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Friday, January 13, 2023

Is Colorado a Good State To Buy a Home?

Colorado, USA

Is Colorado a Good State To Buy a Home?

When looking for the best places to live for outdoor recreation, Colorado sits near the top of the list. Colorado’s residents are known as some of the healthiest people in the United States because of the abundant options for staying active all year round. The ability to get outside all year is one reason the Centennial State is a popular place to live in the Central United States.

But what about for you? Given the real estate industry and economic changes, would Colorado be a good place for you to live? You’ve probably heard that key towns are expensive or that Denver’s housing market has been overpriced.

Don’t let a media focus on one market segment be the end-all for your dreams of western living. We’ll look at the reality of buying a home and living in Colorado to give you facts to help you decide.

What are the advantages to living in Colorado?

beautiful nature in Colorado

Life is abundantly lived in Colorado. Its cities often end up on top places to live lists, like Colorado Springs ranking no 2. in 2022-2023 by US News and World Report. Its accolades run the full gamut: Colorado ends up on lists for a great place to work, raise a family, retire, or live a healthy lifestyle.

For people who like getting outside, many say that the climate is one of the best. Not only do you have some of the best skiing resorts (over 30!) in the country, but sometimes you can go and play a round of golf in the same afternoon.

How is it possible to play in the snow and hit the greens on the same day? It’s all about climate and elevation. The drastic changes make for dry, warmer conditions at lower elevations and snowy winters at higher elevations. The dramatic landscape change means locals can escape the summer heat.

Colorado offers four national parks, 42 state parks, and even more local parks run by counties or cities. Find endless opportunities for a full spectrum of outdoor activities: camping, hiking, snowmobiling, cross-country skiing, fishing, hunting, mountain biking, road cycling–we could go on for a while because Colorado has it!

While the outdoors tends to get the attention, many Colorado cities and communities promote the arts. The Denver Art Museum and the Colorado Springs Fine Arts Center are two examples of the state’s artistic excellence. The Denver Performing Arts complex is home to the state’s symphony, orchestra, opera, ballet, and theater company.

Colorado has professional sports like the NFL Denver Broncos, MBA Colorado Rockies, and NHL Colorado Avalanche. The Winter X Games in Aspen, GoPro Mountain Games in Vail, and National Western Stock Show and Rodeo are huge sporting events. Major festivals include the Telluride Bluegrass Festival and Nederland Frozen Dead Guy Days.

But it’s not all play in Colorado; the locals need to work, too. Luckily, Colorado has a strong economy with a growing tech bubble in Denver and Boulder. Statewide, manufacturing is a chief driver, but you’ll also find Fortune 500 companies and startups. The “Front Range,” an urban section from Fort Collins to Pueblo that includes the largest cities, is a significant financial center.

What are the drawbacks to living in Colorado?

Colorado dry season

Not everyone likes the weather in Colorado. While it’s generally mild, it can experience powerful winds that cause severe property damage and make traveling hard. The eastern planes do experience strong tornadoes.

The dry and arid climate can cause challenges for those who struggle with dry, thin air. And if you’re not used to living at altitude, the high elevation can lead to altitude sickness and impact the body. Even residents can experience headaches, fatigue, and trouble breathing.

This dryness means water can be a problem in the communities. The state’s water consumption depends on having a strong mountain snowpack.

Another consequence of being such a desirable place to live is the influx of new residents and visitors has pushed up the state’s overall cost of living. You can expect to pay more here than in bordering states like Kansas or Wyoming. In particular, markets like the Denver metro are among the nation’s most expensive, especially regarding housing. The popular ski towns of Aspen and Telluride are particularly in demand. Expect to pay more to live here, whether buying or renting.

Traffic in these areas can also really impact your commute. The Front Range cities often experience gridlock during rush hour. The weekends on nice days can be particularly terrible as crowds seek to escape to the ski slopes or the mountains.

Even if you’re not living in a major city, Colorado is a large state with big distances between places. Plan for longer travel times due to the winding mountain roads and the limited resources between the country towns. It may also be a good idea to have an all-wheel-drive vehicle if you plan to enjoy any of the countryside.

Speaking of the countryside, don’t expect to go into the wilderness and see no one. The secret is out when it comes to Colorado’s natural bounty. Don’t be surprised when backcountry shelters are fully booked or the popular trails are crowded. Rocky Mountain National Park can have 40,000 visitors in a single day during the summer.

