The pandemic, rather than crashing housing markets as initially feared, triggered a home price surge unlike any the country has seen, creating an unprecedented amount of wealth.

Four years after the arrival of COVID-19, mountain resort communities continue to record the highest rates of home price appreciation in Colorado. At the same time, gains in some central Denver neighborhoods have failed to keep pace with inflation, according to a Denver Post analysis of home price changes in 401 Colorado ZIP codes provided by Zillow.

Home price gains range from a nearly 107% gain in Edwards, an unincorporated area of Eagle County, to a 10.3% gain in downtown Denver. Smack dab in the middle, or at the median, was Hudson in Weld County with a 37.7% gain in home values over four years.

“In that four-year period we had a once-in-a-lifetime swing in home prices. People wanted to get away from the pandemic in the major urban areas,” said Mike Budd, a broker with Berkshire Hathaway HomeServices Colorado Properties in Edwards.

Allowed to go remote, some workers chose to leave densely populated cities for scenic rural areas. Colorado mountain communities with good broadband access became popular landing spots, Budd said. Some families who frequently visited Colorado decided to lock down vacation homes, aided by record-low interest rates.

And then there were the uber-rich who viewed mountain properties as a better investment option than other alternatives. Budd said a “surprisingly” high percentage of home sales in resort areas in recent years have been all cash.

Budd said the Vail Valley historically has about 800 listings at any given point, but the inventory dropped into the 100s during the most frenzied months. It has since bounced back to around 334 listings this year, but by any measure, supply remains tight.

The typical home price is now approaching $1.8 million in Edwards, long considered a more affordable alternative to Vail or Beaver Creek to the east. And it wasn’t just a pandemic frenzy. In the past year, Edwards home prices rose another 7.7%, still near the top for appreciation.

Although Edwards was the only Colorado area to double in value in four years, several mountain communities recorded home price appreciation rates above 70%. They include Snowmass, Snowmass Village, Steamboat Springs, Basalt, Telluride and Carbondale.

Budd said the run-up has dramatically shifted the market. In the prior two decades, about two-thirds of transactions were under $1 million in the Vail Valley and only 4% were over $5 million. Today, only 28% of transactions are under $1 million, and 8% are over $5 million.

Private land to build on is getting scarcer, construction costs remain significantly higher than along the Front Range, and water rights remain in short supply. That scarcity means mountain home prices probably aren’t heading back down as they did after the Great Recession.

Central Denver left behind

Last decade, a push toward urban living and being closer to work and in the center of the action benefitted downtown Denver and surrounding neighborhoods. But the pandemic changed all that when denser environments became associated with a higher risk of infection.

Smaller living quarters, more common in core urban areas, became painfully cramped when work went remote. Less foot traffic from office workers hurt downtown retailers and restaurants. Public health closures temporarily removed big draws like theater performances and concerts. Protests in the summer of 2020 caused widespread property damage downtown. And the delayed rebuild of the 16th Street Mall continues to make a mess of things.

“In 2020 people started to work from home, and interest rates dropped and single-family homes became more affordable,” said Susan Chong, a principal with Iconique Real Estate, a brokerage firm specializing in urban properties. “Downtown has had one of the smaller gains in value.”

Colorado’s three weakest-performing ZIP codes for home price appreciation in the past four years are in central Denver. They include 80202, with a gain of 10.3%; 80203 to the east with a 13.2% gain and 80218 with a 15.8% gain.

Downtown is within 80202 and the neighborhoods covered by 80203 and 80218 include Speer, Uptown, Capitol Hill, Alamo Placita, City Park West, Cheesman Park and Country Club.

The gains those areas saw might have been completely acceptable in earlier decades. But they didn’t keep pace with inflation and fell way behind the 37.7% median gain statewide.

No Denver neighborhoods managed to surpass the statewide median, although 80249, an area of new construction near the airport, came closest with a 35.9% gain.

