Colorado homebuilding fees: Same house, $77,000 apart

By Shaina Cole | Contributing Writer, Rocky Mountain Voice

In Thornton, the water and sewer charges alone on a new 2,000-square-foot house come to $57,203.

Add the rest of the taxes and fees, and the total reaches $79,503, according to a new report from the Common Sense Institute (CSI).

Somebody pays it.

Depending on the market, the report says, that kind of cost is absorbed through a lower price for the land, a smaller return for the builder or a higher price for the buyer. Or the house never gets built.

The Sept. 23 report priced the same hypothetical house, on the same 7,000-square-foot lot, in 16 Colorado cities. Taxes and fees ranged from $24,295 in Colorado Springs to $101,616 in Boulder.

That is a gap of more than $77,000 on an identical home.

Those totals include sales tax on building materials, figured at Colorado’s 2.9% state rate plus each city’s local rate.

“Colorado’s homebuilding costs vary dramatically by city, and a significant portion of that variation is driven by local policy choices,” the report states.

It was written by CSI economist Andrew Woodward and Peter LiFari, CSI’s 2026 housing fellow. LiFari is also CEO of Maiker Housing Partners, a public housing authority and affordable housing developer based in Adams County.

Where the money goes

Water and sewer connection charges are the largest single cost in nearly every city CSI examined.

CSI found those charges track growth pressure and the cost of water rights more than city size. Fast-growing Front Range suburbs charge the most. Thornton’s water tap fee alone is $49,151, the highest single fee of its kind among the 16 cities.

In Denver, those charges just went up. Denver Water’s board voted in March 2025 to raise its connection fees in steps.

The charge for a single-family home inside Denver reached $10,450 on July 1, up from $7,930 in 2025, the Colorado Sun reported. In suburbs served by Denver Water, it rose from $11,100 to $14,680.

Impact fees for roads, parks and public facilities come next. Castle Rock’s impact fees total $29,852, more than a third of its $82,054 in taxes and fees.

Then there is the affordable housing fee. Only two of the 16 cities charge one on new single-family homes. For a house this size, Boulder charges $15.73 per square foot and Denver charges $8.18.

Hardest on the middle

Boulder has the biggest bill in dollars. Measured against home prices, its fees are not the heaviest.

Boulder’s $101,616 equals 9.2% of its $1.1 million median home price.

In Castle Rock, taxes and fees equal 18.7% of the median home price. That is nearly a fifth. Thornton follows at 17.2%, then Aurora at 13.8% and Greeley at 13.5%.

The report found that “the relative fee burden falls hardest on buyers in the more moderately priced Front Range suburbs, not on buyers in the cohort’s most expensive cities.”

The cost of waiting

Denver’s fees are unremarkable by Colorado standards. At $47,376, the city ranks ninth of 16, almost exactly in the middle.

Its approval timeline is not.

Denver averages 210 days to review a major residential development plan, the report found, citing city data. The next-slowest city, Colorado Springs, takes 51 days. Castle Rock and Windsor take 10. The median for the other 15 cities is 20 days.

Time costs money. At a 7% construction loan rate, CSI estimates every extra month adds roughly $1,750 to a home, assuming $300,000 in land and soft costs.

Windsor and Denver carry nearly identical fees. In 2025, Windsor permitted 21.4 homes per 1,000 residents. Denver permitted 6.6.

The report does not pin that gap on one cause. It names permitting delays and available land as factors to weigh alongside fees.

Lower-fee cities permitted more homes

CSI split the 14 cities with permit data into two groups at the median fee.

The seven cheapest cities to build in permitted an average of 13.9 homes per 1,000 residents in 2025. The seven most expensive permitted 3.1. That is a 4.5-fold gap.

The lower-fee group includes Johnstown and Lone Tree, which the report describes as “small, rapidly annexing towns with abundant vacant land.” They permitted 28.8 and 16.5 homes per 1,000 residents.

Fees “explain only part of the variation,” the authors wrote. They also rule out a simple fix.

“The conclusion should not be that every fee is improper or that eliminating fees would make housing affordable,” they added.

Some costs, the report says, purchase “essential infrastructure, public services and protections.” Others come from “delay, uncertainty, fragmented processes and inherited practices whose public value may no longer justify their cost.”

Rising costs, falling permits

CSI’s report is a snapshot of 2026. Federal permit data shows the trend.

In 2016, the average single-family permit in Colorado listed $309,394 as the estimated value of the structure, according to the Census Bureau’s Building Permits Survey. In 2025 it was $439,694.

That is a 42% increase. National inflation over the same period was 34%.

After inflation, the 2023 figure was lower than 2016’s. The rise came in 2024 and 2025.

The Census Bureau cautions that permit values can differ from the true cost of construction.

Permits moved the other way. Colorado permitted 56,524 homes in 2021 and 33,754 in 2025. Single-family permits fell to 17,406, the fewest since 2014.

State demographers estimate Colorado needs about 34,100 new homes a year over the next decade to keep its housing shortfall from growing. Permits came in below that number in 2024 and 2025. Permits count homes approved, not homes finished.

As Denver added apartments, rents fell

Construction costs don’t set what a home rents or sells for.

“Supply and demand remain the primary drivers of home prices, but public policy materially shapes the conditions under which supply can respond,” the report states.

Costs work on the supply side. According to the report, taxes, fees and delay help determine “whether a project remains feasible.” A project that doesn’t pencil out doesn’t get built.

Metro Denver offers a recent example of rents falling as new supply arrived.

From fiscal 2016 to fiscal 2026, the U.S. Department of Housing and Urban Development’s fair market rent for a two-bedroom unit in metro Denver rose from $1,227 to $2,089. That is 70%. Colorado’s median household income rose 45% from 2016 to 2025.

HUD builds its fiscal 2026 figure on Census survey data collected from 2019 through 2023, then adjusts it for more recent rent changes and projects it forward to 2026.

Then came the apartments. About 12,000 new units came online in metro Denver over the year ending in early 2026, according to the Apartment Association of Metro Denver, as reported by the Denver Gazette.

By then, the metro apartment vacancy rate stood at 7.5% and average rent at $1,758, the association reported.

HUD’s $2,089 and the association’s $1,758 measure different things. HUD’s is a benchmark for a two-bedroom unit, including utilities, set at the 40th percentile of rents paid by recent movers. The association’s is an average across apartments of all sizes.

“The product on the market all at once caused prices to fall,” Drew Hamrick, the association’s senior vice president of government affairs, told the Gazette.

Hamrick also said the pipeline is thin.

“But there’s not much [added supply] in the pipeline; people are not champing at the bit to build,” he said.

What the state is doing

CSI credits Colorado for some steps. The Department of Local Affairs is supporting local governments’ use of technology to streamline permitting and plan review. It also offers grants tied to Proposition 123’s fast-track approval requirements. CSI recommends expanding both.

The authors also take up how the cost of growth gets counted.

“A system that measures only the cost of building, and never the cost of not building, will consistently produce too little housing,” the authors wrote.

In Thornton, the water tap on a new house costs $49,151.