Pandemic Boom
The markets trajectory changed suddenly in 2020.
When COVID-19 hit, the Federal Reserve slashed interest rates to historic lows.
Colorado saw a homebuying frenzy in 20202021.
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This wave of demand, combined with limited inventory, drove Colorado home prices to unprecedented heights.
Interest Rate Whiplash and Cooldown
The frenzied pace began to break in the second half of 2022.
By 2023, Colorados housing activity had reached a near standstill compared to the boom.
By late 2023 Colorados housing affordability index was at its worst level since the mid-2000s housing bubble.
Even under financial constraints, most buyers in this income range gravitated to single-family properties when possible.
Even as sales slowed, condo values held strong, indicating sustained demand for relatively affordable homes.
Multi-Family Properties
A small subset of budget-conscious buyers turned to duplexes or fourplexes effectively becoming owner-occupant landlords.
However, this is a niche: such purchases made up only a few percent of total sales.
New Construction vs.
Despite the challenges, the fundamental preference for single-family living remained strong.
By 2022, however, upsizing became much more difficult.
This was seen across Colorado, from Denver suburbs to smaller towns.
During 20202021, remote work enabled a wave of people to relocate for lifestyle reasons.
This contributed to record sales volumes in those mountain communities in 2020 and pushed prices to stratospheric levels.
Affordability pressures led to migration within Colorado.
Similarly, Weld Countys average (~$485K) was below adjacent counties.
Regional Housing Market Patterns
Homebuying trends in Colorado varied significantly by region.
Denver Metro
The Denver metro is Colorados largest market and set the tone for statewide trends.
It also became one of the least affordable areas.
Home prices in Denver metro skyrocketed through 2021.
By 2023, even households earning $200K could struggle with the median-priced home, illustrating the affordability squeeze.
For moderate-income buyers, this meant many turned to condos or outlying suburbs.
In the suburbs (Jefferson, Arapahoe, etc.
This eased by late 2022, when days-on-market stretched to 2-3 months in some Denver-area segments.
This drew some Denver telecommuters and also strained local buyers.
Larimers housing stock includes many single-family homes and some student-oriented condos (due to Colorado State University).
The areas appeal to both retirees and young professionals kept demand strong.
Welds average home price jumped to ~$485K (up 160% vs 2013).
But recent years saw substantial appreciation as retirees, remote workers, and some Front Range escapees bought there.
They didnt experience the wild swings of the Front Range, but they also have thinner demand.
This is especially true for moderate-income households, who rely on mortgages and are sensitive to interest rate changes.
Historic Low Rates (20192021)
In 2018, 30-year fixed mortgage rates hovered around 4.55%.
For our under-$250K income buyers, this was like rocket fuel for affordability.
Lower rates mean lower monthly payments or the ability to qualify for a larger loan on the same income.
Many buyers in this income range utilized FHA, VA, or other government-backed loans during the low-rate era.
These programs offer low down payments and more flexible credit criteria, crucial for first-time buyers.
With 3% mortgage rates, even these higher-risk loans had manageable payments.
Interest Rate Spike (20222023)
The landscape changed in 2022.
In 2023, rates averaged roughly 6.5% (with moments near 7%).
This was a massive shock compared to what buyers had gotten used to.
One notable trend was the rise in cash buyers and large down payments in 20212022.
By 2022, a record 26% of U.S. buyers paid all cash.
Demographic Profile of Buyers
Who are the households buying homes in Colorado with incomes under $250,000?
By 2023, it jumped further to 38.
Colorado likely mirrors this trend.
Many buyers in 20182021 were millennials finally entering homeownership in their late 20s to late 30s.
Married couples have traditionally been the largest group of homebuyers, and that remained true.
In the 2020s, about 60-65% of buyers were married couples.
Colorado, with many family-friendly areas, likely sees even a bit higher married share in some markets.
Colorados homebuyer profiles showed a notable portion of single female buyers, often buying condos or townhomes.
Single men made up around 810%, and unmarried couples ~6%.
The prevalence of dual-income couples in Colorados expensive markets is high often both partners work to afford the mortgage.
However, one interesting trend is multigenerational buying.
By 2023, the NAR profile noted 17% of buyers purchased a multigenerational home (highest ever).
In Colorado, high housing costs have led some families to buy larger homes together or accommodate older relatives.
This can help pool incomes to afford a nicer property.
Therefore, many buyers tended to be in the upper portion of our bracket, often dual earners.
A major demographic shift was the decline in first-time buyer share by 20222023.
Traditionally, first-timers account for ~40% of buyers.
In 2021, they were around 34%.
But in 2022 this fell to 26%, and in 2023 to just 24% an all-time low.
Colorado certainly saw fewer first-timers in 20222023, as they were squeezed out by affordability.
