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Want to know the cost of living in Colorado? Recently, it seems like everyone wants to move to this state.
Whether it’s for the weather, the mountains, or the culture, Colorado is one of the fastest growing states in the nation.
Colorado is growing at a rapid pace. Between 2010 and 2020, the state’s population grew 14.8% to 5.8 million residents.
This makes the square state the 7th fastest growing state in the country. But what is the cost of living in Colorado? Is it expensive to live here?
Need help moving to Colorado? Want more ideas for the best places to live in the square state?
We literally wrote the book about our experience moving across the country to Colorado.
Get our new book, Moving to Colorado: Where Should I Live? which has been updated for 2022.
As more people populate the state the demand for housing, goods, and services is bound to go up. Let’s breakdown the exact cost of living in Colorado for each main category.
In this post:
1. Housing costs in Colorado: $1,494-$3,487
Housing costs are the biggest main factor on why the cost of living in Colorado is so high.
How much do homes cost in Colorado? According to Zillow, the median price for a home in Colorado at the beginning of 2022 is $589,634 (an increase of more than $150,000 in the past two years). And prices are expected to continue rising in the next few years.
Not to mention the fact that mortgage interest rates have been increasing at a rapid rate. In fact, according to CNBC the 30-year mortgage rate has surged up to 6.28% in June 2022.
Adding up the rising interest rates on mortgages and the ever-increasing cost of housing means that Colorado is becoming an expensive place to live.
Here is how the home prices and values stack up in the top 3 most popular cities in Colorado.
An article by The Denver Post states that home prices in Denver’s metro area are 5 times the median household income.
For reference, the general guideline is to pay no more than 2.5 divided by your monthly income on a mortgage payment.
Simply take your monthly income / 2.5 = how much house you can easily afford!
The increase in popularity and housing prices means Denver is becoming less affordable as the weeks and months go by.
According to Zillow, the average cost of a home in Denver is $652,170.
The good news though, is that Denver’s real estate market is cooling off due to the fact that home prices are simply becoming unaffordable.
Many people can not afford to pay the high prices for rent and mortgage every month and are looking elsewhere.
Demand remains fairly high, and it is my assumption that Denver will still continue to be a popular destination for newcomers in the coming years.
If you find a good deal now, don’t wait! Housing costs are likely to rise in coming months.
Aside from Denver, Colorado Springs is one of the fastest-growing cities in the state.
It’s much more affordable than Denver while still providing many of the awesome amenities the state has to offer.
Zillow states that the average cost of a home in Colorado Springs is $492,383.
Unlike Denver, Colorado Springs’ housing market is white hot and on the rise. The city is becoming more popular every day and housing prices are rapidly increasing.
In fact, the average cost of owning a home has increased exponentially since early 2019.
When we purchased our home in July 2018, it was valued at $272,000 and today it’s worth $404,600 according to a Zestimate (in just a three-year period!).
Boulder is a picturesque place to live that has a small town feel with big city prices. It’s a college town by nature while also being a getaway for many of Denver’s most successful residents.
Because many out-of-state students call Boulder home as well as Denver’s elite, the housing market is out of control. You can pay upwards of $550+ per square foot!
Using Zillow’s home value index, the average cost of a home in Boulder is $1,126,946.
Thankfully though, Boulder’s housing market is cooling off and housing prices are expected to stay relatively steady in the coming months.
Renting an apartment versus buying a home
Generally speaking, renting is usually more expensive than buying a home. However, Colorado’s housing market likes to make its own rules.
Being a homeowner is part of the American dream, but if it’s your dream to live in Colorado, you might be better off renting — at least in the beginning.
A 2020 report suggests that renting a home is better than buying in Colorado. It states that renting is a cheaper option in more than 53% of Colorado counties.
Note: One main caveat is that renters are on their own when it comes to finding a place and negotiating a good deal. In Colorado, renters do not have real estate agents to represent or help them.
If you do have the funds to purchase a home in Colorado, do it as soon as possible. Prices are expected to increase while popularity and demand continues to rise.
Average cost of buying a home: $589,634 or $3,487 per month
Average cost of renting an apartment: $1,494 per month (two bedroom)
2. Utility expenses: $214
According to a study on utilities ranked by state, the average monthly utility bill in Colorado is $241, putting it somewhere in the middle of the pack.
