Residential construction fell sharply in 2009

Main reason was that builders, seeing slowdown, cut back on supply

| Feb 21, 2010

The total for building permits issued in Boulder during 2009 dropped to just 167 — less than half the number for 2008 — as builders responded to falling demand by sharply cutting back the supply of new homes.

This market-driven decline came while City Council was laboriously debating whether to limit the size of new and expanded homes — the famous “pops and scrapes” debate — which eventually led to the new size-limit ordinance that took effect in January.

Rather than any Council action, it was the deepening recession — plus a sharp turnabout in lenders’ willingness to provide mortgages — that ultimately put the brakes on homebuilding. During 2009, the City of Boulder issued permits for only 180 new residential units; subtracting the units to be demolished and rebuilt, that’s a net total of 167 units authorized for construction.

The table below shows building permits issued for various categories of new housing in the City of Boulder by year.

Abbreviations: SF-Detached: single family detached houses; SF-Attached: duplex and townhouse units; MF: multi-family units (buildings or three units or more); MH: mobile homes (becoming increasing rare in Boulder); Demos: -structure removals of single-family or multi-family units, often called “scrapes” when they’re to be replaced by newer (and usually larger) residences.

Aside from Boulder’s balanced economy, there are a number of reasons why the housing prices locally have not suffered as much as those in places like Longmont and Greeley:

  • Boulder has stricter growth-management policies, resulting in less sprawl and speculative construction.
  • Cutbacks in new construction, as outlined above.
  • Most new construction since 2000 has been in for-sale housing, including condominiums and townhouses. Only one large rental apartment community has been built in Boulder during the decade. To the extent that rental options are limited, home buying is encouraged.
  • Boulder’s vaunted quality of life attracts second-home buyers, including retirees and University of Colorado alumni.
  • Favorable tax treatments have encouraged many parents of CU students to buy condos for their student children (known in real-estate circles as “kiddie condos”). Some of these owners keep the units after their student has graduated, either for their stay-in-Boulder kids or as rental housing.

Major role for infill housing

Because Boulder controls sprawl at its peripheries, much of the new housing built since 2000 has been in infill multi-family buildings, especially downtown, near CU and in East Boulder. Single-family construction has been mostly in north Boulder developments such as Dakota Ridge, Northfield Commons, Holiday and Uptown Broadway, plus some “scrape” replacements in existing neighborhoods.

It’s likely that new housing construction won’t rebound until the national economy improves and lenders become more willing to make home and development loans. Boulder will keep attracting buyers, while growth controls throttle back the construction.

Demographic changes — such as an aging population and a desire for more pedestrian, transit and cycling-friendly neighborhoods — will push new residential development into in-fill areas and higher-density buildings. Watch for ongoing conflicts over the effects of such housing — especially when it’s located close to existing neighborhoods with lower densities.

Eric Karnes is an active member of PLAN-Boulder County and former editor of its newsletter/blog, The Advocate. He is a consultant on commercial real estate research for several national clients.


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