What on earth is going on in Colorado’s housing market? In light of the recent strain in the Colorado housing market, it may be daunting to make the decision to enter the housing market and look for a place to rent or buy in Colorado. To calm any doubts or concerns you may have, let us put things in perspective for you. The current unprecedented housing strain is not at all unique to Colorado, but as a community, we must unite to find solutions to address it. The national housing market is undergoing a fundamental shift in the overall consumer dynamic of the entire market.
Opportunities, people, economic impact, and partnerships comprise the four pillars of the housing market. Each of these pillars is foundational to current market dynamics, but it is their relationship with one another that helps to answer some of the cause-and-effect questions that renters might have, particularly with respect to inventory and pricing.
As we move further into the 21st century, more and more modern-day consumers in the housing market are deciding to remain as tenants in rental properties instead of making the financial leap to become homeowners. Nearly 39 million Americans live in apartments and the number of homeowners renting their properties are at record highs—putting unprecedented pressure on the apartment industry nationwide. To keep pace with increasing demand, the United States needs at the very least 4.6 million new apartments by the year 2030. The ever-growing demand for apartments at all price points is making it challenging for millions of American families to find quality rental housing that is affordable at their income levels. The good news in Colorado is that there are over 29,000 rental units renting at or below $1,000 per month and rental prices are on the decline.
In recent years, the national rental market has responded and risen to meet demand: an average of one million new renter properties were established every year since 2013. This is a new annual record. However, an average of at least 325,000 new apartment homes (with at least four apartments in each unit) will need to be constructed each year in order to meet growing demand, but only 244,000 new apartments units were built each year between 2012 and 2016.
The Obama Administration conducted a study on America’s barriers to affordable housing and found that burdensome regulatory and permitting processes create significant roadblocks to new construction. Communities can and should work collaboratively with their local and state governments to remove some of the more onerous regulatory hurdles in place, as doing so will give renters greater options at more competitive price points.
Currently, the U.S. apartment industry contributes $1.3 trillion to the national economy annually. This astounding economic contribution will only prove to increase as the industry continues to grow with demand. Hundreds of thousands of new apartment buildings will need to be constructed and millions of existing apartments will need to be updated in metro areas across the country, which will provide a significant positive impact on job creation and both state and the national economy for years to come.
(Source: Apartment Demand Study Fact Sheet)