It’s not the most expensive state for utility bills but it’s no longer one of the cheapest states either.
For reference, EnergyStar.gov states the typical utility bill for a family in the U.S. is about $171.66 or $2,060 annually.
Monthly utility costs for this comparison include the following expenses:
- Natural gas
- Water / sewer
- Cable TV
- Trash / recycling
This means Colorado’s utility costs are $70 more per month than the average in the country. There are multiple reasons why these costs are higher and how you can lower them.
Renewable energy sources
Many homeowners and businesses in Colorado are increasing their use of renewable energy sources.
This can mean having your entire house powered by solar panels, or running a business completely off of energy produced by wind turbines (there are nearly 2,000 wind turbines in the state!).
Colorado is leading the country in renewable sources with our sources more than doubling since 2010.
While these factors decrease the average monthly cost of a Colorado utility bill, the cost of water is always unpredictable.
Colorado only recently found its way out of a 20+ year drought. Water costs can be very high depending on the amount of rain or snow received that year.
This has caused our utility bill to increase in prices rapidly, especially if we use a lot of water for showering, washing clothes, and watering the lawn.
Here are few things that can help make your Colorado utility bill lower.
No central air conditioning
One thing that might surprise you by moving to Colorado is that many homes DO NOT have central air conditioning.
As a girl from Texas, I found this quite shocking. But after living in the state for my first year, I quickly realized that air conditioning is usually not needed.
In fact, our home in Colorado Springs does not have central A/C (as is the same with many homes in our neighborhood). And we’ve honestly never needed it.
In addition, many small businesses and shops do not have central A/C in their buildings.
Colorado is a state that likes to keep it’s doors open to nature and to reduce the amount of noise created by central air conditioning units.
Low cost of natural gas
Colorado is the 6th largest natural gas-producing state, and is among the top 5 natural gas-producing states in the country.
This makes it easy for Colorado residents to use the natural gas they produce, reducing the high cost of transportation and delivery required from out-of-state.
However, with the economy still reeling from 2020 and potentially having a shortage soon, prices for natural gas (as well as water!) have skyrocketed.
Instead of traditional electric stoves and central heat, many homes have gas cooktops and a furnace to keep the home warm in the winter.
In fact, 7 out of 10 households in the state use natural gas as their primary home heating source.
3. Food budget: $553
According to Intuit’s budgeting software called Mint, the suggested monthly budget for groceries for 2 people is $553 or $892 for a family of four.
But MIT estimates that Colorado budgets should add an additional 10-14% based on the size of your family.
Colorado is also a very healthy state with many of us eating restricted diets ranging from vegan to gluten free.
So be sure to take any dietary restrictions or food preferences into your budget calculation for food.
Average food budget: $553 minimum per month or up to 14% of your monthly budget.
4. Healthcare costs: $358
Another factor for determining the cost of living in Colorado are healthcare costs.
Colorado residents put a lot of emphasis on being outside and staying active. We’re very health conscious in every aspect, from food to exercise, hobbies, and even therapy.
Residents spend a lot more money on vitamins, organic food, gym memberships, and outdoor hobbies like hiking, camping or skiing.
This can reduce the number of hospital visits, but does increase the cost of other categories.
One factor that can’t be controlled is the national cost of health insurance which is at the whim of the Federal government. And medical premiums continue to increase nationwide.
The average monthly cost of medical insurance without a subsidy in Colorado $358, according to HealthMarkets.com.
Average healthcare costs: $358 per month
5. Colorado state taxes: $412.67
Colorado is a flat-tax state which means that now matter how little, or how much money you make, you will be taxed 4.50% of your income in 2022.
The base sales tax rate is 2.9% while many cities add their own sales tax on top of this amount.
For example, the sales tax you will pay in the Aspen Snowmass area can be upwards of 10.40% depending on what you are buying.
In case you are wondering, yes, you will be taxed for both medical or recreational marijuana.
This is subject to regular sales tax, plus an additional 15% sales tax and 15% excise tax.
Finally, there are property taxes to pay on real estate you own in Colorado.
Thankfully though, these tax rates are some of the best in the nation with the average effective property tax rate being just 0.57%.
The reason property taxes are so low is that no amount of property tax revenue goes to the Colorado state government.
