Auto affordability drops sharply in metro Denver as price increases outstrip income gains

Affordability is a big issue in housing, but the pandemic has also forced more consumers to stretch when buying a new or used vehicle, especially those who want to own a small SUV in Colorado., an online auto website, compared auto prices in August 2019 versus August 2022 nationally. New car prices are up almost 29% on average, while the cost of a 3-year-old used car is up 52%. Incomes, by contrast, rose a much smaller 13%, meaning consumers aren’t keeping up. Higher interest rates on auto loans will only compound the problem.

To measure affordability, has created an index that compares median household income against the payments on a 60-month loan for a new car and 36 months for a used. An index score of 100 represents payments at 10% of monthly income, the maximum recommended amount.

In August 2019, the affordability score for a 3-year-old car was 101.93 in metro Denver and 99.1 nationally. Fast forward to this past August, and the affordability index score dropped to 77.6 in metro Denver and 72.7 nationally. Used car prices are much higher in Denver, with a 3-year-old auto costing $37,322 on average, compared to $25,542 nationally.

“People still need to replace their vehicles, so the resulting drop in affordability means shoppers are either taking longer loan terms and paying higher interest rates, putting down less money for a down payment, or even forgoing the kind of car they originally wanted for a lower cost model in order to make ends meet,” said Karl Brauer, an executive analyst at, in the report.

The affordability index for new cars in metro Denver didn’t decline nearly as much as it did for used, moving from 98.7 in August 2019 to 95.3 in August 2022.

The used car with the biggest decrease in affordability in metro Denver was the Subaru Forester. Someone who traded in a 3-year-old Forester back in August 2019 received on average $18,482. Say they bought another Forester and traded it in exactly three years later, this August. They would have received $33,284, an increase of 80.1%.

That pricing craziness is on the extreme end, but several models were up 40% or more. The Mazda CX-5 went from $20,517 to $31,947, an increase of 55.7%, while the Subaru Outback went from $21,401 to $31,393 or 46.7%. Other models with big price increases were the Toyota RAV4, up 46.2% and the Honda CR-V, up 43.8%. Payments on all those models, despite their age, surpassed the recommended range of affordability for someone earning the median household income in metro Denver.

“All of the least affordable cars in Denver are small SUVs from Japan. These cars are popular in most regions, but they are particularly sought after in parts of the country with inclement weather and easy access to recreational areas, both of which are true in Denver,” Brauer in an email.

Used car prices are starting to fall, and the supply of new cars is expected to increase as bottlenecks in the supply chain ease. That increased inventory is likely to hit as demand is softer because of a recession. That could offer a rare arbitrage opportunity for those who can pull it off — sell the lightly used car near the peak now and buy a new car late next year. Pulling it off, however, won’t be easy without something else to drive, say a 15-year-old beater in grandma’s driveway.

“If a person can sell a used car now and wait 6-12 months to buy that would be ideal, but most people who can benefit from selling a car right now will have to quickly replace it, meaning they will have to buy in this environment where prices are still high,” Brauer said.

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