New home starts far underrepresent demand

BOULDER — New housing growth will continue in the Boulder Valley and Broomfield region, but it will be heavily constrained by market factors such as construction labor and lot availability.

John Covert, regional director for the Colorado/New Mexico Metrostudy, outlined the challenges in a presentation to the Boulder Valley Real Estate Conference this morning in Boulder.

The annual conference was held at the new Embassy Suites hotel in Boulder, which opened for business Tuesday.

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Metrostudy is a national organization that tracks new housing starts. It has about 30 researchers in Colorado who visit every residential lot every 90 days in order to gather data on lot availability, housing starts and housing sales.

Covert said labor in the construction trades is a major impediment to getting new homes built throughout the state. “Everything is under construction in Colorado, which taxes the labor market in general,” Covert said. He expects that trend to continue through 2018 and perhaps beyond.

The other major impediment is lot availability with demand far outstripping supply. That has meant that lot and new home prices have escalated rapidly and has forced people interested in new homes to venture further from Boulder, where the supply is the lowest.

“The $300,000 price point for new single-family detached homes is almost gone and won’t be returning,” he said.

In Boulder in the past 12 months, new home starts are down 3 percent from the year prior. Metrostudy’s statistics showed that only 28 new homes were sold in the past year, which represents only 2 percent of all home sales. Sixty percent of new homes sold are above $500,000 in the Boulder region.

In Broomfield, there were 596 new home closings, representing 16.1 percent of all home sales. New home starts will slow in Broomfield as the large Anthem development draws to a close.

In comparison, on the Weld County side of Erie, there were 298 new home sales, which accounted for 78 percent of all sales. Lots are more available the farther one ventures north and east of Boulder, he said.

Covert expects the housing market to remain strong in the region, although constrained by the labor and lot availability factors. He said Boulder and Broomfield would maintain market share as long as lots can be made available for building.