You sense it when driving or looking for a home to buy or rent. And, you are right! 100,000 people are estimated to have moved to Colorado between July 2014 and July 2015, according to US Census Bureau data released in December 2015. The Colorado population is now estimated at 5.4 million. Since 2010, Colorado’s population has increased by 408,000, ranking 7th in the US for total population change, and adding more residents than the population of Larimer County. Natural population increase (births and deaths) represented 32,000 of the recent increase, and the remaining 68,000 came from net migration — more people moving into the state than leaving.
Why is Colorado population increasing?
Low unemployment: The Colorado unemployment rate hit 3.6 percent in November 2015, compared with 5 percent nationally, according to the US Bureau of Labor Statistics. Colorado was among the top 5 states in 2014 for job gains. Although job gains have decreased since 2014, the population is expected to see another 100,000 increase in 2016.
Legalized marijuana: Commercial brokers and marijuana enthusiasts in the Denver area point to the marijuana industry as a source of increasing population. Millennials are attracted by the legal access to pot, and out-of-state entrepreneurs see opportunities to benefit from the growing industry.
The same reasons many of us moved to Colorado: the mountains, year round outdoor recreation, job relocation, arts and culture, and a diverse economy (think aerospace to craft breweries).
How Does Increasing Population Affect Real Estate?
Increased housing costs: The cost of housing in post-recession Colorado has increased dramatically. Consumers face strong competition both for rental housing and home purchases, driving rental rates to unaffordable levels for many families, and creating price “bidding wars” for buyers. Increased housing costs also reflect the lack of affordable entry-level housing.
Lack of housing: The amount of available housing has been outpaced by new household formation in recent years. In 2015, household formation was estimated at 45,300 while new housing units were estimated to be 25,000. New construction dropped significantly during the recession and still has not returned to pre-recession levels. As of July 2015, only 2% of new construction was available with pricing affordable to middle-class Coloradans. One impediment to entry-level condo development in Fort Collins and beyond is the state’s construction-defects law that allows condo owners to sue developers over construction defects, and created a shift to luxury priced housing. In 2015, proposed legislation in Colorado was drafted that would encourage condo development by changing current laws. However, the legislation failed, leaving an unresolved and ongoing challenge for entry level housing inventory.
Solutions?
From the state (www.housingcolorado.org) to the local level (http://www.fcgov.com/socialsustainability), affordable housing groups are actively pursuing needed policy changes and legislative action to address challenges facing the real estate industry as our population continues to increase.
Sources: The Prowers Journal; Kathie Barstnar, NAIOP Commercial Real
Estate Development Association; Elizabeth Garner, The Denver Post
Business; Arielle Milkman, New Republic
Want more information?
Colorado Population | census.gov
Colorado Population in the Last 12 Months | DenverPost.com
What Drives Real Estate? | Investopedia.com