Colorado Ranks Among the Worst States for Housing Affordability
The Common Sense Institute, a free-enterprise research group, developed a “Misery Index” last year to evaluate the challenges homebuyers face in the current housing market. Colorado was second only to Montana, which posted a 93.7% change in home affordability since January 2009. Idaho (90.5%), Tennessee (87.7%), and California (82.9%) round out the top five.
“The index sums normalized and equally weighted home prices and 30-year mortgage rates to measure effective costs of homebuying relative to historical levels,” the report stated.
The report said overall prices remain high due to high rates of inflation during the last 18 months, with a slight moderation of growth in July, according to the report.
“The continuing deterioration in affordability will plague homebuyers, while at the same time higher interest rates may deter new homebuilding, further restricting supply by putting upward pressure on home prices,” Steven Byers, a senior economist with CSI, said in a statement.
Steamboat Springs had the largest decrease in home affordability with a 93.7% increase since January 2009. Edwards (90.8%), Fort Morgan (90.5%), Cañon City (87.7%), and Pueblo (82.9%) round out the top five. Boulder had the smallest decrease in home affordability at 43.3%, followed by Denver (46.9%), Fort Collins (47.2%), Durango (50.9%) and Craig (52%).
“Housing will remain a top issue for the foreseeable future as Colorado becomes less and less affordable,” CSI Executive Director Kelly Caufield said in a statement announcing the report.
Nationally, Louisiana’s 39.4% price change made it the state with the smallest decrease in home affordability. Maryland (40.9%), Illinois (43.3%), Alaska (43.3%), and New Jersey (46.9%) rounded out the bottom of the rankings.
The report analyzed data from Zillow and the St. Louis Federal Reserve Bank for its rankings. It included only metropolitan statistical areas within the state tracked by Zillow.