Examining Why Colorado Cost of Living and Travelling is More Expensive than Other States
Many people who live in Colorado or who travel here have seen costs in the state rise over the last several years. In many cases, by crossing state lines into Colorado’s bordering statespeople notice that prices are cheaper across the board — from food to gas to lodging.
Although some places in the U.S. are still more expensive than Colorado, residents are concerned about the state’s rising prices. An article published by Uncover Colorado explains that the increased cost of living in the state could be attributed to Colorado being one of the country’s fastest-growing states as the population increased by 14 percent from 2010 to 2020 to 5.8 million residents.
The article reports, “According to Colorado’s Office of Economic Development and International Trade, the state’s overall cost of living is 12% higher than the national average and is increasing yearly.” A single person living in Colorado, they can expect to pay just over $2,000 a month on average to live. But a family of four can expect to spend as much as $4,700 per month to live in the state.
One factor that plays into the cost of living is the real estate market which is 34 percent more expensive than the national average. For example, Uncover Colorado reports that the average home in Colorado costs around $591,000, but that average fluctuates between $488,000 and $850,000 depending on location. The Federal Reserve Bank of St. Louis reports that the average house in the U.S. costs around $428,000.
Undercover Colorado also states that people renting in Colorado pay around $1,300 for a one-bedroom apartment and $2,500 for a house. Statista reports that the average rent for a one-bedroom in the country is around $1,100 and $1,800 for a four-bedroom.
A family of four also spends around $1,200 every month on food. Transportation is also a high cost in the state as residents who own a vehicle pay about $650 per month on gas, maintenance, repairs, and express tolls.
The costs to travel in or to the state have also been on the rise. During the summer of 2021, the state saw a big increase in people traveling to the state after shutdowns created by the pandemic ceased.
CPR reported in 2021 that room prices in the state’s mountain towns rose 40 percent compared to 2019. The article explains that the high demand and the trend toward renting larger properties on vacations could have been contributing factors.
Local Economist Explains Rising Costs and Colorado Cost of Living
According to Gary Horvath, Senior Associate for Summit Economics in Colorado Springs, the issue with rising costs in the state cannot be explained by one reason. He said that the state’s rising minimum wage is one reason prices have gone up, but there are several other factors that come into play.
Horvath said that in addition to the higher minimum wage, one reason Colorado has higher costs is that the state has higher annual salaries than neighboring states. “We can afford things,” Horvath said. “When you go to places like Aspen and Vail and Boulder and Cherry Creek and even the Broadmoor area in Colorado Springs, prices are more expensive there because they can charge more and they can get more.”
Horvath also said that changes in policies and regulations (including the rise in the minimum wage) have all contributed to things being more expensive. “For example, the equal pay for equal rights amendment, which was intended to be good could have caused problems,” Horvath explained. “There are unintended consequences with some of the stuff we have done. We passed this transportation act within the past year and one of the things they did was throw a bunch of fees in there. So if you order something with one of the companies that deliver to houses, there is going to be a fee on there for that. Everyone is going to have to pay a fee for their car every year to drive it on the roads. Little things like that add up and make things more expensive.”
Horvath said that the state’s low unemployment rate and the statewide employee shortage have also caused prices to rise because training and retaining employees is now a larger cost. He explained that due to the employee shortage many businesses are forced to invest more in automation, which costs more to purchase and maintain.
Colorado’s Inflation Rate is Currently Higher than the U.S.
Republican Gubernatorial Candidate Heidi Ganahl has recently spoken up about the fact that inflation in Colorado is higher than it is in the United States as a whole. And according to Horvath’s August 2022 Economic Outlook, the state is seeing worse inflation currently than the country as a whole.
“I think what is most important is where inflation is high,” Horvath said in an interview. “One of the reasons could be housing. Colorado’s appreciation of property is greater than the rest of the country as it has been around 20 percent. Everything that we need like food is higher. Coloradans like recreation and the inflation there tends to be higher than the average. Transportation and gasoline prices are also up. So I think it’s the mix of what is high and what is probably causing Colorado to be a little higher. It typically bounces back and forth, but over the past decade or so I think Colorado has been a little bit higher more often than not.”
