average of 1.15%. The 0.52% figure is a state average. Residents in Grand Junction paid on average just 42 basis points, while Denver was the most expensive city at 0.56%. On average, single-family home owners paid $2,046 in property taxes in 2016.
The Gallagher Amendment was added to Colorado’s constitution in 1982. It limits the amount of property tax the government can collect from residential properties to just 45% of its total real estate tax revenue. The other 55% must come from commercial properties. The 45/55 ratio is set at the state level, meaning that some cities could be far from this figure.
Colorado is a recourse state. This means a lender can pursue a variety of assets owned by a borrower if the borrower defaults on the mortgage. Foreclosures operate outside of the judicial system. Under Colorado law, lenders have the right to file a lawsuit after a nonjudicial foreclosure if a property’s market value isn’t enough to cover the remaining balance on the mortgage.
The Centennial State has a strong property market that blew through the Great Recession without a hitch. The state has a strong economy with good income levels, but above-average home prices may put larger residences out of reach for some buyers. For additional information on the housing market in the Centennial State, browse through the following sites:
US 10-year Treasury rates have recently fallen to all-time record lows due to the spread of coronavirus driving a risk off sentiment, with other financial rates falling in tandem. Homeowners who buy or refinance at today's low rates may benefit from recent rate volatility.
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