Colorado Prices Are Catching Up to California — Unless You Rent
Ask around Denver and you’ll hear it constantly: rent feels like California now. Housing prices feel like California now. The whole state, the theory goes, is quietly turning into California with better mountains. It’s usually said about one thing — a lease renewal, a house listing — and generalized to two entire states.
The broad claim, checked first
Before zooming into any one city or any one price tag: has Colorado’s overall cost of living actually moved toward California’s? The Bureau of Economic Analysis tracks exactly this — a price-level index for every state, benchmarked to the national average.
of BEA price-level data — and the overall cost-of-living gap between Colorado and California has moved by 0.2 points in that time. Statistically flat.
Taken literally, the popular belief is wrong. Colorado has not been closing in on California’s overall cost of living. It never left second gear.
The one thing that actually moved: housing
So where is the “it feels like California now” feeling coming from? Break the same index into its components and one line stands out.
Housing is the one category where Colorado is genuinely, measurably catching up. Everything else in the basket — groceries, utilities, general services — isn’t telling the same story, which is exactly why the belief feels true (people mostly complain about rent and home prices) while the state-level number stays flat.
Zoom into the cities people actually mean
Nobody comparing “Colorado” to “California” is thinking about Grand Junction versus Bakersfield. They mean Denver versus LA, or Denver versus the Bay Area. At that resolution, the convergence is sharper.
— how much Denver's housing-cost gap with Los Angeles has closed since 2008. It's the sharpest convergence of any pair measured on this page.
That’s an index, benchmarked to the national average — useful for comparing regions on the same scale, less intuitive than an actual price tag. So here’s the same story in dollars: typical home value, Denver vs. LA vs. San Francisco, 2008 versus today.
Two independent sources — BEA’s relative price index and Zillow’s raw dollar data — agree. Homeownership costs in Denver really have been closing the gap with the coastal California metros people actually compare it to.
The twist: rent didn’t get the memo
Here’s where it gets uncomfortable for the clean version of the belief. Home values converging is a story about buyers, and most people aren’t buying — they’re renting. Zillow’s rent index tells a different story.
Two reputable sources on the same general question point in different directions once you split buying from renting. That split — not a single yes-or-no — is the actual finding.
Against San Francisco rent specifically, Denver did narrow the gap a bit (57% of SF rent in 2015 to 61% today) — modest, and nowhere near the homeownership convergence. Against LA, the rent gap didn’t close at all. If “Colorado is getting close to California” is a claim about what it costs to rent an apartment, the data mostly says no.
Why the belief exists anyway
The homeownership story lines up with something real: people actually did move.
growth in Californians filing a Colorado address on their tax return the following year, from the 2009-10 baseline (9,300/year) to the 2020-21 pandemic peak (16,153/year). It's cooled since — 14,044 in 2022-23 — but is still well above where it started.
There’s also a real financial pull that has nothing to do with home prices. Colorado’s flat 4.40% income tax is a fraction of California’s top marginal rate (13.30%, effectively 14.6% with the state’s payroll surtax on wages above the cap). Colorado’s effective property tax rate (0.50%) is lower than California’s (0.70%) too, though California’s Prop 13 caps assessment growth in ways a headline rate doesn’t capture. None of that is “cost of living” in the price-index sense above, but it’s a second, separate reason a Californian relocating to Colorado plausibly feels like they came out ahead, on top of whatever the housing numbers say.
Verdict
Collapsing this into one yes-or-no would misstate what the data actually shows. Three separate answers, depending on the question actually being asked:
- “Is Colorado’s overall cost of living catching up to California’s?” No. The state-level, all-items gap hasn’t moved in 16 years of BEA data.
- “Are Denver home prices catching up to LA and San Francisco’s?” Yes, clearly — confirmed two independent ways, index and dollar terms alike. This is the real phenomenon behind the belief.
- “Is rent catching up?” Mostly no. Denver’s rent gap with LA actually widened since 2015; the gap with San Francisco narrowed only modestly.
The belief survives as a story about buying a house in Denver specifically — and that part checks out. Stretched to “Colorado” and “California” as whole states, or to renting instead of buying, it doesn’t.