Boulder, Colorado
Adobe Stock Boulder, Colorado

The typical monthly mortgage payment has climbed 73% nationally since the beginning of last year as high home prices and rising mortgage rates have strained housing affordability.

While housing has become more expensive across the country, the extent is still relative. For example, coastal cities such as Los Angeles and San Francisco have median existing prices of $940,000 and $1.2 million, respectively. Conversely, places such as Austin, Texas, and Phoenix have experienced over 30% price appreciation since 2020 but still offer median existing homes priced less than $500,000.

Housing affordability generally improves as one moves away from the coast, but even inland markets are reaching affordability extremes. To make sense of this, we identified the top five most expensive noncoastal markets across the country today and over time.

We created our rankings with two metrics: one based on median existing-home prices and the other based on price-to-income ratios. We included metros with a population of 250,000 or greater.

Different Landscape in the 1980s

Looking back, the 1980s were a period of low home prices. All major noncoastal markets in our sample posted median prices less than $100,000. That home price is equivalent to $390,000 today after adjusting for inflation. While home prices were relatively low, elevated interest rates were the issue. Interest rates averaged 12.5% throughout the decade, nearly double current levels. As such, the price-to-income ratio in the 1980s was below current levels, but the payment-to-income ratio was higher in many markets.

1990s: Income Growth Meets Home Price Growth

Home prices grew from the 1980s to the 1990s, but so did incomes. As a result, the price-to-income ratios for the most expensive noncoastal markets decreased compared with the most expensive ones in the 1980s despite prices rising 70% on average among our top five over the same period.

Mountain West and Southwest Dominate the List Come 2000

Since the turn of the century, markets in Colorado have been a mainstay on the lists. Boulder, for example, has ranked most expensive in four of the five comparison years for price and three of the five for home price to income. Boulder’s rise as the most expensive noncoastal market has been driven by a multitude of factors including:

  • Demand fueled by the attractive outdoor lifestyle. According to the local government, Boulder “owns or oversees over 100,000 acres of open space” allowing for myriad outdoor activities, including hiking, biking, trail running, horseback riding, and kayaking. The area attracts primary residents, second home buyers, and even athletes (Olympians and otherwise) that use the terrain for training.
  • Supply is limited by zoning and regulation. A large part of Boulder’s charm stems from the low-density, low-height buildings in the metro coupled with natural beauty. Local officials and residents are adamant about keeping that charm, resulting in a difficult, time-consuming, and expensive building environment. In fact, beyond geographic barriers to growth related to lakes, reservoirs, and mountains, the Residential Growth Management System established by the city of Boulder caps growth each year to just 1% of the existing residential housing supply.
  • Influx of relocators. Only 18.2% of searches in Boulder come from within the metro. The top markets where searches stem from are Colorado's Denver and Fort Collins as well as Phoenix, Chicago, and New York.
  • High-income jobs. Many key industries in Boulder are high paying, including aerospace, bioscience, cleantech, and IT/software. Companies such as Google, IBM, Lockheed Martin, Northrop Grumman, and Qualcomm have a presence in Boulder, contributing to the pool of high-income residents.
  • Educated workforce. The steady flow of new enrollment contributes to local population growth as some of those attending the University of Colorado Boulder stay local after graduation.

Denver, Fort Collins, and Greeley also top the list of the most expensive noncoastal markets. While Fort Collins and Denver placed in the top five in prior decades, Greeley is new to the list in 2023.

Greeley is now the fourth most-expensive noncoastal market based on local home prices. Greeley, which ranked outside the top 10 in 2010, appreciated over 200% from 2010 through today, outpacing the national growth rate of 120% during the same time. Greeley’s price growth has been driven by a supply-and-demand imbalance fueled by relative affordability and migration. Greeley added 2.1% of its population via domestic migration annually since 2015, with many of the relocators coming from within the state. Searches from Denver dominate the non-Greeley resident website traffic. While Greeley is expensive nationally, the market’s median price is 10% below Denver’s levels.

Potential buyers in expensive noncoastal markets, but also in many metros across the country, have had to get creative to find paths to homeownership. Those looking to buy are considering their options such as buying a smaller home, moving farther from a central business district, stretching their budget, looking for creative financing, and even uprooting their lives and moving to a more affordable market elsewhere in the country.

From the building community, home builders are considering changes to density, floor plans, and square footage. For example, Boulder’s average new unit size has declined 15% since pre-pandemic, outpacing the national contraction of 10%. The building community is staying focused on controlling what they can control and will need to continue to do so to regain a healthy, well-functioning housing market.