After years of contentious fights over zoning reform, Colorado housing advocates are turning their attention to all the other things that make homes so expensive across the state.
It’s not a short list.
A new report released in June by the Mile High United Way identified close to a dozen factors that make it hard to build affordable housing in Colorado — a sobering reminder that zoning alone won’t solve the state’s housing crisis.
High interest rates, expensive construction materials and a shortage of skilled labor rank among the economic factors. Slow-moving regulatory processes can also add months or even years to housing development, driving up costs all the while.
Then there’s land. And infrastructure. And water. And yes, zoning.
“When you see the size of the problem, and you see all the solutions that are required, there’s kind of only one answer, which is, wow, you really got to get everybody in the room together to tackle this, or we’re going to fall farther and farther behind,” said Ryan McCullough, a partner at McKinsey & Company.
The consulting firm worked on the report with the United Way and the BuildStrong Foundation, a charitable offshoot of housing developer Oakwood Homes. But it quickly became clear to those involved that Colorado doesn’t need another study saying how bad things are — it needs more people working together to fix it.
So over the past year, the effort morphed into something else. Advocates launched a new housing consortium in March that they hope will bring housing developers and nonprofits together with state and local officials for a unified mission: to make progress on the dizzying array of economic and political factors that drive up housing costs.
Regulatory headaches
Last year, when Pat Hamill decided to install a new back porch at his Cherry Creek home, he wanted to hire a contractor he’d worked with for decades.
His designer called back with some bad news. The contractor refused to work in Denver because of permitting headaches, something Hamill, a longtime homebuilder, was all too familiar with.
“Out of all the different markets that we did business in, Denver was absolutely the worst,” said Hamill, the former CEO of Oakwood Homes, who cochairs the new consortium.
A city audit released in 2024 found that the average processing time for residential permits skyrocketed in recent years. Minor permits that used to take 15 days in 2020 took 58 days in 2023. Permitting times for new construction nearly doubled, from 150 days to 263.
The city says it’s working on it. Mayor Mike Johnston in April signed an executive order creating a new permitting office to work across city departments to process permits faster.
The report says more cities need to do the same. In a Mile High United Way survey of more than 200 housing professionals and other stakeholders, 82% said permitting was a key challenge preventing more affordable housing supply from being built. Even more (88%) pointed to zoning and variance timelines, while 79% blamed local pushback against housing development.
But local governments and neighboring homeowners aren’t the only ones causing costly regulatory headaches for housing developers.
Affordable housing projects often rely on multiple funding streams, layering state grants on top of state and federal tax credits to finance large developments while keeping rents affordable. But every program has its own deadlines and funding timelines — and they’re spread across multiple state agencies, including the Department of Local Affairs, the governor’s Office of Economic Development and International Trade and the Colorado Housing and Finance Authority.
In a worst-case scenario, it can take as long as 560 days for a developer to stitch different public funding sources together, the report found. That kind of delay can be a death knell for a project.
Housing developments that made financial sense when interest rates were low in 2021 might not now — and if they do, they can’t be built as affordably.
“Time is everything,” Hamill said.
The cost of construction
While permitting delays and zoning stand out as problems within the government’s control, the most frequently cited barrier to affordability is somewhat harder to solve: the cost of construction.
Building material costs were labeled a challenge by 97% of those surveyed; 91% pointed to the cost and supply of labor.
It’s tempting to look at these as national problems that defy easy fixes at the state or local level. But the report’s authors say policymakers aren’t helpless in either area.
Factory-built modular homes can cut costs by 20% to 25% compared with homes built on-site with traditional construction methods, the report estimates. But while Colorado has a growing modular construction industry, it only achieves a fraction of the savings factories do in other states where there’s enough demand to scale up. One key reason, the authors said, is that different building requirements in different cities make it hard to use one design across jurisdictions.
Meanwhile, expanding apprenticeship programs could take a chunk out of the state’s shortage of construction workers, which the report expects to grow to 45,000 by 2027. And that scenario may be optimistic; the federal crackdown on immigration could further erode the supply of skilled labor.
But, according to the survey, by far the biggest hurdle for housing that low-income residents can afford is a lack of public funding.
In recent years, the state has invested heavily in affordable housing projects. Lawmakers expanded the state’s affordable housing tax credit in 2024, while voters approved hundreds of millions of dollars for housing by passing Proposition 123 in 2022.
The biggest funder of affordable housing — the federal government — is sending mixed signals. The Trump administration’s wide-ranging domestic policy bill expands the low-income housing tax credit, which is expected to spur more housing development. But it has also proposed deep cuts to vouchers and rental assistance programs that keep housing costs affordable for low-income families.
What’s next
The consortium is cochaired by Hamill and Maria De Cambra, the executive director of the state Department of Local Affairs. In its first few months, the group has grown from 35 members to about 70, a roster that includes developers, advocacy organizations like Housing Colorado, and public officials from the various state agencies that dole out housing grants and tax credits.
A few cities are represented, too, including Colorado Springs and Denver. But more will need to buy in for the effort to have the success organizers are seeking.
“In all this research we were doing — we surveyed 200 people, we interviewed 40 people — what we heard from them all is we all know the solutions,” said Katie Colton, a researcher who is now managing the consortium for BuildStrong. “But there’s nobody whose job is to just work across the different stakeholders to get these solutions done.”
The consortium has a lot of work to do to bring down the temperature of the state’s housing politics.
Gov. Jared Polis in May escalated his administration’s fight with cities, signing an executive order to withhold grant funding from those who don’t cooperate with the state’s land use laws. Days later, some local officials sued the state over what they view as unconstitutional mandates to change their zoning laws.
Meanwhile, the Colorado Municipal League this month advised cities in an email that it views the governor’s executive order as illegal.
“It is CML’s position that this order exceeds the governor’s authority … and promotes arbitrary and capricious agency action,” the email read, in part.
Still others who are trying to adopt housing reforms say they lack the staff and resources to keep up with all the state policy changes in recent years — let alone take steps to improve their own zoning and permitting processes in the meantime.
“We passed a lot of legislation in Colorado,” Colton said. “I can’t say if that’s good or bad, but you’re getting three or four or five new policies dropped on you every May that you have to implement within the next year. It’s a lot. How do you do that and also focus locally?”
McCullough, the consultant at McKinsey, said that amid cooling rent prices, he doesn’t want policymakers to lose sight of the sheer scale of the problem.
Today, Colorado has a shortfall of 162,000 affordable units for those making 50% or less of the area median income — about $70,000 for a family of four in Denver.
The report found that if developers continue building affordable housing at the rate they have since 2016, that shortage will grow to 257,000 units by 2035.
“The fact is, it’s getting worse,” McCullough said. “We’re actually losing affordable supply.”