(The Center Square) – Colorado’s housing market will be a significant barrier to the state’s economic competitiveness in the future, according to a new report.
Colorado ranked last in a housing competitiveness index ranking of the 50 states and the District of Columbia in the Common Sense Institute’s 2023 Free Enterprise Report. The research assesses the economic performance and competitiveness of the state. It rated Colorado eighth in economic performance and aggregate competitiveness.
“Colorado’s cost of business and cost of living have become increasingly expensive, communities face serious quality of life issues, K-12 student outcomes remain disappointing despite improved funding, and the recent slowing of net migration will have significant negative economic consequences if it persists,” the report stated.
The research examines eight public policy areas and ranked Colorado’s competitiveness in each: education (20th), energy (32nd), health care (13th), housing (51st), infrastructure (9th), public safety (31st), state budget (38th) and taxes and fees (14th).
“For decades, Colorado has been a highly attractive place to live and to do business,” Lang Sias, author of the report, said in a statement. “Our state, particularly in the last several years, has become a highly expensive place to live and do business, and we also face quality of life issues that undermine our appeal.”
The report gave a negative outlook for Colorado’s housing, health care and taxes. The outlook was based on recent legislation, legislation being considered and bills before legislators.
The report said housing supply continues to negatively influence Colorado’s economic performance as prices are increasing at a faster rate relative to wages than in other states. CSI estimated someone making the median wage in the state would need to work 96 hours a month to afford the mortgage on a median-priced home – a 118% increase compared to the 44 hours required in 2011. It also estimated someone would have to work 87 hours to pay rent, a 92.5% increase from 45 hours in 2011.
“It is unclear how Colorado’s housing issues will improve in a significant way unless meaningful reforms are enacted,” the report stated. “In recent years, there has been significant emphasis on what state policy makers can do to address the problem. However, given that housing development is largely influenced by local zoning and land use measures, statewide interventions have mostly been related to providing funding that can only address a restricted number of projects relative to the full needs of the market.”
The report said legislation passed this year to prevent restrictions on new housing was a positive step.
“However, more will be needed to prevent local governments continuing to work around this by increasing restrictions of development costs in other ways,” the report said.
