That's not crazy in Denver :). I saw a place which was 850$ a month (literally this month), and it was in a decent location, and relatively large. I totally believe you could find something small and cheap for 500.
When I was in college I had a pretty sweet house-sitting gig with a guy who was out of town for a lot of the year operating commercial research vessels. He paid me $250/month to watch the place while he was gone, take care of his dog, water the plants, etc. When he was in town I paid $250/mo to rent my room, but since most years he was gone for 5-8 months my net cost was <$0.
Yeah, it's crazy in Denver... wtf are you talking about? Avg is like 2k. Browse craigslist. Denver has been hot for years. I live in a 100k Midwest town and 500 is crazy here.