With 300 days of sunshine annually, stunning mountain views and easy access to hiking, skiing and other outdoor activities, Colorado is a popular place to call home. This popularity comes at a price—it’s the fourth most expensive state for homebuyers nationwide, according to Redfin. 

That’s only part of what’s exacerbating the Colorado affordable housing crisis. According to the National Low Income Housing Coalition, 79% of extremely low-income households face severe cost burdens.

I spoke to affordable housing leaders and developers to learn more about the state’s top housing challenges and how communities across the Centennial State are growing the affordable housing supply.

Affordable housing challenges in Colorado

Colorado affordable housing leaders face several obstacles. “We’re seeing persistently high land costs, construction cost escalation and a scarce supply of funding resources, resulting in a consistent undersupply of housing to meet the demand,” said Blaise Rastello, Vice President and Colorado Market Leader at Ulysses Development Group.  

Across the state, challenges include:

• Funding limitations: Critical resources including Private Activity Bonds remain scarce, constraining developments that rely on Low-Income Housing Tax Credit (LIHTC). “The financing constraints mean that even when there’s political will and local support for affordable housing, only about a few thousand units can actually get built in Colorado annually,” said Ben Taylor, Vice President and Project Partner at affordable housing developer Lincoln Avenue Communities.
• Mismatch in housing needed and what’s being built: “There’s often a mismatch between the housing that’s available and the type of housing needed,” said Isaac Silver, Vice President of Community Development Real Estate in the Central Region at J.P. Morgan. “In Boulder, for instance, some owners are tearing down modest rental houses and replacing them with multimillion dollar residences, increasing home prices, which therefore decreases the supply of more affordable homes and drives up demand for affordable rental properties.
• Land availability: Known for its natural beauty, Colorado has more than 8 million acres designated as public land and 27 million acres allocated to the federal mineral estate, according to the Bureau of Land Management. There’s a limited amount of land available for affordable housing across the state. This can present challenges, especially for cities in western Colorado, which may already face land availability issues because of their mountainous terrain. Governments and developers alike are rising to the challenge, finding creative ways to increase affordable housing.

Boulder

In recent years, Boulder has emerged as a tech hub, attracting corporate offices for the likes of Amazon, Apple and Google. The resulting population growth has increased the cost of housing. To address the issue, the County of Boulder started collecting its Affordable and Attainable Housing Tax (AAHT), an extension of the county sales and use tax, which previously went to funding construction of an alternative sentencing facility and related services. Enacted in January 2025, the tax is projected to generate $16.7 million in its first year, according to the county.

After administrative costs and reserves, the tax will fund:

• $9.7 million for new affordable housing development 
• $5 million for supportive services to help maintain properties and prevent homelessness
• $500,000 for a new Innovation Grant Program supporting nonprofit organizations and smaller municipalities in the county

“Public-private partnerships are critical to growing the affordable housing supply, and Boulder County’s AAHT will also be advantageous in attracting private investors,” Silver said.

Colorado Springs

“The housing crisis is particularly severe in areas with high concentrations of veterans—like Colorado Springs,” Taylor said. Affordable housing for veterans is unique and may involve amenities designed for individuals with disabilities, supportive services for formerly homeless veterans and proximity to Veterans Affairs healthcare facilities.

For example, Lincoln Avenue Communities’ InterQuest Ridge Apartments is located near the U.S. Air Force Academy, working with Mt. Carmel Veterans Service Center to implement veteran preferences for 20 units at the housing community.

Colorado Springs also has a significant need for larger affordable rental units, such as three- and four-bedroom options. “The affordable housing stock hasn’t kept up with providing family-sized options,” Taylor said. “Large families in need of affordable housing often face long waits for appropriately-sized units. They may end up overcrowding into a smaller apartment, with kids doubling up in rooms.”

Denver

Like many cities, Denver faces a lack of affordable housing at all income levels, and that starts with the unhoused population. 

In 2023, the City of Denver launched its All In Mile High initiative, using a multipronged approach to address homelessness. The program surpassed its initial goals, moving more than 2,500 people indoors and closing more than 350 blocks of encampments. Expanding on its success, the city aims to not only bring more people indoors, but also connect formerly homeless individuals with permanent supportive housing.

