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Developers in Colorado are on track to pull more construction permits this year for multifamily homes than for single-family homes, something that hasn’t happened before. But condos are largely missing in that record surge and with them an opportunity to provide more affordable housing options for first-time buyers.

The state is on track for roughly 27,500 multifamily housing permits this year versus 25,700 permits for single-family, according to the 2023 Colorado Business Economic Outlook from the University of Colorado Boulder. Historically, multifamily has represented 30% of all housing construction and since 2012 it has run closer to 40%. This year, it will represent 52% of all permits pulled.

That surge in denser development would seem like a good time to add more condos, which cost much less than single-family homes, to the market. But the Outlook estimates that since 2010, the state has added one condo for every 19 apartments built. It attributes that lopsided distribution to concerns about construction defects litigation, higher insurance costs for condos and easier-to-obtain financing for apartments.

“There is such a pent-up demand for condos, but building more affordable condos doesn’t really doesn’t pencil out for the builders,” said Bethel Sand, a real estate agent with LIV Sotheby’s International Realty, who runs the website Denver Condomania.

Unraveling the why behind the lack of condo construction, which is almost identical to apartment construction, isn’t easy. Economic considerations are at play both locally and nationally. As more potential buyers get priced out of the purchase market, it makes sense to build more apartments for them.

Because of higher mortgage rates, a household at the median income in Denver could afford a home that cost $487,111 in 2021. In November, what the typical household could afford dropped to $350,037 because of higher monthly payments, according to a study from Point2Homes.com.

In Denver, only 13% of homes listed were affordable to someone earning the median household income, while in Aurora that ratio is an even lower 8%, according to the Point2 study. The median price for a single-family home that sold in metro Denver in November was $622,490 and for condos it was $405,000, according to the Denver Metro Association of Realtors.

— Full story via Aldo Svaldi, The Denver Post 

Multifamily construction is booming in Colorado, but condos are only a small slice

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