Market Update, March 28, 2024

Lawrence Yun, NAR’s chief economist, just stated, “The high-cost regions in the Northeast and West experienced pullbacks due to affordability challenges…Home prices rising faster than income growth is not healthy and adds challenges for first-time buyers.”

ATTOM Data Solutions’ first-quarter 2024 U.S. Home Affordability Report states, “median-priced single-family homes and condos remain less affordable in the first quarter of 2024 compared to historical averages in more than 95 percent of counties around the nation with enough data to analyze. The latest trend continues a pattern, dating back to 2022, of home ownership requiring historically large portions of wages around the country.”

Affordability has been an ongoing issue in Metro Denver, and I wanted to take another look at how affordable homes are right now.

The median price for homes sold yesterday and the day before was $570,000, $10,000 more than when I looked at affordability a year ago. The average home sold for 97% of its asking price.

When our prices peaked—in April 2022—the median price for a home that sold was $600,000. Then, homes sold for an average of 106% of their asking price. 

As we know, prices are just one part of the overall affordability equation.

Interest rates are another critical part of affordability. Buyers who closed in the past few days probably locked their interest rate about a month ago. So, a typical buyer may have gotten an interest rate of 7.12% (at 6.9%, rates are lower today). 

If we assume a 10% down payment, that the buyer will pay a monthly HOA fee, and we include taxes and insurance, the monthly payment on a median-priced home sold yesterday could be about $4,413.

A year ago, those payments were about $4,344 per month. 

At the peak of the market in April 2022, a buyer could have locked an interest rate of 4.42%. Monthly payments could have been about $3,866.

The monthly payments on a median-priced home have gone up more than $500 per month since prices peaked in April 2022. Even though the median price of a home has declined, the monthly cost of homeownership has risen.

The last piece of the affordability puzzle is income.

If your income increased in the past year, the increase in monthly payments might not seem like much. That median-priced home may seem more affordable now than in the past.

ATTOM’s U.S. Home Affordability dives into local data to show how much it takes to buy the median-priced home in metro-area counties. In Denver, for example, ATTOM estimates it takes about 35.1% of the median income to purchase the median-priced home (A year ago, that number was 33%). It takes 48% in Boulder to buy the median home, down from 49% a year ago. In Jefferson County, you’ll spend 48.6% of your income, compared to 47% a year ago. It takes 56% in Douglas County compared to 51% one year ago. Finally, in Adams County, it takes 46.1% of the median income to purchase the median-priced home. We didn’t look at these counties last year, but in Larimer and Weld Counties, it takes 49.8% and 46.3%, respectively to buy the median-priced home. 

In every county except Boulder, buying a median-priced home costs more of the median income than it did a year ago. In other words, buying a home has become more expensive throughout the metro area. In some counties, buying the median-priced home costs almost half the median income.

Homes could become more affordable if prices or interest rates come down or incomes increase. Buyers would get the most relief if all of those things were to happen.