How expensive is buying a home in Denver?

A resident will need to work an additional 36 hours per month compared to the year before to pay for the mortgage on a newly purchased average-priced home.

That average price, by the way, now stands at $619,451 — more than double what it was in 2013.

And that’s if a hopeful buyer can actually find a property to purchase.

These are some of the major findings of a study released by the Common Sense Institute this week. 

“Housing affordability in Denver has been declining due to increasing housing prices and rising mortgage rates,” report author Steven Byers, a senior economist at the Common Sense Institute, told The Denver Gazette. 

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“Denver has not been building enough new housing units to keep up with increases in new residents and this has contributed to increased housing prices,” Byers added.

The city has added 162,000 new residents since 2005, while the average-priced home in Denver has increased 138%, from $260,600 to $619,500.

According to the study, Denver is short between 13,000 and 31,000 housing units today and will need to build between 31,000 and 49,000 more to accommodate expected population growth by 2028.

Jennifer Castor, a spokesperson for Denver Mayor Michael Hancock, said housing affordability has been a key issue for the administration.   

“While we haven’t yet been able to review the full report or assess the veracity of its findings, housing affordability has been a priority for the Mayor and his administration for years,” Castor said. 

“We’re also now prioritizing affordable housing in permit reviews, to help get these units through the process faster, and get homes ready for families sooner,” Castor continued. “That’s why we’ve budgeted more funding than ever before to support building affordable housing, helped build or preserve over 10,000 affordable homes over the last 11 years, and are now requiring more affordable housing to be included in new developments.”

The CSI report said homebuilder confidence has declined 75% since a recent high in November 2020 and noted that the National Association of Home Builders/Wells Fargo Housing Market Index for the Western Region has been falling for nine straight months, indicating a likely decrease in the rate of new housing creation going forward.

Runaway inflation beginning in the spring of 2022 caused mortgage rates to jump as the Federal Reserve raised the interest rate, causing a dramatic effect on the cost of purchasing a home.

The report said that, from January 2007 until the summer of 2020, about 55 hours of work were required to make an average mortgage payment.

The Covid-19 pandemic drove the work hours to keep up with a mortgage up 70% — from 61 to 104 hours for workers getting an average wage of $38.30.

Proposed legislation before the state General Assembly that seeks to push for full electrification of homes and businesses will also reduce affordability, the report said.

Byers cited a study done by Black Hills Energy, which said the cost to fully electrify all residential housing in Denver ranges between $41,000 and $47,000 per existing unit. The puts the total cost to current Denver residents at $8.6 billion to $10 billion.

The cost of fully electrifying Denver homes, which CSI study puts at $47,231, is equivalent to 58% of the median household income of $81,630, the group said.