Factors Impacting Housing Affordability
Colorado’s housing affordability challenge is first and foremost one of supply. Prior to the Great Recession, there were more housing units in the seven-county Denver metro region than households.
But, since the recession, the region has added households at an annual rate that has far outstripped that of housing units, consuming the surplus of housing units. As a result, demand has outstripped supply for nearly a decade and housing prices have risen in excess of wages, causing housing to become increasingly unaffordable for many Coloradans.
We forecast excess demand to persist, even with record levels of building permit activity. Under these circumstances, only significant increases in housing supply will stabilize price; incremental reductions in the cost structure of development will accrue to developer profit and do little to ameliorate price pressure.
And, everyone should care about this affordability challenge. Housing cost-stressed households impact all Coloradans through the negative effects on business, public tax bases, health and education.