Colorado’s apartment building boom is fading fast. The slowdown extends to some affordable housing, according to a report from the Federal Reserve Bank of Kansas City.
The report examines builders’ use of the Low-Income Housing Tax Credit program, a federal program created in 1986 that uses tax breaks to boost affordable housing construction. Colorado developers pulled ahead of the national average in the past decade in terms of building affordable units through the program, according to Kansas City Fed economists. The growth ran parallel to the state’s population growth.
But apartment construction in Colorado slowed dramatically at the end of last year as developers struggled to fill a glut of new buildings. At the end of last year, the number of new apartment buildings, including affordable and market-rate units, fell to levels not seen in almost a decade, according to the report.
The surge in multifamily building in Colorado in recent years was far larger than what was happening in the rest of the U.S., according to Nick Sly, an economist and Denver branch executive at the Kansas City Fed.
“This part of the country, generally, did not look like the rest of the country [in terms of] how much housing was developed over the last couple of years,” Sly said.
Now, more people are moving out of Colorado, apartment rents are falling and new development is way down.
“The conversation that we're having about housing in Colorado is really poised to change because … those factors are really looking to turn in the coming year,” Sly said.
