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Colorado home prices need to fall by nearly a third to be affordable

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Colorado would need to drop nearly a third to get home prices closer to 2015 levels, but that’s unlikely, he said. Harsh Evaluation from the Colorado Futures Centerin partnership with Colorado State University.

More precisely, statewide home prices should drop 32% so that three-quarters of homes in 2015 are affordable for state median income households. . The reductions that had to occur in individual counties ranged from her 19% in He Huerfano County on the low end to almost 60% in Jackson County.

Costilla, Sedgwick, Summit, and Grand are other counties in Colorado that should see declines of about 50% or more to regain previous levels of affordability.

“Colorado’s Housing Affordability Challenge It is well documented, especially as it has become more acute in the latter half of the last decade. The state’s strong recovery from the Great Recession and pandemic, combined with strong housing demand and limited supply in the market, has resulted in greater price pressure than the state has seen in decades.

Why is 2015 the base year? In 2007, his 65% of homes in the state were affordable for average-income households. During the housing market recession, many borrowers had their homes foreclosed and prices fell. By 2015, its affordability ratio had risen to 76% of affordable housing at the median income level. Essentially, affordability went from 2 out of 3 to 3 out of 4.

But affordability has deteriorated significantly since then. As the housing glut of the 2000s was absorbed, new construction could not keep up with population growth. Demographic trends and accommodative Federal Reserve monetary policy stimulated demand. House price growth has averaged 10% annually since mid-2015, far outpacing income growth. And the price increase experienced during the pandemic is the largest on record.

By 2020, only half of median household incomes will have affordable housing, a situation that has worsened after price spikes in 2021 and early 2022.

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