Colorado’s affordable housing crisis isn’t just a market problem, it’s a policy failure. For years, state lawmakers have piled on regulations, mandates, and costs in the name of progress, while ignoring the fundamental laws of supply and demand. The result is a self-inflicted doom loop that is driving up prices, strangling supply, and pushing homeownership further out of reach for working families.

This loop is being fueled by three converging forces: a lack of meaningful construction-defect reform that has crippled condominium development, energy mandates that are inflating utility and construction costs, and skyrocketing insurance premiums that make it more expensive to build and own property.

Let’s start with construction-defect laws, the most fixable part of Colorado’s housing problem. For nearly two decades, developers have avoided building condominiums because state law makes it far too easy for homeowners’ associations to file sweeping lawsuits, even for minor issues that could be fixed without litigation. According to the Common Sense Institute, the number of active condo developers in Colorado fell by 84 percent between 2007 and 2022, and the share of new housing starts that are condos dropped from more than 20 percent to less than 3 percent. Insurance premiums for condo projects are now 230 percent higher than for rental apartments, with coverage often costing 5–5.5 percent (or more) of total hard costs, versus about 1–1.5 percent for multifamily rentals. That delta, driven by lawsuit risk, often wipes out the profit margin on condos entirely. That’s not the market failing; that’s government policy choking off the supply of entry-level homes. Condos used to be a steppingstone for young families and first-time buyers. Now, that rung of the housing ladder has been sawed off, forcing more people to rent longer, which in turn drives rents higher and deepens the affordability crisis.

Next, consider Colorado’s aggressive renewable energy mandates. Irrespective of one’s view on renewable energy, the state’s 100 percent renewable-energy goal by 2050 is ambitious and expensive. Utilities are being required to prematurely abandon reliable, affordable coal and natural-gas infrastructure before the end of its useful life, while building costly renewable and transmission systems in its place. 

Because the sun doesn’t shine at night and the wind doesn’t always blow, meeting demand with intermittent sources requires not only backup generation but also a substantial overbuild of infrastructure to offset inefficiencies in collection and delivery.  Those costs are passed directly to ratepayers and builders. A Denver Gazette analysis found that the average household could see $30–$40 higher monthly energy bills by 2035, and the Common Sense Institute estimates that Colorado households will shoulder nearly $2,400 in additional electricity costs between 2024 and 2040. These are hidden taxes, imposed through dozens of legislative and regulatory actions, that make it harder to build affordable homes and harder for working families to keep the lights on.

All this is compounded by the explosion of property-insurance costs. According to news reports, homeowners’ premiums in Colorado grew 57.9 percent between 2018 and 2023, one of the steepest increases in the nation. The Rocky Mountain Insurance Information Association cites three major drivers: severe hail, increased wildfire exposure, and rising rebuild costs tied to inflation and construction-material shortages, the confluence of which is adding hundreds of dollars to mortgages and further pricing people out of homeownership.

Together, these forces form a cycle that’s hard to break: government regulation and mandates increase costs, fewer projects pencil out, supply shrinks, prices rise, and lawmakers respond with more regulations, which raise costs even further.

Breaking the cycle will not be easy. The legislature should enact real construction-defect reform to encourage condo development again. It should also slow the march toward all-renewable mandates and allow energy choice for consumers and builders.

Local governments can also lead by creating conditions for the market to work. Cities should explore and pilot voluntary insurance pools or limited first-loss programs to reduce barriers for condo builders. Developers would share the costs, while the city’s role should be narrowly focused on enabling private investment and reducing risk.

Simply put, Colorado needs the freedom for the private sector to build and innovate. The path to affordability runs through competition, supply, and sound economics.

We can protect the environment, encourage innovation, and still make homeownership achievable, but only if we restore balance and common sense. It’s time for policymakers to recognize that affordability and overregulation cannot coexist.

Colorado’s families deserve a shot at the American Dream. That starts by breaking the doom loop and letting free markets, not government micromanagement, lead the way.

Dan Nordberg is a former Colorado State Representative and presidential appointee, serving as Regional Administrator for Region VIII and later as Director of the Office of Rural Affairs at the U.S. Small Business Administration.