U.S. News recently published an article listing the best places to live in the United States based on perceived value, quality of life, and robust job markets. Colorado (unsurprisingly) had 4 cities make the top 10: Boulder, Denver, Fort Collins and Colorado Springs. The secret is out, Colorado is a wonderful place to live. This state boasts a diverse array of activities and cultures, an ever-growing popular food scene, and an expanding job market. All these perks make it a desirable place to plant roots. How has the growing popularity affected the overall cost of living in our home state?
I know many folks feel as if Denver and the state of Colorado are getting more and more expensive but how is that feeling quantified? The answer is the Consumer Price Index or CPI. CPI takes the average weighted prices of a variety of goods and services like home prices, transportation costs, food, and health care costs. This measure allows us to examine how the cost-of-living changes over time and is often associated with tracking inflation.
Breaking Down Living Costs in Colorado
According to the Colorado Office of Economic Development and International Trade, Colorado’s cost of living is:
- 12% above the national average overall
- 2% below the national average for utilities
- 7% above the national average for transportation
- At the national average for groceries
- 4% below the national average for health care
These statistics seem inline, but the biggest sector that is missing from this list is housing. According to Zillow, the median home price in Colorado is $479,127, a whopping 66% higher than the national average. The lack of supply and increase of demand for more space post-pandemic has played a large roll in boosting Colorado home prices in 2021.
Affordability by Income
The below infographic shows that to be able to afford a home in Colorado, you would need to earn a salary of $100,200 per year, the 5th highest salary needed in the U.S.
Demand for Homes in Denver
If we focus on the city of Denver, the CPI has been increasing at an average rate of 2.6% per year since 2011, says the U.S. Bureau of Labor Statistics. From May of 2020 to May 2021, the cost of goods (CPI) has increased by 3.2% driven by increasing home prices and domestic supply chain hiccups. Housing prices in the city of Denver surpass the state average, coming in at $529,269. This number has grown 10.8% over the last year, according to Zillow.
Bottom Line: Colorado is Fairly Average
All in all, the state of Colorado is not a major outlier when it comes to cost of living. During a quick grocery run or a trip to the doctor, prices should be comparable to many cities in the U.S. The biggest (and most expensive) factor when it comes to Colorado’s cost of living is the booming housing market, which continues to reach new heights. For more information on the rising cost of living, tune into a recent Inside the Economy video.
Will Cost of Living Affect Your Financial Future?
The cost of living in Colorado and across the U.S. is everchanging. A CERTIFIED FINANCIAL PLANNER™ can help you navigate important questions like how inflation can affect your investment portfolio or plans for retirement. If you would like to discuss how cost of living plays into your financial future, set up a free consultation with one of SH&J’s CERTIFIED FINANCIAL PLANNERS™.