In Colorado, millennials have become one of the most influential groups in real estate.
But what they want, and where theyre looking, often breaks from tradition.
One reason millennials are so prominent in Colorados housing market is simple demographics.
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Colorados population has many people in their late 20s and 30s the prime age for first-time home buying.
The states robust job growth and attractive lifestyle have drawn young adults from elsewhere as well.
Like prior generations, most millennials say they want a house with space for a growing family.
This suggests that after spending time cooped up during COVID-19, young buyers began prioritizing more living space.
Nearly half of millennials surveyed said that outdoor living space was a top priority for them.
Alternative Housing Types
Not all millennials have been buying large suburban houses.
Some, especially in urban areas like downtown Denver, have purchased condominiums or townhomes.
Condos and townhouses often cost less than detached homes, making them appealing to first-time buyers on a budget.
They also require less maintenance (no yard work) and can be closer to city jobs and entertainment.
The millennial generation covers a span of ages, so within 20182023 we saw different stages.
By contrast, older millennials (mid-30s to early 40s) were more likely to be repeat buyers.
The Upsizing Trend
Upsizing has been a common pattern.
Vacation Home Trend
One interesting trend is some millennials buying vacation homes or second homes.
Colorados resort towns and scenic areas saw surging demand for vacation properties in that period.
That said, millennial purchases of vacation homes were still a small slice of the pie.
Most millennials focused on primary residences.
Denver has a vibrant job market that attracts young professionals, but it also has high home prices.
Many Denver millennials initially rent in the city and then buy homes in the metro suburbs when theyre ready.
The citys population grew rapidly, up 37% since 2000, fueled in part by millennial newcomers.
Western Slope and Mountain Towns
Colorados Western Slope and mountain towns present a different picture.
Homes in ski resort counties frequently top $1 million in median value.
The pandemic did allow some younger remote workers with high-paying jobs to relocate to mountain towns.
Their presence, along with ongoing retiree and investor demand, caused mountain home prices to spike in 20202021.
For example, the average sale price in Summit County was 13% higher in 2022 than in 2021.
In 2018, 30-year fixed mortgage rates were roughly around 4.5% APR, a fairly normal level historically.
Many millennials jumped at this chance to buy with cheap financing.
However, this situation reversed sharply in 2022.
The Federal Reserve raised rates to combat inflation, and mortgage rates more than doubled in one year.
Many first-time millennial buyers use FHA loans or other government-backed loans that allow smaller down payments.
These loans are popular because coming up with a 20% down payment is challenging for young adults.
Even with these aids, millennials often ended up with high loan-to-value ratios.
Student Debt Impact
Another factor in financing was the impact of student debt and credit conditions.
Colorado experienced steep home price increases during this period.
Statewide, home values rose roughly 50% between 2018 and 2023.
Home price growth far outpaced income growth, which means homes became less affordable for first-time buyers.
Millennials, often early in their careers during this time, felt this acutely.
Remote Work Revolution
The COVID-19 pandemic triggered a widespread remote work revolution.
Suddenly, many millennials who used to work in offices found themselves working from home.
Nearly 90% of organizations worldwide adopted remote work at the height of the pandemic.
This change made millennials rethink their housing needs and location choices.
Remote work also meant homes needed space for home offices.
This influenced the kind of homes they bought (favoring those with extra bedrooms or dens).
Family Formation Timing
Other lifestyle factors include family formation and marriage timing.
Marriage or partnership often increases buying power (two incomes) and motivation to buy a house.
By 2023 the oldest were 42.
This maturation led to a huge jump in homeownership.
By 2022, 51.4% of millennials were homeowners the first time a majority have owned.
Millennials went from being newcomers in the market to the dominant buying force.
In Colorado by 20182023, millennials were roughly fifty to sixty percent of buyers.
But most were too early in their careers or cautious.
By 20222023, a new challenge of high interest rates emerged.
Millennials in the earlier period often delayed buying the median age of first-time buyers crept up during the 2010s.
The latter period saw them assert themselves as the key buyer demographic, despite challenges of affordability.
