By Shaina Cole | Contributing Writer, Rocky Mountain Voice
Colorado’s affordable housing crunch – especially in the rental sector – has been building for years. Reports from the Common Sense Institute and Bell Policy Center trace the tipping point to around 2015, when demand consistently began outpacing supply.
The last decade has seen rising home prices, stagnant wages and insufficient new construction which has made the situation worse due to recent immigration pressures and allegations of resource allocation issues.
Origins and escalation of the crisis
Bell Policy Center noted a statewide rental rate increase from 30.9% in 2009 to 34.8% by 2022, with urban counties like Denver reaching 50.1%.
In just a year, Colorado slipped further down the affordability scale, now ranking 8th worst in the nation. For many renters, the numbers are personal – over half spend more than a third of their income on housing, and 13% are sacrificing half just to stay put. Behind those numbers is a staggering shortfall in available rental units. In the Denver metro, the deficit hit as high as 135,000 rentals in 2024.
Only 16,615 new permits were issued in 2024, far short of the estimated annual need of 37,520 to 55,331—has failed to keep pace with population growth, particularly in multi-family rental developments, where only 47.4% of permits were allocated in the Denver metro last year.
Challenges in the rental market
Structural issues are compounding the rental crisis. The Bell Policy Center highlights that single-family homes purchased by institutional investors often see rent increases up to 37% higher than the average, affecting many renters.
They also noted the rise of “build-to-rent” (BTR) developments, with Denver seeing a 91% increase in BTR single-family home completions over five years by 2023, offering amenities like yards but potentially reducing long-term affordability due to institutional ownership.
Zoning and regulatory bottlenecks, as noted by the Common Sense Institute, have slowed the construction of affordable multi-family units, with counties like Adams and Jefferson issuing over 79% of permits for single-family homes.
Additionally, the Bell Policy Center reports a 9.7% vacancy rate – the highest since 2000 – yet notes that this increase in high-end rental units has not translated into affordability for low-income renters.
Impact of the immigration crisis
Colorado’s rental market is already stretched thin, and new immigration trends are adding to the squeeze. The state is expected to gain more than 200,000 people by 2028 – roughly 86,000 new households, according to the Common Sense Institute.
Some of that growth includes undocumented immigrants, adding to the competition for affordable rental options.
State policies, such as HB 21-1054, allow undocumented residents to access housing assistance without status disclosure, placing them in competition with citizens for limited units.
This has raised concerns, including an allegation from a whistleblower who claimed that undocumented families are being prioritized for subsidized rentals in Gunnison County over citizens already on the waitlist.
“They’re giving priority to undocumented families over citizens on the waitlist, and it’s pushing locals out,” the individual stated. Rocky Mountain Voice granted the source anonymity due to the sensitivity of the claim and fear of professional retaliation. While the allegation remains unverified, it highlights growing tensions over how limited housing resources are distributed.
The Bell Policy Center notes that low-income families are particularly vulnerable. Statewide, there are just 30 affordable units available for every 100 extremely low-income renters – a gap that’s only growing as demand rises.
Policy push meets rising homelessness
The rental crisis is hitting not just individuals but also Colorado’s broader economy. The Common Sense Institute ranks Colorado 50th in housing competitiveness. This shortage affects more than housing – it hits workforce retention too, especially in areas like Gunnison.
Proposition 123, passed in 2022, directs $300 million annually to affordable housing, with about 40% earmarked for rental support, homelessness prevention and local planning efforts.
According to the Metro Denver Homeless Initiative’s January 2025 Point-in-Time count, released in June, homelessness in the seven-county Denver metro region rose by 10%, while shelter occupancy climbed 12%, chronic homelessness increased 16% and the number of homeless families rose from 2,101 to 3,136.
It’s a crisis that’s been years in the making, now intensified by population pressures and heated debates over how resources get distributed.
The Common Sense Institute, Bell Policy Center, and MDHI data demonstrates the supply deficit and economic pressure. Yet the absence of real-time resource allocation data – and the challenge of balancing competing needs – suggests the crisis is far from over.