For the past several years, young homebuyers have been seemingly shut out of Colorado’s housing market.
Since April 2021, the median cost of a single-family home has increased by 19% to nearly $600,000. Other entry-level properties like condos and townhomes are also about 7.1% more expensive than they were four years ago, with a median sales price of $407,000, according to data from the Colorado Association of Realtors.
Elevated interest rates continue to make mortgage loans unappetizing to many homebuyers. Fannie Mae measured the average rate for a conventional 30-year loan at 6.84% this week, which is more than double the 2.95% average rate seen at this time in 2021. The rapid increase in interest rates not only decreased available inventory but also decreased homebuilding activity and homebuyer demand, all of which contributed to the rapid price increases.
Now that Colorado’s housing market appears to be shaking off its pandemic-era shackles, young homebuyers find themselves in a market unlike any seen before. Inventory has grown rapidly, with Realtor.com measuring a 65% increase in metro Denver over the past year. In normal times, that would be a welcome sign for homebuyers. But wages have not kept pace with home price appreciations, which makes affordability a primary concern for many buyers.
There are also several new incentives, financing tools and home types for homebuyers to choose from. For instance, some homebuilders are offering rate buydowns to attract buyers. This incentive first appeared in the 1970s and 1980s when mortgage rates were in the double digits. It works by requiring homebuilders or lenders to pay an upfront fee to permanently or temporarily reduce the interest rate on a homebuyer’s mortgage loan.
Some homebuyers are also turning to alternative financing methods like shared equity agreements and co-buying to afford a home. Shared equity models require a homeowner to sign over a percentage of their home’s future equity to a lender in exchange for cash upfront. Co-buying allows friends or family members to pool their resources together without forming an LLC like a traditional real estate investment group.
Nontraditional home types like rent-to-own properties, tiny homes, shipping container homes and accessory dwelling units have also become more popular since the pandemic.
All these changes can make it difficult for young, first-time homebuyers to know where to start. Yet industry experts say several time-tested methods can still help young homebuyers purchase their first home.
For Rent signs in Denver’s Baker neighborhood on May 14, 2025. (Eric Lubbers, The Colorado Sun)Create a budget
Contrary to popular belief, buying a home doesn’t begin by perusing Zillow.
Instead, young homebuyers should take the time to create a budget, allowing them to understand better what kind of home they can afford.
Brittany Frantz, mortgage operations supervisor at the Credit Union of Colorado, said there is no magic formula to identify a realistic price point. However, experts typically recommend that mortgage and utility costs should not make up more than 30% of a household’s total income. For example, a household making a combined $10,000 per month should not spend more than $3,000 on housing costs.
Paige Omohundro, business development manager at the Colorado Housing Finance Authority, added that CHFA has several homebuyer classes for young homebuyers. CHFA also offers scholarships for homebuyers to attend their classes.
Educate yourself on the associated finances of buying a home
There are several taxes and fees associated with buying a home that homebuyers need to be aware of. Some of them include:
Down payment Earnest money Closing costs Inspection fees Appraisal fees Title fees Homeowners Association dues/feesAll of these fees can make up between 2% and 5% of a home’s purchase price, Frantz said. Some of the fees can also be rolled into a homebuyer’s mortgage loan.
Frantz said homebuyers should also ask their lender as many questions as possible about their loan and the fees included in it to understand their financial impact.
For instance, not every loan requires a 20% down payment. Homebuyers can pay as little as 3% to 5% as a down payment. Loans with down payments less than 20% of the purchase price require the homeowner to pay mortgage insurance every month, which protects the lender in cases where a homeowner defaults on their loan.
“Think about what you want in your home, and then build a budget based on what you’re looking for,” Frantz said.
Prepare for taxes and insurance costs
Homeowners also need to be prepared for future tax and insurance cost increases. Property taxes can fluctuate greatly because they are assessed every two years. Homeowners’ insurance is reassessed annually.
Homeowners can renegotiate homeowners’ insurance costs by shopping around for better policies. However, property taxes are much more difficult to change as they require going through a formal protest process with the local tax assessor.
Insurance costs can also determine how much homeowners pay in HOA fees. While these fees typically apply to people purchasing townhomes and condos, they can also apply to single-family homes in certain communities.
“Make sure what you’re entering into works for the long term,” Frantz said.
Get creative with financing options
The traditional mortgage process may not work for every young homebuyer, especially those with limited or no credit history.
Instead, young homeowners can use some creative financing methods to purchase their first home.
One method is known as “house-hacking,” where a homebuyer purchases a multifamily property and rents out part of it to help offset their mortgage costs. Lydia Golesh, a real estate agent with Keller Williams, said this method works for homeowners who are willing to assume the risks of being a landlord or property manager.
Other methods, like co-buying, could be an option. Co-buying is when a group of people pool their resources together to purchase a home. Typically, this group does not need to form an LLC like traditional real estate investors.
Young homebuyers event
Brittany Frantz, Lydia Golesh and Paige Omohundro all spoke at a recent home buying event hosted by The Colorado Sun, with sponsorship support from Credit Union of Colorado, Colorado Housing & Finance Authority, Oakwood Homes, AAA-The Auto Club Group, and Keller Williams.
Utilize a first-time homebuyer program
Several first-time homebuyer programs can help young homebuyers purchase their first property. Omohundro said some of the programs can be stacked together to give first-time homebuyers a leg up when purchasing a home.
For example, CHFA has down payment assistance loans and grants for first-time homebuyers. Some of the programs can be combined with offerings from the Colorado Housing Assistance Corporation, Omohundro said. Credit Union of Colorado also has a 100% financing program for first-time homebuyers.
“There are lots of products out there, so it’s about finding the one that works best for you,” she said.
Pick a location and don’t wait to buy
Golesh said young homebuyers should look at up-and-coming neighborhoods to find affordable deals. Some places she suggested looking at include:
East Aurora West Lakewood Southwest Denver North DenverOnce a buyer settles on a location, Golesh said it’s best to buy as soon as they are able.
“Don’t wait for the perfect moment,” Golesh said. “Just like life, real estate comes in ebbs and flows.”
Evaluating a real estate agent
One of the most overlooked aspects of homebuying is evaluating the real estate agent you will be working with.
Omohundro said evaluating an agent is similar to interviewing for a job. She suggested that homebuyers talk to different real estate agents to ensure they work with someone who “has their back.”
Homebuyers should not only talk to agents, but they should also do some research into a real estate agent’s business. Read reviews from previous customers or talk with people who have worked with the realtor in the past.
“They survive off of referrals, so they want to do right by you,” Omohundro said.
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