Why Is Colorado So Expensive?

With its natural beauty and thriving cities, Colorado has long been a desirable place to live. However, along with its popularity comes notably high costs of living across the state. So what’s behind Colorado’s expensive price tag?

If you’re short on time, here’s the quick answer: Key reasons Colorado is expensive include high housing costs driven by limited supply and high demand, rising costs of goods and services, and gentrification in urban areas.

In this comprehensive guide, we’ll analyze the various factors contributing to Colorado’s high cost of living. You’ll learn about Colorado’s changing demographics, housing supply issues, economic growth, and impacts from tourism and migration.

Booming Population Growth and Limited Housing

Colorado has experienced a significant population boom in recent years, attracting people from all over the country. The state’s stunning natural beauty, outdoor recreational opportunities, and vibrant job market have made it a popular destination for individuals and families alike.

However, this influx of people has put a strain on the housing market, leading to rising costs and limited availability.

More home buyers than inventory

One of the main reasons why Colorado has become so expensive is the high demand for housing, coupled with a limited supply. The number of people looking to buy a home in Colorado has far exceeded the available inventory, creating a competitive market where prices continue to rise.

This has made it challenging for first-time homebuyers and those with lower incomes to find affordable housing options.

According to a report by the Colorado Association of Realtors, the state’s housing inventory reached a record low in 2020, with a 71.3% decrease in available homes compared to the previous year. This scarcity of housing options has driven up prices and led to bidding wars among potential buyers.

Difficult geographic constraints on building

Another factor contributing to the high cost of housing in Colorado is the state’s challenging geographic constraints on building. With its picturesque mountains, vast plains, and protected natural areas, the state has limited available land for new construction.

This scarcity of developable land has made it difficult for builders to keep up with the demand for housing.

Furthermore, the mountainous terrain in Colorado presents additional challenges for construction, as it often requires specialized engineering and higher costs. Building homes in areas prone to wildfires or avalanches also adds to the overall expense of construction, making it more difficult to provide affordable housing options.

Expanding Economy and Income Inequality

One of the reasons why Colorado has become increasingly expensive in recent years is its expanding economy. The state has experienced significant growth in industries such as technology, aerospace, and renewable energy.

The strong job market has attracted many professionals and skilled workers from other states, leading to increased demand for housing and higher living costs.

Strong job market

Colorado has consistently ranked among the top states for job growth in the United States. The state’s diverse economy offers a wide range of employment opportunities, attracting talent from various industries.

Tech giants like Google and Amazon have established a significant presence in Colorado, creating high-paying jobs and stimulating economic growth. However, this influx of high-income earners has put pressure on the housing market, leading to rising home prices and rental rates.

The demand for housing has outpaced supply, resulting in a shortage of affordable housing options. According to the Colorado Division of Housing, the median home price in the state has increased by over 50% in the past decade.

This has made it increasingly difficult for individuals and families with lower incomes to find affordable housing, contributing to the overall increase in the cost of living.

Disparity between high and low wages

While Colorado’s expanding economy has brought prosperity to many, it has also exacerbated income inequality. The state has seen a significant disparity between high and low wages, with some sectors paying significantly higher salaries than others.

This wage gap has widened over time, making it more challenging for lower-income individuals to keep up with the rising cost of living.

According to a report by the Economic Policy Institute, the top 1% of earners in Colorado make an average of 27.8 times more than the bottom 99%. This income disparity not only affects individuals and families struggling to make ends meet but also contributes to the overall affordability crisis in the state.

Efforts are being made to address these issues, with initiatives aimed at increasing affordable housing options and promoting economic equality. However, the complex nature of the problem requires a comprehensive approach involving government, businesses, and the community to create lasting solutions.

Impacts of Tourism Industry Success

The tourism industry in Colorado has experienced tremendous success over the years, attracting millions of visitors from around the world. While this has undoubtedly brought numerous benefits to the state, it has also contributed to the rising cost of living in Colorado.

Resort town inflation

One of the major impacts of the tourism industry’s success in Colorado is the inflation of prices in resort towns. Popular destinations such as Aspen, Vail, and Breckenridge have seen a significant increase in real estate prices, making it increasingly difficult for locals to afford housing.

The demand for vacation homes and rental properties has driven up the cost of living in these areas, pushing out long-time residents and forcing them to seek more affordable housing options elsewhere.

The rise in real estate prices has also had a ripple effect on other aspects of the local economy, such as groceries, utilities, and services. As the cost of living increases, businesses in resort towns have to adjust their prices to remain profitable.