Is Colorado a tax-friendly state?

is Colorado a tax friendly state?

Generally speaking, Colorado is a good place when it comes to taxes. It does charge an individual income tax, but it’s at a flat rate of 4.4% as of 2022.

Real estate property taxes also trend towards the lower end, with Colorado having one of the lowest median tax rates in the country. Tax Foundation found homeowners paid 0.54% of their home’s value in property taxes, ranking the state no. 47 of 50 for property taxes. On a per capita basis, that came out to $1,816, ranking the state no. 15. That drastic difference is because Colorado has higher real estate values.

Where Colorado makes up for its tax burden is in its sales tax. The state rate is 2.9%, but local counties and municipalities can charge up to 8.3%. Between the state and local levies, it can be over 11% in some areas. The good news is groceries and prescription drugs are exempt. Plus, you control most of what you buy.

For retirees, Social Security benefits are pretty much exempt from state income taxes starting in 2022. Up to $24,000 of pension income from private, government, and military plans can be excluded. Some residents may qualify for a property tax exemption of up to 50% on the first $200,000 of actual property value.

Colorado also levies “sin” taxes on commodities like cigarettes, tobacco products, alcohol, and marijuana.

How much money do you need to live comfortably in Colorado?

A senior citizen looking at his wallet

The exact amount will vary depending on where you live in the state. For instance, if you’re planning to live in Denver, residents need to make over $110,000 to own a home.

MIT Living Wage Calculations for 2022 found a family of four, with one adult working, would need a salary of $40.11 an hour to make a living wage in the state. That same family spent about $11,764 on food, $18,390 on housing, and $13,456 on transportation.

What is Colorado’s real estate market like?

Colorado’s housing values are one of the higher ones in the nation. US News and World had its housing affordability in the bottom three states.

In November 2022, the median sales price for Colorado single-family homes was $545,000, a 2.8% year-over-year increase. Its year-to-date prices were up almost 12%.

Real estate market in Colorado

Certain metros had even higher prices. In the Denver metro, the median price was $587,500 in the same month. The market is one of the busiest in the state. For some perspective, even at those prices, it’s still beneath places like New York, Miami, and San Francisco.

Its overall housing is higher because of the abundance of towns with high median prices. Take Aspen, where January’s median home price was $1.6 million, or Vail, where 139 homes had a median of $1.7 million.

Even with high median prices, the sales pace will likely be busy, at least in 2023. One index pegged Colorado Springs as one of the top buyer’s markets in 2023.

What are some key places to live in Colorado?

Colorado has a range of cities and towns that offer something special for everyone. We can’t feature every city or ski town, but here are a few stand-outs.

Colorado Springs is one of Colorado’s most popular destinations due to its stunning scenery and access to outdoor recreation, while Denver provides top-tier urban amenities for those who like city life. The Mile High City will keep you busy, but you’ll need the proper budget to pay for the high cost of living.

Boulder is home to Colorado’s renowned University of Colorado, and features a lively downtown with many entertainment options. The school district has a strong reputation for excellence. As a bonus, mountain biking trails and hiking are relatively close.

Aurora is Colorado’s third-largest city and is noted for its beautiful residential areas, excellent schools, and affordable housing options. It’s near the airport if you need to commute across the nation.

Grand Junction and Colorado City have become great places to buy a home. These cities often have high marks for low crime rates and are more affordable with better commute times for workers than the Denver metro.

Durango in the southwestern part of the state offers a stunning desert landscape and access to popular destinations like Mesa Verde National Park.

We can’t mention living in Colorado without Aspen, Vail, and Telluride. The ski resort towns are tourist destinations, but they have prices to match. A high number of options cater to the vacation or part-time market.

Find more affordable properties and a tight-knit community atmosphere in Colorado’s smaller towns.

Buying a home in Colorado

buying a home in Colorado

No doubt, Colorado is a fantastic place to call your home – with stunning views, countless outdoor activities, and a healthy real estate market. But be sure to do your research and consider the cost of living. Colorado may be a great place to live, but it still comes with a price tag.

Still, with some planning and research, you can find your perfect Colorado home, whether it’s in urban Denver or a quiet Mesa town. A local real estate agent can help you explore all your Colorado living options.

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Preston Guyton

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