Homebuyers are always looking for affordable housing options. As costs-of-living, inflation, debt, interest rates, and other factors affect potential buyers home valuations continue to rise across the country. Colorado, especially, has high home valuations and high demand, which is slowly pushing most of the housing market out of “affordability” standards. This is particularly true for first-time homebuyers. Finding that affordable market can be stressful. Let’s take a look at some affordable markets across the country, and how they compare to Colorado and Longmont specifically.
What Makes A Market “Affordable”?
When we talk about “affordable markets” in real estate, we’re looking at the average cost of a listed home and the opportunity for first-time homebuyers to access these median sales prices. Pre-pandemic, first-time homebuyers were typically looking for homes around or under $350,000 with mortgage interest rates around 3-4%. Loan options helped with down payments, payment security, and loan acquisition. Though these options still exist, the high mortgage interest rates are keeping mortgage payments close to double what they were pre-pandemic on similarly priced homes today. This means a home at $350,000 may not be affordable for a first-time homebuyer in these economic conditions.
Colorado’s median sales price is currently sitting at $565,000. Longmont, CO’s median sales price is just below that at $525,000. In order to afford the median sales price in Colorado, a buyer would have to earn approximately $150,000 a year. Most first-time homebuyers are not at this level of income. Let’s look at some affordable markets, then.
Where Are Affordable Markets?
Texas – Accordering to SmartAsset, Texas is seen as the state with the most affordable markets for first-time homebuyers anywhere in the nation. This state, however, is not home to the most affordable houses per se. Killeen, Wichita Falls, McCallen, Waco, and Brownsville make their top 10 affordable housing markets – more areas than any other state.
Median Prices from $186,000 – $255,000
New York – According to many sources, several areas of upstate New York, including Rochester, Niagara Falls, and Syracuse are quite affordable for first-time homebuyers (see PR Newswire and NY Times)
Median Prices from $135,000 – $200,000
Michigan – the Grand Rapids area in Michigan is growing in both industry and housing and has surprised many by becoming one of the more affordable areas to move post-pandemic.
Median Prices from $260,000
Iowa – Des Moines and Omaha have fairly decent markets (including economy and job markets) that help make their housing prices quite competitive in today’s market.
Median Prices from $200,000 – $270,000
Will Colorado Be Affordable Again?
The simple answer is, “yes,” but we have to look at the factors that help make Colorado affordable:
- Location – Keep an eye on key markets around the Denver Metro Area and beyond to find affordable real estate options.
- Job Market – Most companies use market adjustment pay-scales to help offset costs-of-living. Colorado is one of the states with a slightly above average cost-of-living and many companies are beginning to acknowledge this. Rather than moving their company out of state, they will adjust hiring offers to compensate.
- Older Homes vs. New Builds – Keep your eye out for older homes in older neighborhoods. These will typically have lower valuations and offer room for negotiations when building the sales contract. New builds, however, have to pay off the building costs with little room for negotiation.
- Understand Affordability For You – Take a hard look at your budget and see what you can truly afford. Work closely with your loan officer and real estate agent to find the right options when looking to buy in the Denver Front Range Area.
- Save Up For Your Down Payment – Down Payments can help reduce your monthly mortgage payments quite a bit. You can also work with the seller and your mortgage lender to find ways to assist with the Down Payment and other fees associated with home buying.
- Stay Positive – Don’t be discouraged by home valuations and prices. There is something out there for you!
What do you think about the Colorado home valuations and the real estate market? Is it now outside the realm of possibility for first-time homebuyers? Or do you feel the market will change soon? Let us know in the comments below.
Additional Reading:
https://www.nytimes.com/2024/02/29/realestate/first-time-home-buyers-markets.html
https://smartasset.com/data-studies/best-places-first-time-homebuyers-2023
https://www.usatoday.com/story/money/2024/01/11/best-markets-first-time-home-buyers/72178383007/