All of the taxes stay within your county of residence, which is a nice benefit.
Income from property taxes are used to pay for local government services like road maintenance, local school districts, free public events, and more.
Average Colorado state tax bill: $2,252 yearly estimated tax on a $62,600 average salary in Colorado in 2022, or $187.67 per month.
Average Colorado property tax bill: $2,535 yearly property tax based on the average $589,634 home value, or or $225 per month.
Total taxes: $412.67 per month
Colorado state tax information was calculated using SmartAsset.com state calculators.
6. Transportation expenses: $657.61
As mentioned previously, Coloradans like to stay active and tend to go on in-state road trips and mountain drives frequently.
Here is how the state’s transportation costs breakdown.
Cost of gas
In 2022, Colorado residents spend about 2.69% of their income on gas. Based on the median monthly income of $4,440 as detailed by this study, this amount is equivalent to $119.43 per month.
The same data shows that Colorado residents spend around $1,440 per year on gas.
According to a 2018 report from TripNet.org, the annual cost per driver in Colorado is $515 statewide, for road repairs and maintenance.
There is also the cost of tolls associated with express lanes, due to the ever expanding amount of traffic.
Many Colorado residents, including myself, pay for an Express Toll Tag for popular express lanes like E-470.
The cost for this is charged to your Toll Tag account each time you use the Express Tollway, and is not charged on a monthly basis.
According to AAA.com the average prices of gas in Colorado starts at $4.90 for regular and goes up to $5.53 for premium gasoline.
This price has nearly doubled in the past couple of years, leaving many Coloradans with budgets that are stretched more than ever.
Taking all of these costs into consideration, it’s safe to assume that you will spend at least $450 per month on gas and tolls.
Public transit can help reduce the cost of driving everywhere, but only if you live and work with access to one of the major cities.
Thanks to Colorado’s Regional Transportation District (RTD), public transportation is widely available in the state. They offer bus, rail, and light rail services to Denver, Boulder, and nearby cities.
A monthly pass for these services will cost between $114-$200 depending on whether you want local or regional service.
You can score more discounts on public transit by purchasing a Neighborhood EcoPass, an EcoPass for employees, a CollegePass, or a FlexPass.
Colorado has some of the highest car insurance premiums in the country. Mostly due to the fact that we get hit with falling rocks when driving in the mountains, or hail storms that come without warning.
The typical car insurance rate in Colorado is $1,363.40 per year or $113.61 per month. This is higher than the national average by 0.6%.
Average transportation expenses: $657.61 per month.
What is the exact cost of living in Colorado?
When adding up the total cost of each category listed above, it costs $5,682.28 per month to live in Colorado in 2022 (if you have an average mortgage cost).
Is it expensive to live in Colorado? After doing the research and living in this state for over 7 years, I’d say the answer is “yes.”
Obviously, it depends on whether you live in Denver or a smaller, less populated town in Colorado.
The cost of living could increase or decrease in each category depending on the county you live in.
So, what does this mean for your income? There are many perks and lifestyle upgrades that this state offers, but it’s also very expensive.
How much do you need to earn to live in Colorado?
According to data from HowMuch.net, in order to comfortably afford to live in Colorado, you have to earn over $100,200 annually. This works out to earning about $8,350 per month.
But that information may be inaccurate as it does not count for the state of the economy post-2020.
In more recent data, the average annual salary in Colorado is roughly $62,000 per year.
This could mean you are able to pay most of your bills but doesn’t leave much room for discretionary income.
Bottom line: The average cost of living in Colorado in 2021 is $5,598.53 and this number continues to climb every day.
With the minimum wage increase and the average statewide wage being $62,000, is it possible to live comfortably on this amount of money?
If you want to buy a house, or pay for food, or fuel that costs more than our estimates, you will need to pay more!
We also recommend earning at least $8,000-9,000 per month to comfortably afford everything.
Other expenses not calculated
Other factors not included in these calculations are travel and entertainment costs, we all know how Coloradans love to ski and snowboard, and contributions for retirement.
In addition, this does not take into consideration any payments for car loans or other debts aside from owning a home.
This is obviously not a complete list of what it costs to live in Colorado but this covers the basics.
It gives you an educated idea of what you can expect to pay on average, when living in this beautiful state.