People who relocated to metro Denver from other states in the past decade earned higher incomes — by an average of $3,100 per household — than those who left, despite being a couple years younger, according to a new study.
And for those newcomers relocating from expensive coastal cities, metro Denver’s rents and home prices represented a relative bargain, which helps explain why home prices and rents here have risen above what income gains could justify and why some households have found themselves priced out.
“You are taking the brunt of California’s housing refugees. Metro Denver is still affordable to them,” said Issi Romem, chief economist at BuildZoom, a website that helps people locate contractors and conducted the study.
Romen studied migration patterns in 442 metro areas between 2005 and 2016, comparing the age, household size, incomes and educational levels of those leaving versus those coming.
His research showed a pattern of polarization, with a group of cities gaining more highly-educated and higher-paid workers, while another group was losing them. The metros on the winning end in the battle for skilled workers tended to have much higher home prices.
The median annual household income of those coming into the Denver-Aurora metro area was $52,588, while the median income of those leaving was $49,473, a difference of $3,115. The median for all metro Denver households was $64,315.
Those incoming households made more, even though the median age of the head of the households coming into Denver was almost two years younger than that of those leaving.
After two decades in northern California, technology entrepreneur Joe Marrapodi finally had enough with escalating living costs.
“It was getting expensive five years ago and now it is beyond that point,” Marrapodi said. “I don’t understand how it continues to work.”
College graduates starting out in San Francisco face rents of $4,000 or more, and the median home price there is approaching $1.3 million, according to Zillow. When it came to renting office space, landlords were demanding a year of lease payments in cash up front, Marrapodi said.
Fed up, Marrapodi, 44, moved not only his family but the entire company he co-founded — Greentoe, which provides a “name your price” venue for retail goods, similar to what Priceline offers for flights and hotel rooms.
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Of the 10 workers Greentoe has, nine made the move with him to Denver, with one staying behind. A year later, eight of the nine still live in the Denver area and Marrapodi said he and his employees have no regrets about the move.
Denver is in the camp of metro areas attracting higher-earning and usually younger households, while seeing lower-income older households move away. Others include New York, Los Angeles, Washington, Seattle and San Jose, Calif.
At the “negative” end of the pole are metros such as Philadelphia, Detroit, Minneapolis, Cleveland, St Louis, Kansas City, Mo., and Milwaukee, where those coming in make less than those leaving, and often less likely to have a college degree.
“We think that the higher level incomes are driven by the types of job growth as well as affordability, but want to emphasize that Denver metro is only slightly above the red line,” said state demographer Elizabeth Garner.
In New York and Los Angeles, the income gap between those coming versus those leaving is twice as large as Denver’s, while it is nearly four times as large in the San Francisco and San Jose area.
Garner said metro Denver has had a long history of attracting young college graduates, which has allowed the economy to advance. In the other direction, she thinks the region is seeing retirees leveraging the big price gains they have seen on their homes and relocate to more affordable markets, she said.
Garner also argues that the inability of housing development to keep up with population growth pushes prices up, not just the mix of people relocating to metro Denver.
“This has caused the price appreciation to increase faster that what would have occurred were the housing market is in line with the population growth,” she said.
Cost of living was a big factor for Colleen Shattuck, 62, and her husband Paul, 65, who called it quits on Colorado and moved to Helena, Mont., in September.
“We both had retired and the cost of living was getting out of control,” she said.
Trying to get around the city has become more difficult, and people they ran across were ruder. The couple had built a nice equity gain in their Highlands Ranch home, leaving them in a position to move closer to their oldest son and his family.
“This is like what Denver was 30 or 40 years ago,” Shattuck said. “I remember when everyone was nice in Denver.”
Although higher-income households and higher home prices might be viewed by some as a positive, it may be possible for a market to become so popular and expensive that is starts to repel rather than attract people.
Demographers Joel Kotkin and Wendell Cox note that most recent census estimates show residents of some of the most expensive cities are increasingly starting to say enough. The biggest percentage declines in population last year among large metros came in Los Angeles, Chicago, New York and San Jose.
The seven metros that comprise the San Francisco Bay Area’s seven metros experienced outmigration 10-fold higher than they had averaged since 2010.
In metro Denver, the number of people coming in from other states continued to outpace the number leaving last year, but there was also an unexpected rise in the number of households moving out.