This can impact both residents and visitors, as they may find themselves paying higher prices for everyday goods and services.

Influx of visitors

The influx of visitors to Colorado has put a strain on the state’s infrastructure and resources. Popular tourist destinations like Rocky Mountain National Park and the ski resorts often experience overcrowding, especially during peak seasons.

This can lead to traffic congestion, longer wait times at restaurants and attractions, and increased pressure on public facilities such as restrooms and parking lots.

The increased demand for resources also has environmental implications. The higher number of visitors can put a strain on natural resources, such as water and energy, as well as contribute to pollution and waste generation.

Local governments and organizations have had to invest in infrastructure improvements and sustainability initiatives to mitigate these impacts, which can further drive up costs for residents.

Despite these challenges, the tourism industry in Colorado continues to thrive, bringing in significant revenue and creating job opportunities for locals. It is essential for policymakers and stakeholders to find a balance between promoting tourism and preserving the quality of life for residents.

By implementing sustainable practices and investing in infrastructure, Colorado can continue to enjoy the benefits of tourism while minimizing the negative impacts on its residents and natural resources.

Spillover Effects From Gentrification

Gentrification is a phenomenon that has become increasingly prominent in many cities across the United States, and Colorado is no exception. As neighborhoods undergo revitalization efforts, there are both positive and negative consequences that can affect the overall cost of living in the area.

Neighborhood revitalization

One of the main reasons why Colorado has become expensive is due to the spillover effects from gentrification. As neighborhoods are revitalized, they attract new businesses, upscale restaurants, and trendy shops.

This influx of investment and development can lead to an increase in property values and overall cost of living in the surrounding areas.

With the rise of new amenities and improved infrastructure, neighborhoods that were once considered less desirable start to appeal to a wider range of residents. This increased demand for housing and limited supply can drive up prices, making it more difficult for lower-income individuals and families to afford living in the area.

Displacement of lower-income residents

Unfortunately, one of the negative consequences of gentrification is the displacement of lower-income residents. As property values increase and rents go up, long-time residents may find themselves unable to afford the rising costs and are forced to move elsewhere.

While gentrification can bring economic growth and revitalization to a neighborhood, it also raises concerns about the social impact on vulnerable populations. Displacement can disrupt established communities, leading to a loss of social ties and support networks.

Efforts are being made in Colorado to address these issues and mitigate the negative effects of gentrification. Affordable housing initiatives, rent control measures, and community development programs aim to provide support and assistance to those who are at risk of being displaced.

It is important to note that the spillover effects of gentrification are complex and can vary depending on the specific neighborhood and city. Understanding these dynamics can help policymakers and community members work together to find solutions that promote inclusive growth and affordability.

For more information on gentrification and its impact on communities, you can visit www.urban.org or www.apa.org.

Lack of Public Programs and Affordable Housing

One of the main reasons why Colorado is so expensive is the lack of public programs and affordable housing options. This has created a challenging situation for many residents who struggle to find affordable places to live.

The state has experienced cuts to state funding, which has had a direct impact on the availability of public programs and resources.

Cuts to state funding

Over the years, Colorado has faced significant cuts to state funding for various programs, including housing assistance and public services. These cuts have resulted in a decrease in the number of resources available to help individuals and families with affordable housing options.

As a result, the demand for affordable housing has far exceeded the supply, driving up prices in the housing market.

According to a report by the Colorado Center on Law and Policy, the state’s funding for affordable housing has been reduced by more than 50% since 2001. This reduction in funding has made it increasingly difficult for low-income individuals and families to find suitable and affordable housing options.

Shortage of subsidized units

In addition to cuts in funding, Colorado also faces a shortage of subsidized housing units. Subsidized housing provides affordable rental options for low-income individuals and families, but the number of available units falls far short of the demand.

According to the Colorado Department of Local Affairs, the state has a deficit of over 100,000 subsidized housing units. This shortage has led to increased competition for these units, driving up prices and making it even more difficult for individuals and families to secure affordable housing.

The lack of affordable housing options not only affects low-income individuals and families, but it also impacts the overall cost of living in Colorado. With the rising prices of housing, other expenses such as groceries, transportation, and healthcare also become more expensive.

Efforts are being made to address the affordable housing crisis in Colorado, but it remains a significant challenge. Organizations such as the Colorado Housing and Finance Authority and local housing authorities are working to increase the availability of affordable housing options and provide assistance to those in need.

However, it will take time to reverse the impact of years of funding cuts and address the shortage of subsidized units.

For more information on affordable housing in Colorado, you can visit the