While there are plenty of older condos available for sale, new construction projects are few and far between. So, why aren't developers building more new condos in Denver? Let's take a closer look at some of the factors that may be contributing to the shortage.
The Construction Defect Law
One of the main reasons why developers may be hesitant to build new condos in Denver is the state's Construction Defect law. This law allows condo owners to sue developers and builders for construction defects for up to six years after the project is completed. As a result, developers may face increased legal and insurance costs, which can make it more difficult and expensive to build new condo projects.
Affordable Housing Requirements
Another factor that could be impacting the availability of new condos in Denver is the city's affordable housing requirements. In Denver, developers are required to set aside 10% of the units in new for-sale developments or 20% of the units in new rental developments for affordable housing. These units are sold or rented at below-market rates to qualified buyers or renters who meet certain income restrictions.
While these requirements are designed to increase access to affordable housing, they can also make it more difficult and expensive for developers to build new projects. Developers may be required to provide additional amenities or services to affordable housing residents, which can increase the cost of the project. The process of complying with affordable housing requirements can also be complex and time-consuming, which can discourage developers from pursuing new condo projects.
Zoning and Regulatory Restrictions
Zoning and regulatory restrictions can also be a factor in the scarcity of new condos in Denver. In some areas of the city, zoning restrictions may limit the height or density of new construction projects, making it more difficult for developers to build new condos. Regulatory requirements, such as energy efficiency standards, may also add to the cost of new construction projects.
High Construction Costs
Finally, the cost of construction in Denver may be a barrier to building new condos. Construction costs have been rising in recent years, due in part to a shortage of skilled labor and rising material costs. These factors can make it more expensive for developers to build new condos, especially in areas where land prices are already high.
In summary, there are several factors that may be contributing to the shortage of new condos in Denver, including the Construction Defect law, affordable housing requirements, zoning and regulatory restrictions, and high construction costs. While these factors may make it more difficult and expensive for developers to build new condo projects, it's worth noting that there are still opportunities for buyers to find great condos in Denver's existing inventory. As always, it's important to work with a knowledgeable real estate agent who can help you navigate the market and find the right property for your needs.
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