The CSPR study showed strong evidence for immense affordable housing demand in Denver, as illustrated by torrid price increases among entry-level housing that far exceeds rent hikes in recent years. However, despite clear demand for affordable housing, condominium starts (particularly at the lower end of the market) remain unacceptably sluggish. This trend, if left unaddressed, will have a devastating impact on Colorado’s housing market and our state’s economy.
As the CSPR study notes: Crowding-out of young buyers impacts households by preventing them from building home equity, but also impacts the city and state at large through reduced migration, greater income inequality, and infrastructure pressures created by increased urban sprawl, and disincentive for businesses to move to or open offices in Denver.
So why are developers unable to fill a critical gap in Colorado’s affordable housing market? Our misguided construction defect liability laws according to one study tack on an extra $15,000 per unit for builders and make it economically unfeasible to build multi-unit condos worth less than $450,000. This is unfair to working class Coloradans who are struggling to find a home in the area where they live and work.
We Need Your Help…
● SB 156 would fix problems in the current construction defect law by providing a common sense and balanced solution that protects consumers from faulty construction while also increasing diverse and more affordable options for home ownership.
● Join us on social media to let everyone know that Colorado needs bipartisan affordable housing solutions. Use the hashtag #NoPlaceLikeHomeCO to tweet about the new CSPR study, SB 156, and the need for more affordable housing for working class Coloradans.
● Write a letter to the editor in support of more affordable housing options for working class Coloradans. Submit toThe Denver Post or your local paper.
Share the Facts about surging demand for affordable housing in Denver...
✓ There is insufficient supply of new housing in Denver to absorb the demand for entry-level homes, particularly in the area of condominiums, which has led to Denver median home prices reaching all-time highs.
✓ Crowding-out of young buyers impacts households by preventing them from building home equity, but also impacts the city and state at large through reduced migration, greater income inequality, and infrastructure pressures created by increased urban sprawl, and disincentive for businesses to move to or open offices in Denver.
✓ Denver for-sale home prices have increased much more quickly than rent prices, particularly in the lowest (“entry-level”) price tiers. For the previous 5 years through December 2016, the median Denver home price increased 73.2%, while median rent prices increased just 46.4%.
✓ Despite recent evidence of growing demand for more affordable condominiums, the majority of new starts are at the highest end of the market. In 2015, the total number of condominium closings was 49% above the historical average. In 2016 almost 76% of all condominiums sold were regular resales priced below $300,000, yet 75% of all new condo starts were expected to be priced at over $700,000.
✓ The REMI simulation found that even a 1% decrease in residential investment in 2017 would result in over 1,800 fewer jobs for Coloradans and decrease state GDP over the next 5 years by $1.06 Billion.
✓ With just a 1% increase in housing costs above the baseline in 2017, Coloradans see a decrease of $322 million in real disposable income as a result of the less migration due to higher costs relative to other states and fewer jobs due to crowding out of other consumption.