In a real estate upswing of a lifetime, central Denver homeowners lost ground. The only other place in Colorado where that happened was in Rangely, a coal-dependent town that saw a gain of 16.6%.

But there are signs that downtown real estate could be bottoming out as more sellers throw in the towel on trying to make the return they had hoped to make. In some cases, they have consigned themselves to taking a significant loss. Buyers, many from out-of-state, are there to meet them in their reluctant surrender to reality.

“It has been quiet, but it is definitely making a comeback in the first quarter of this year,” Chong said. “People still believe in downtown.”

Long-term, other trends could favor downtown areas. A survey from RCLCO, a real estate research firm, found that more affluent younger adults preferred to have second homes in downtown areas over mountain resorts, viewing them as a better long-term investment.

“More people aged 35 to 44 preferred a city location,” said Caroline Flax Ganz, a real estate economist at RCLCO in Washington, D.C. As younger generations accumulate more wealth, they could gravitate towards downtown properties and bypass resort areas.

They were looking at using downtown residences for weekend stays and viewed them as better investments in terms of rental income than mountain and beach areas, Ganz said on a press call Thursday.

Surprising gains on the Plains

Summarizing the last four years as mountain resorts hot, dense urban areas not, and everywhere else somewhere in between, is an oversimplification.

The Zillow data contained some surprises. After Edwards, the area closest to doubling its home values was Kit Carson in Cheyenne County with a 98.6% gain in the past four years.

Las Animas in Bent County was up 73.5%, making the ninth spot out of 401 ZIP Codes tracked for pandemic price appreciation. McClave, in the same county, saw home prices up 70.4%, while Cheyenne Wells, about an hour south of Kit Carson, was up 67.1%.

About half of the ZIP Codes on the Plains had too few transactions to allow Zillow to track them, especially in Colorado’s highly distressed southeastern corner. But when enough sales information was available, housing markets on the Eastern Plains outperformed those along the northern Front Range.

And that outperformance has accelerated in the past year. Of the top five performing ZIP codes on a one-year basis, three were on the Plains, led by Kit Carson and Eads. Kirk in Yuma County has joined the home appreciation party in fifth place.

The pursuit of affordability seems like the most reasonable explanation, and the Eastern Plains are starting from much lower price points. Even after almost doubling, the typical home price in Kit Carson only reached $141,592 in January, according to its Zillow Home Price Index.

In Las Animas, typical homes were still going for $91,377, the only Colorado ZIP code in the study still below $100,000. That’s a far cry from Woody Creek outside Aspen, the state leader with a typical home value of just under $4.4 million. Boulder’s 80304 ZIP is the leader along the Front Range at $1.4 million.

“We hear from a lot of people selling their homes on the Front Range trying to find a cheaper property,” said Brock Reedy, an associate broker with Wilson Realty in Lamar.

In Lamar, Zillow pegs the typical home at $165,749, even after a 53.4% increase in the past four years. Brock adds that $200,000 can buy a nice home in Lamar with some land, while it won’t even “buy a bedroom” in downtown Denver.

“We have had quite a few folks coming out from the Front Range,” said Virgil George, a managing broker at the Rocking X Land Co. in Burlington near the Kanas border.

Retirees not dependent on job opportunities and looking for a calmer pace of life are among those trading city life for affordable country living.

Rocking X recently sold two homes where the buyers signed on the dotted line without ever touring in person, George said.

Buyers working in metro Denver and Colorado Springs pushed up prices in Bennett, Strasburg, Limon and Hugo, trading affordability for a long commute before the pandemic. But Limon and Hugo saw some of the smaller gains among the Plains ZIPs in the past four years.

George remains skeptical of the Zillow numbers, even though his brokerage has had a strong run despite higher interest rates. For starters, few homes switch hands out on the Plains and new construction is rare, meaning just a few sales can push the percentage change way up.

Call him a skeptic, but George isn’t ready to call Cheyenne County Colorado’s hottest housing market, even if Zillow said Kit Carson led the state for home price appreciation last year and was in second place over four years.