COLORADO, USA — It’s no secret buying a home in Colorado isn’t exactly cheap these days. But getting back to a point where homes are actually affordable may be even harder than we think.
Colorado’s housing market has become completely unaffordable for many. Even as prices begin to drop, a new report says the state’s affordable housing problem won’t be solved unless we see an "unprecedented" drop in prices.
Even if Colorado’s insane home prices continue to cool down, it’s unlikely they’ll ever come down enough to reach the same level of affordability we saw in 2015, a year when interest rates were low. That’s according to a new study by Phyllis Resnick and her colleagues at the Colorado Futures Center, a non-profit research institute affiliated with Colorado State University.
"A market correction alone will not correct the affordability challenges that Colorado is facing," said Resnick, director and lead economist of the center. "I think the reason that we did this research was to demonstrate that the market alone can’t create levels of affordability that we’ve enjoyed before."
Housing values would have to drop a staggering 32% statewide to reach the same levels of affordability we saw in 2015, according to the report. That means people would lose up to a third of their home values. The report concludes that housing market correction alone “will not restore affordability” in Colorado without “considerable pain” to homeowners.
"I think it’s very unlikely that it will swing all of the way back. While we are likely to see some correction, we are going to continue to struggle with affordability," said Resnick.
Housing prices have gone up throughout the entire state over the past years. But the biggest challenge Colorado is facing when it comes to affordable housing is in the mountains. Perhaps unsurprisingly, the resort areas have seen some of the biggest increases in housing prices, making affordability in the high country a major problem.
"What we looked at was how much would values or prices have to come down in order for the same share of homes to be affordable for someone earning an average wage today," said Resnick. "Coloradans could afford a lot more house in 2015 than they can afford today."
Experts say things like new zoning regulations, land use changes, and even investing more in different housing options like manufactured homes could make a dent in making Colorado affordable again.
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