Housing growth outpaced population growth in all but six Colorado counties in the first part of the decade, leading analysts to speculate the housing market is overbuilt.
The U.S. Census Bureau’s annual report on housing units released today shows the state continued to add homes since 2000 at an 11.2 percent clip. Over the same period, the state’s population grew by 7 percent.
“Many, many housing units have been built, and the population growth isn’t going with it,” said Y. Richard Lin of the Colorado Department of Local Affairs. “That’s good for the people, because there is more housing available. But housing prices keep going up, so people can’t afford” them.
A disconnect exists between the increasing number of housing units and the lower population rate, said Tucker Hart Adams, chief economist for the Rocky Mountain region of U.S. Bank.
“The numbers don’t add up,” she said. “If you are building (two) times as many houses as the number of people moving to the state, my question is – if we’re not overbuilt – who is buying them and living in them?”
The Denver metro area has three times as many homes on the market this year as it did five years ago – 21,300 homes for sale in the first quarter of 2005 compared with 6,800 in the same period of 2000.
The vacancy rate in apartments was 10.2 percent in the first quarter of 2004 compared with 5.1 percent in 2000.
At the same time, home sales are breaking records. The real estate market in metro Denver set a high last year with 54,012 home resales – a 12.6 percent increase over 2003.
“The chickens are going to come home to roost,” Adams said. “I don’t know when. People who really stretch to move out of apartments into houses, and did it with no money down – interest-only loans or floating mortgages – are not going to be able to stay in those houses.”
The apartment vacancy rate is beginning to decline, however, because fewer new apartments are being built, said Mike Rinner, senior analyst for the Genesis Group. There were 5,746 new apartments built in metro Denver last year compared with 16,008 in 2000.
Counties where population has kept pace with housing are Delta, Douglas, Mineral, Park, Phillips and Saguache.
It’s a matter of planning, said Douglas County Planning Director Peter A. Italiano.
His county for years held the mantle of being one of the fastest-growing in the country. It still tops Colorado, but over the four-year period of 2000-04 it slipped to No. 7 for housing units on the national list. It was the 62nd-fastest-growing county from 2003 to 2004.
“As your base population goes up, it gets harder and harder to keep that growth rate,” Italiano said. “I look at the positive side. … A lot of that growth fueled open-space acquisition.”
Staff writer Jeffrey A. Roberts contributed to this report.
