DENVER (KDVR) — The Colorado Futures Center has put a dollar figure on how much Colorado’s housing market needs to drop to match 2015’s affordability levels.
Don’t hold your breath.
The Centennial State was not cheap before 2015, but it was much cheaper than it is now. About 76% of the state’s housing was affordable to households making their county’s median income. By 2020, only 51% of homes were affordable for middle earners.
The center uses the 30% rule to gauge affordability: Shelter should be no more than 30% of net income. Households paying any more are deemed “cost-burdened.”
Median income has risen since 2015, but not nearly as much as housing costs. To get back to 2015 affordability levels, Colorado’s housing stock would have to fall by 32% — an unprecedented drop.
Because median income and median housing prices vary from county to county, some housing markets are less affordable than others.
Home values in the Denver metro counties need to drop $140,000 to $300,000 to get back to 2015 levels. Denver homes would need to cost $200,000 less, Jefferson County homes $180,000 less, Adams County homes $160,000 less and Arapahoe County homes $158,000 less.
Housing markets would need to crash even more outside the Denver metro.
Colorado’s unaffordability problem is widespread. While the counties in the metro area have some of the higher housing prices, their median incomes are also higher.
Not so with outlying counties in the Eastern plains and Western Slope. Lincoln, Morgan and Washington counties would need to come down more than 40% in order to recover their 2015 affordability levels.
Grand, Jackson and Summit counties would need to drop the most, considering their housing values skyrocketed beyond that of the rest of the state. Jackson County’s median home price would need to drop 59% to get back to 2015 affordability levels, while Grand and Summit counties’ would need to drop 53% and 51%, respectively.