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Denver’s Condominium Crisis

If we build them, buyers will definitely come. So why aren't more developers jumping in?

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Got a mortgage? Consider yourself lucky. As the Denver metro area’s multi-year housing inventory problem continues, there are few indications that relief is on the way.

One positive development arrived Wednesday, after the Denver City Council approved a zoning change that will allow the former site of St. Anthony’s Hospital, south of Sloan’s Lake, to be redeveloped into 12- and eight-story condominium complexes that also will include retail outlets.

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Although the change isn’t welcomed by all—neighborhood activists have voiced concerns about increased congestion in the area and about the mixed-use buildings potentially casting shadows across the south side of the park—the proposed project would add almost 200 condos and more than 25 townhomes to the area. It would also help revitalize what’s become a rather moribund stretch of the neighborhood since the hospital closed in 2011.

This is but one small remedy to a citywide problem that’s recently been debated in the Colorado State House, as well. This week, legislators introduced a bipartisan bill that would reform the state’s condo construction-defects law that developers claim has increased their liability and insurance premiums so much that condo projects are no longer financially viable. However, while those lobbying for less restrictive measures claim that Colorado’s current regulations are too prohibitive, causing the construction slowdown, others say this assessment is far too simplistic. These folks point out that a variety of factors—including stricter credit requirements to higher fees to wage stagnation—are all conspiring to scare would-be buyers from the market. Not only that, the condo construction slowdown isn’t unique to Colorado; in fact it’s similar to what’s happening nationwide.

These issues are more pronounced here because our state has become such a desirable relocation destination for individuals, families, and even corporations. With this trend unlikely to abate any time soon, we’ll need to find the right mix of policies and investment to get those construction cranes rising again, albeit with the appropriate checks and balances in place. If we don’t, the mortgages we do have could eventually turn from an asset to an albatross.

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