The housing shortfall in Colorado is north of 100,000 units, but that number is dropping from a peak in 2019, according to an analysis from state demographers that looked at data up until 2023.
Demographers say that 34,100 new homes will need to be built each year to prevent that shortfall from growing over the next decade.
"Since 2000, Colorado's housing market has undergone significant transformation. Population growth has outpaced new housing development, resulting in supply constraints and escalating costs," the report reads. "Multiple studies have highlighted how Colorado's housing supply has not kept pace with housing demand and is particularly deficient relative to other states."
The report concluded that in 2023, Colorado had a housing shortfall of 106,000 units. Researchers analyzed census data including the total housing units in the state, number of households, age of heads of household, number of second homes and number of uninhabitable units. The report's authors acknowledged that their work does not fully capture all populations in the state, such as those experiencing homelessness, since they relied on imperfect census data.
The shortfall began to accelerate around 2007 and peaked at 140,000 units in 2019. Since then, Colorado's population growth has slowed and housing production has increased.
"Since 2020, 43,000 housing units have been built on average annually, a marked increase from the previous decade's housing production. These factors combined have allowed for the housing deficit to be cut by nearly 25% in a short amount of time between the peak shortfall in 2019 and 2023," the report reads.
The report does not consider the types or prices of housing needed to close the gap or make housing affordable in the state. Around 2015, housing prices started rising faster than personal incomes in the state, and by 2023 there was the largest gap in housing affordability in over 20 years. By that year, housing prices were up 223% since 2000, but income was only up 144%.
"Despite making substantial improvements in the state's housing deficit over the past five years, the gap between household income and housing costs are greater now than ever before, a phenomenon that is disproportionately impacting low-income households in Colorado," the report says.
State demographers plan to update the housing shortfall analysis every year. That should give insight into how emerging factors, such as rising construction costs, policy changes and tariff impacts, will affect the housing supply.
An analysis from the National Low Income Housing Coalition found that Colorado has a deficit of about 134,000 rental units for extremely low-income households. The right-leaning American Enterprise Institute estimates that the Colorado housing shortfall sits at about 180,000 units, the sixth highest in the country. Housing policy group Up For Growth found that Colorado needs about 105,000 units to meet needs as of 2022. Those three studies used different methodologies than the state demographer's office, though Up For Growth's methodology is most similar.
Since 2023, the Colorado Legislature has passed a handful of policies to spur housing construction, but it's hard to gauge their impact so soon. That includes laws to streamline modular and manufactured housing, expand the parts of the state where accessory dwelling units are universally allowed, incentivize denser housing around transit hubs, and reduce litigation risks for construction defect claims.
"We are fighting to lower housing costs and ensure that every Coloradan can realize the dream of becoming a homeowner but more work needs to be done. By expanding housing options, we can lower costs and provide more options for Coloradans to live where we want to live," Gov. Jared Polis, who has put housing and affordability near the top of his policy agenda, said in a statement.
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