(The Center Square) – Consumers’ ability to afford a home in Denver and throughout Colorado continues to decline, according to a new report.
The Homebuyers Misery Index, compiled by the Common Sense Institute, worsened in all of Colorado’s counties and throughout many parts of the Denver metro area since the think tank’s last report in August 2023. CSI’s Free Enterprise Competitiveness Housing Index currently ranks Colorado last in a ranking of 50 states and the District of Columbia.
“Despite a glimmer of hope facilitated by declining mortgage rates in the fourth quarter of 2023, available inventory remained restrained as homeowners clung to their homes financed with sub-3% mortgage rates, keeping the cost of housing stubbornly high,” according to the 29-page report. “New housing permits also remain suppressed in the fourth quarter, with all Denver metro area counties forecasted to end the year in a housing supply deficit status.”
The unaffordability index jumped 7% in Mesa County while Boulder’s increased 3%.
“This research proves what we are all seeing and feeling in our communities,” Peter LiFari, CSI’s housing fellow, said in a statement announcing the report. “Affordable housing is Colorado’s biggest challenge. Without affordable housing, our communities suffer, our businesses lack a workforce and the overall quality of our lives declines.”
The report found the average homeowner had to work more hours to pay for a monthly mortgage. From 2013 and 2023, the number of hours an average Denver homeowner had to work to make a mortgage payment increased 172%, from 42 to 114 hours a month.
The estimated housing deficit in Denver in 2023 was between 45,025 and 115,012 units. The report estimated an additional 26,971 to 40,968 housing units will be required to meet population-driven demand to close the existing deficit by 2028.
“Affordable housing is a complex issue that involves many, many stakeholders and interested parties, but chief among them are the families and individuals that simply cannot afford to live in our great state,” LiFari said. “Solving this issue must be at the top of the list of every elected official across Colorado.”
New housing permits spiked in Denver in early 2023 but dropped after May. Based on the number of permits issued through October in the Denver region, the projected number of permits (20,477) is down 17% from 2022 levels (24,872).
The report’s authors urge state government leaders to develop strategies to address the affordability problem. “A stark divide persists between Colorado cities and the state government regarding strategies to tackle the housing unit deficit,” according to the report. “While the governor has positioned housing as a matter of statewide concern, local municipalities have resisted state interventions, such as the governor’s statewide zoning reform efforts advocating for fiscal incentives and technical support while retaining autonomy over land use decisions.”