Navigating Colorado’s real estate market can be challenging for first-time homebuyers.
According to new research by Moneywise, Colorado ranks fourth on its list of most difficult states for first-time homebuyers — the others in the top 5: Hawaii, California, Washington, and Massachusetts.
The National Association of Realtors estimates the average buyer makes a 13% downpayment. Based on Colorado’s median home price of $560,000, that means a $73,000 downpayment.
But even finding houses in that price range is challenging.
According to the April report from the Denver Metro Association of Realtors, inventory in the Denver metro’s “classic market,” defined as properties that sold for between $300,000 to $500,000, remains tight.
In March, metro Denver saw 331 fewer residential listings in that price range vs. March 2022, a 21 percent decline.
“With demand continuing to be strong, the result becomes another classic supply versus demand tug of war,” says DMAR market trends committee member William Maine.
“With low supply and strong demand, the close-price-to-list-price ratio continued to hold firm at 99.7 percent for detached proprties and 99.9 percent for attached,” he says.
More starter homes needed
Available homes in the starter home price range are rare in the Denver metro. Few builders construct homes at that price point.
While nearly 70% of new homes once were 1,400 square feet or less, now only 8% are that size.
The economics of today’s housing market — land costs combined with local rules and regulations — push builders to construct bigger homes that ultimately cost more.
One area builder is experimenting with a lower-cost option. Oakwood Homes launched On2 Homes, its new stand-alone starter home line in Green Valley Ranch.
Prices start in the low $300,000s for 1,100-1,200 square feet of living space, including two- and three-bedroom layouts.
Detached garages cost extra, but eventually, the company plans to provide three-story models with attached garages.
Buying homes remains a solid investment
Despite the challenges of coming up with a downpayment, a new report from the National Association of Realtors shows that owning a home is one of the best investments.
The report shows that nationally from 2012 to 2022, low-income homeowners built an average $98,910 in appreciation, while middle-income and upper-income owners built $122,070 and $150,810, respectively.
“This analysis shows how homeownership is a catalyst for building wealth for people from all walks of life,” said Lawrence Yun, NAR’s chief economist.
April 21, 2023
Sponsored: Tired of neutral? Ceiling wallpaper brings color, style to any room
April 14, 2023
Sponsored: Report: Colorado housing market shows signs of resuming ‘normal’ conditions
April 7, 2023
Sponsored: Historic low inventory continues to push Denver metro home prices up
March 31, 2023
Sponsored: Denver’s Belcaro neighborhood combines luxury and convenience
“A monthly mortgage payment is often considered a forced savings account that helps homeowners build a net worth about 40 times higher than that of a renter.”
The benefit of owning a home is even more significant in Colorado.
NAR statistics show wealth gains in key cities broken down by income: low, middle, and upper.
The news and editorial staffs of The Denver Post had no role in this post’s preparation.