Between soaring real estate prices and higher interest rates, housing affordability continues to deteriorate in Colorado this year, leaving Gen Xers as one age group still able to buy a mid-priced home in Arapahoe and El Paso counties — but not Denver.
Denver went from the eighth least expensive urban housing market in the nation in February to the fifth least expensive, behind Miami, in March, according to a monthly survey from OJO Labs, an Austin-based real estate technology company. The survey found that the average Denver metro sale price rose more than 23% in the past year to $564,990 and is now 6.6 times the median household income.
Colorado Springs ranked the ninth least expensive metropolitan area for the second month in a row, with a median home sale price of $435,000, six times the median household income, according to OJO Laboratories. The nationwide comparable unaffordability score was 4.7 in March, up from 4.4 in February.
Point2Homes, in a separate study last month, looked at intergenerational affordability in the 100 largest US counties, comparing median household incomes against median home prices, as well as the wealth available to finance a down payment. Denver, Arapahoe, and El Paso counties are included, which have about 36% of the state’s population.
“Housing costs are gradually taking up more of the household’s income, making the issue of home affordability a multifaceted problem, one that needs local and personalized solutions,” said Carmen Ruguppetti, Communications Strategist at International Property Portal. Part of the Yardi Matrix.
Point2Homes split generations differently from the US Census Bureau and most demographics. Generation Z was defined as 15-24 years old, Millennials 25-44 years old, Generation X 45-64 years old, and Boomers, 65 and older.
Of those four generations, only the tenth generation had a median income high enough to purchase mid-priced homes in Arapahoe and El Paso counties. A median-income Denver buyer faced a maximum affordability of $559,920 versus the median home-study price of $616,875. Nationwide, about 70 of the 100 counties studied were within reach of Generation X buyers looking to purchase a home in the mid- or mid-point.
By contrast, millennials made enough to buy homes in only 34 of the 100 counties studied and none of Colorado counties, even though they came close to Arapahoe County. They are the main active buying group in the housing market, at least for starter homes.
“Local markets vary greatly. But it is probably safe to say that many buyers, not just millennials, are choosing suburbs or other affordable areas if they want to become homeowners,” said Ruguppetti.
The study used an age range that prompted newborns to retire when incomes tended to be lower. They had the biggest affordability hurdles to overcome after Generation Z. Only 11 counties nationwide had access to baby boomers—none in Colorado. However, the study did not take into account home equity that many retirees have created, a store of value that can be used to purchase a smaller home outright.
Nationwide, none of the large 100 counties were within reach of Generation Z buyers with average incomes. This is not a surprise, given that they started their careers and earned less money. They typically earn enough to purchase a home worth $284,279 in Arapahoe County, a $282,890 home in Denver County and a $238,344 home in El Paso County. Hard to get all of these in the current market.