Us Coloradoans are used to making many top-10 lists.

Whether it be best place to live, best place to retire, best place to raise a family, or best place to own real estate, you can usually find a Colorado town or two on these types of lists.

But, here’s one we didn’t make…

The 10 Most Expensive Places to Live

The recent list, put together by Bungalow.com, uses data from M.I.T. and the U.S. Bureau of Labor Statistics.

Colorado is thankfully nowhere to be found in the top 10.

Predictably, Hawaii is at the top followed by New York, Massachusetts and California.

So, while it may feel costly to live here in Colorado, it is not as expensive at many other places.

If you watch the weekly statistics that we produce and post on social media, a number that might be jumping off the screen at you is the average price.

Specifically, it is the percentage increase in average price versus last year that is striking.

We are commonly asked ‘how could average prices increase 20% to 30% in one year?’

It is important to note prices haven’t appreciated up to 30%, it’s only the average price that has increased by that amount.

A key reason why average prices have increased by such a significant amount is that there are many more luxury properties selling this year versus last year.

Sales of properties priced over $1,000,000 have seen a substantial increase compared to 2020.

Look at these numbers which show the year over year increase in closed transactions for real estate priced over $1 million:

• Larimer County = 159%
• Weld County = 247%
• Metro Denver = 137%

So, transactions of luxury properties have much more than doubled compared to 2020 which is pulling up the average sales price in a significant way.

Here’s the latest from one of our favorite data sources – the Federal Housing Finance Authority (FHFA).

They track home prices across the Country and produce a quarterly Home Price Index report.

It is not uncommon to find Colorado near the top of the list for year over year price growth.

The latest report has us ranked 13th with only a 13% year over year increase (said with sarcasm).

Idaho is first with a whopping 24% increase. Utah is second at 19%.

Here is our interpretation of these numbers…

Colorado has a history of strong, steady price growth instead of booms and busts.

Our market does not take the big, wild swings in prices that other markets sometimes do.

The fact that Colorado is not at the very top of the list right now is actually good news to us.

We know that our clients appreciate a market that is more steady instead of one that can feel like a rollercoaster.

The economic research blog called “Calculated Risk” just completed a fascinating study on home prices.

Specifically, they looked at the correlation between home price growth and inventory.

They used price data from the Case-Shiller Home Price Index and inventory data from the National Association of Realtors.

No surprise, they found that the lower the inventory the higher the home price growth.  Also no surprise, as inventory goes up, price growth slows down.

This all correlates with simple economic rules of supply and demand.

The interesting part of their research is this:  at a certain level of inventory, prices have the potential to go down.

That level, according to their research, is six months of inventory.

That means, prices don’t have a chance of decreasing in a market until there is at least 6 months of inventory available for sale.

To put that in perspective, today there is two weeks of inventory on the market along the Front Range.

So, there would need to be 12 times the amount of homes for sale on the market for prices to even have a chance to go down.

This week we had the opportunity to hear a presentation by Ed McMahon who is the Senior Fellow for Sustainable Development at the Urban Land Institute.

He is a leading expert on the future of housing and development in the United States.

He sees that Colorado is positioned to massively benefit from the work from home shift taking place across the Country.

Ed cited that only 1 in 10 companies expect employees to come back to the office to work full time.  The believes the future of work is a hybrid model where most employees are mixing their work hours between the company office and their home office.

What does this mean for housing demand?

Smaller cities (like Denver), suburbs and high-amenity small towns will benefit.

He sees that those places with a high quality of life will benefit the most.

Bottom line, if people are untethered from their corporate office and can live anywhere, they will choose to live in places that are nice to live.

Colorado is certainly high on the list of high-amenity and high-quality places.

So, the new work from home dynamic is another reason to be bullish on the future of Colorado real estate.

Hot off the press is the Core Logic Homeowner Equity Report.  This is their quarterly look at what is happening with homeowners’ equity across the country.

Here are the staggering numbers coming out of their research:

• Collectively, U.S. homeowners with mortgages have realized a $1.5 Trillion gain in equity over the last 12 months.
• Only 2.8% of all mortgaged properties have negative equity meaning the home is worth less than the loan amount.
• In Colorado, just 2.5% of homeowners have negative equity.  For comparison, the percentage in Louisiana is 10.7%.

This research is one of many reasons why we don’t see any sort of impending housing crisis like we experienced in 2009.  In the fourth quarter of 2009 for instance, 26% of all homeowners had negative equity.