In Colorado’s third congressional district, which covers almost all of Western Colorado, there’s been a 29.1% year-to-date increase in average sale prices for condos and townhomes. Ongoing population growth, accelerated by Coronavirus, coupled with historically low housing inventory, are driving these price increases. This imbalance of supply and demand underscores the need for increased production of multifamily housing, the backbone of our OZ Funds, across this geography.
While some areas of the country have actually been overbuilt, the last decade saw the lowest amount of new housing development since 1959. Between 1959-2008 housing production ranged from 1M to 2.2M new units annually, but in 2009 production sank to a mere 500K units, according to US Census Data. And this trend has held. People across the country are feeling the crunch as real estate prices increase and housing availability decreases.
According to Colorado Association of Realtors, Colorado markets ended the recent decade with record lows in housing inventory. Against this low housing inventory, Colorado has seen continued and growing population growth setting up a true challenge for communities to accommodate the incoming demand.
Low Inventory Evident to Colorado Residents
The need for more housing, that is accessible to workers in the region, does not come as a surprise to anyone currently living in or considering a move to Western Colorado. Low inventory and high prices act as a barrier for workforce employees and make it challenging to secure long-term rentals and affordable housing. The Colorado Association of Realtors reported that Townhomes/Condos in Colorado’s Third Congressional District saw a staggering 29.1% increase in average sales price from January through July of 2020 (1). Meanwhile, Colorado’s Western Slope population is projected to grow +67.2% by 2050, creating even more demand for high density housing. (2)
Pandemic Accelerates Existing Migration Trends
The recent global pandemic has only accelerated population growth trends as more people are leaving major metropolitan areas in favor of more remote, lifestyle-driven communities. To date, 2020 luxury real estate sales in Telluride, Summit County, Vail, and Crested Butte are substantially outpacing their Denver counterparts (3), evidence that the exodus has begun. This will create an even greater disparity between housing demand and available inventory throughout Western Colorado.
Four Points Focused On Long-Term, Sustainable Growth
Higher prices and reduced inventory is a formula to out-price the workforce population that ultimately supports the growth and sustainability of a community for generations to come. At Four Points Funding we are focused on healthy, sustainable community growth. Denser housing (i.e. multifamily projects) supports a growing workforce by helping to ease the disparity between housing demand and inventory. By investing in the development of multifamily housing we’re offering our stakeholders a lower-risk, more recession proof holding, while driving positive and sustainable growth across Western Colorado.