The change from tenant to proprietor – an uphill battle in Colorado

Most first-time home buyers are renters, and one way to measure the difficulty of moving from renting to home is to compare the typical cost of home ownership to the typical annual rent in a given location.

Nationwide, average home prices are 18.27 times the average annual rent, or in other words, typical homes cost just over 18 years in current dollars in rental payments, according to analysis by Wendell Cox, a client at Demographia, a St In Louis-based public company Order company.

But in several states, including Colorado, the “cost of promotion” is many times higher. In Hawaii, the ratio is 33.8, or nearly 85%, higher than the US ratio. That’s extreme, but in California the ratio is 29.3 or 60.7% higher. In Massachusetts, the cost of climbing is 40.4% higher than the national average.

States in the Rocky Mountain and Pacific Northwest dominate the rest of the top 10 list, with the cost of increasing 39.3% in Montana, 37.2% in Utah, 36.5% in Oregon and in Idaho are 32.3% higher. Then Colorado follows in eighth place with a cost-increase rate of 31.5% above the US average, followed by Wyoming with 30.5% more.

“There is a general perception that house prices are higher where rents are higher. This is true. However, mean house prices measured at market level (metropolitan area) tend to rise (at a) much faster rate than rents in the more expensive states, ”said Cox in a blog post on the Newgeography website.

The average house price in the US rose almost three times as fast as average gross rents between 1969 and 2019, according to data from the US Census Bureau researched by Cox. The analysis did not include the extreme spike in home values ​​during the pandemic.

“The house price increases since 2019 are likely to make the cost of promotion even more prohibitive, especially in the most expensive states,” said Cox.

However, it is difficult to draw a direct line between a higher quota and the attractiveness of a location. California has the second highest home price to rent ratio and also the second highest net outflow of residents in the past decade after New York. Texas, which has the fifth lowest rate, half of California, was second only to Florida in terms of net migration.

Even so, high-ratio states like Colorado, Idaho, Washington, and Oregon remain popular retreat destinations, which has helped drive home prices soaring. Although Colorado residents like to complain that the state is being overrun, migration has slowed sharply in the second half of the last decade, and gains are slower than in previous decades, state demographer Elizabeth Garner said earlier this month.

Housing construction, after outperforming demand in the 00s, has been unable to keep pace, resulting in soaring home prices.

“When we build over, it’s a problem, and when we build too little, it’s a problem,” she said.

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