EL PASO COUNTY — Construction of multifamily housing, including apartments and condos, is expected to slow dramatically in El Paso County after a decade-low number of multifamily housing permits pulled so far in 2024, according to a Pikes Peak Housing Network quarterly report.
The Q3 report shows a nearly 90% decrease in multifamily housing unit permits compared to 2022. A few years ago, El Paso County saw a dramatic spike in multifamily housing permits, with 3,847 units in 2021 and 4,955 units in 2022, according to the report. So far in 2024, only 501 units have been permitted.
Jill Gaebler, the Executive Director of the Pikes Peak Housing Network, said many of the units permitted in 2021 and 2022 are starting to come online, which explains the large increase in apartment properties in downtown Colorado Springs. She said the boost has helped meet the demand for apartments across the city.
"We're starting to catch up with the demand that we have seen for apartments in our community," she said. "Here in Colorado Springs, we build and then we don't, and then we build and then we don't. And yet, the people moving to Colorado Springs and the people needing apartments doesn't change. It doesn't boom and bust. It continues to grow."
However, Gaebler said she's concerned about a worsened housing deficit down the road due to the dramatic decrease in apartment permits pulled this year.
"Next year, the year after, I think we are going to begin to struggle again," she said. "As any supply and demand, you know, economist will tell you, if we don't have enough housing, then rents will go up."
Thomas Garmong, former President of the Housing and Building Association of Colorado Springs, said the previous boom in apartment construction was likely caused by higher demand for multifamily housing as home prices and interest rates soared. Garmong said the subsequent decrease in permits could be attributed to the higher cost builders are facing when financing construction projects.
"It was a lot easier to get cheaper money during those COVID years, and basically multifamily builders were using that to finance projects. Now that those cap rates have increased, it's much harder to finance those projects, so I think that's also causing some of the drop-off in permits that you're seeing," said Garmong.
Garmong said although the typical boom and bust of the housing market was more dramatic than usual over the past few years, he said he's not concerned about a future housing deficit.
"I think that the spike we saw in the last two or three years on the upside was also against the grain for what we normally see. So I think this is probably a reaction to that. But in terms of a deficit for housing, there's always going to be a need for housing. It's just the question of how much supply we can bring on to meet that demand," said Garmong.
Laura Nelson, Executive Director of the Apartment Association of Southern Colorado, said she believes the large number of properties coming online now will cushion any shortage of multifamily housing in the future. She said the low number of permits pulled this year is not concerning to her unless the trend continues year after year.
The Q3 housing data report from the Pikes Peak Housing Network shows the average monthly rent for a one-bedroom apartment in Colorado Springs is $1,467, which has remained consistent with prices from last year. The average one-bedroom monthly rent in downtown Colorado Springs is $1,834, which is a slight decrease compared to last year, according to the report.
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