The city also faces a workforce housing shortage. “Both the City of Denver and the State of Colorado are also interested in creating housing that’s affordable to the missing middle,” Rastello said. The city and state need to leverage workforce housing solutions and resources other than LIHTC to produce housing that’s attainable to individuals and families earning between 80% and 120% of the area median income (AMI).”

Fort Collins

According to the Common Sense Institute of Colorado, between 1,580 and 2,197 permits are needed annually through 2028 to close Fort Collins’ housing supply deficit and meet the demands of future population growth. 

One of the ways Fort Collins is growing the housing inventory is by converting unused churches and other houses of worship into affordable housing. For example, Heart of the Rockies donated 9 acres of vacant land adjacent to the church and worked with several nonprofits to develop the land into Heartside Hills, which includes:

• 72 affordable apartment units 
• Nine single-family homes
• Two homes for adults with and without developmental disabilities 

The development has prompted Colorado lawmakers to create legislation, nicknamed "Yes in God's Backyard" (YIGBY). The proposed bill would make it easier for faith-based organizations to build residential housing on their land.

Ski towns

Colorado is home to picturesque—and expensive—ski towns, such as Aspen, Breckenridge and Vail. 

While these areas are popular for visitors, there isn’t sufficient housing for many residents for several reasons, including the income gap between full- and part-time residents. 

The 2021 Mountain Migration Report from the Northwest Colorado Council of Governments (NWCCOG) found that nearly 70% of newcomers and 80% of part-time residents have a household income above $150,000 per year. Roughly 60% of full-time residents (often hospitality workers) earn less than $150,000 in household income per year.

“This influx of wealth in a housing-scarce environment, landlocked by geography (and beautiful public lands) drives rents and home prices far beyond attainability of average workers,” according to NWCCOG’s 2023 Workforce Housing Report. 

Local governments are taking various innovative approaches to add affordable and workforce housing. For example, some government agencies offer employees discounted rent on government-owned multifamily units, deed-restricted housing for purchase or housing stipends. 

Even with these subsidies, many spots in western Colorado must get creative. Summit County, for example, is working with the U.S. Forest Service to build housing on one of the agency’s administrative worksites. Within the county, the Town of Silverthorne is buying existing residential units and reselling them at a discounted price under a deed restriction that requires occupancy to be by members of the Summit County workforce. 

Statewide affordable housing legislation

In addition to cities’ and towns’ efforts, the state has passed legislation to address the affordable housing crisis, including:

• Middle Income Tax Credit: The first of its kind in the U.S., the tax credit is designated for owners of rental housing developments whose residents have an annual household income between 80% and 120% of the county’s AMI. For rural resort counties, the annual income is between 80% and 140% of the respective AMI.
• Accelerated Colorado Affordable Housing Tax Credit: Typically, the standard credit flow for state tax credit was an equal distribution of the credit over six years. “To  increase pricing for the state tax credit and thus equity to the projects, the new accelerated program allocates 70% of the credit in the first year, then the remaining over years two through six,” said John Kavanaugh, Head of Single Investor Fund Acquisitions for Tax Oriented Investments at J.P. Morgan. 
• Accessory Dwelling Units (ADUs): State legislation passed in 2024 is paving the way for more ADUs across the mountainous state. “Programs established by the law are still in development and designed to incentivize and finance additional ADUs in communities throughout Colorado,” said Steve Johnson, Chief Operating Officer, Colorado Housing and Finance Authority (CHFA). 
• Support for modular housing manufacturers: Programs managed by the Colorado Office of Economic Development and International Trade (OEDIT) and administered by CHFA, provided funding that supported the growth of eight modular housing manufacturers across the state. “Modular housing production tends to involve less materials waste, increased energy efficiency, a controlled manufacturing environment and ideally, a reduced construction timeline,” Johnson said. The cost savings from modular construction can then be passed down to residents.

Affordable housing preservation

Growing the affordable housing supply helps grow Colorado’s total housing inventory, but housing preservation is vital to meeting long-term housing goals. This is especially important in high-cost communities. 

“Over the last several years, Colorado has dedicated the majority of funding resources to creating new supply, impacting the available funding resources that are dedicated to preservation,” Rastello said. 

“Preserving existing housing is as critical as creating new units, as it often costs less than new construction,” Johnson said. “If we lose existing affordable units to market conversions, we aren’t solving the problem; we’re compounding it.”