Are We Due For a Mass Exodus From Colorado?
Cost of living, in part, to blame
About 193,000 Coloradans moved out of state last year, and according to State Demographer Elizabeth Garner, “We are seeing that there has been an increase in outs — the highest on record.” Don’t worry, the bottom is not falling out. There are still more people moving here than leaving, but the reasons people are giving are headed out will ultimately slow the population increases in the near future and have an impact on future real estate price appreciation.
According to a survey by the Denver Post, the number one reason cited by people leaving Colorado is the cost of living. Housing prices in Denver are up 58 percent in the last eight years, while the average apartment rent is up 63.6 percent during the same period. This increase in living costs has far exceeded any increases in salary (15 percent over the same period) and therefore has priced many people out of the market. The high cost of living is no surprise given what we all have witnessed throughout the Front Range and other markets throughout the state.
A number of other items were cited in the survey:
- Political climate,
Even though more people are moving out, there are still plenty moving in; there was a net increase of 30,000 new relocations to the state – the lowest level in seven years.
WHAT DOES THIS MEAN?
Denver and the Front Range are still desirable places for businesses and their workers. Employers are still attracted to the area based on the large population of highly educated and technical workers. (See What Colorado city will grow the fastest?) The out migration means the market ultimately will come into better parity, suggesting supply and demand in the market will not be so far apart. This will ultimately lead to a more moderate rate of increases in real estate.
WHAT SHOULD YOU DO?
Be careful trying to time the market. We are somewhere near a peak and net migration will not enable the rapid appreciation we have seen the last eight years. This is critical for short-term real estate investors (fix and flip). Investors should evaluate if they will need to sell sometime in the next one to three years, and if so, now could be a good time – that is, If the ultimate goal is to hold.
Most markets in Colorado should hold up fine and appreciate modestly over a long period of time so the recommendation would be to just sit tight.