Colorado maintained the same ratio of housing units per resident in 2024 as it had in 1985—roughly 0.45 homes for every person—yet the typical home now costs 5.1 years of median household income compared to 3.1 years four decades ago, according to a new report published by the Common Sense Institute. The analysis reveals that while homebuilding technically kept pace with population growth over 40 years, two historic shortages and a demographic shift toward smaller households have driven housing costs sharply higher relative to what Colorado families earn.
The report documents two distinct periods when population growth dramatically outstripped construction, each leaving lasting effects on affordability. From 1991 to 1995, Colorado added 507,000 residents but permitted only 144,000 homes—about 3.5 new residents for every building permit. The same ratio appeared again from 2008 to 2016, when the state grew by 708,000 people while issuing permits for just 204,000 homes. In the state's 10 largest counties, vacancy rates plunged from 10.7% in 1988 to below 5% by 1993, then from 9.4% in 2006 to 3.2% in 2016. After each shortage ended, home values climbed roughly three times faster than incomes and remained elevated even after construction recovered. Most recently, shrinking household size has become the dominant driver of demand. Colorado's average household fell from 2.55 people in 2020 to 2.45 in 2024—a decline that alone generated approximately 88,000 new households from 2021 to 2024, exceeding the 69,000 households created by population growth. In Denver, the number of occupied studio apartments surged 164% between 2005 and 2024, rising from roughly 8,700 to 23,000 units and outpacing growth in any other home size. Studios and one-bedroom units together accounted for more than a third of the approximately 108,000 homes Denver added during that span.
The report finds that smaller homes carry a substantial cost penalty: in 2025, a typical one-bedroom home in Colorado was valued at about $291,000, compared to roughly $173,000 per bedroom for a three-bedroom home—a premium of approximately 70%. Median rent increases between the mid-2010s and early 2020s followed the same pattern, with studios rising 85% and one-bedroom units climbing 73%, compared to 53% for three-bedroom units and 46% for four-bedroom units. According to the analysis, as more Coloradans live alone or in pairs, a growing share of households pay this premium, raising the average price per bedroom even when individual home prices hold steady.
The shift toward smaller households reflects both an aging population and changing family patterns, and the report's authors expect it to continue through mid-century. Coloradans aged 65 and older comprised 11% of the population in 2010 and 16.5% in 2024, with the State Demography Office projecting 20.7% by 2050. Nearly half of Colorado households headed by someone 75 or older consist of a single person, about double the rate for householders under 55, and roughly two-thirds of homeowners 65 and older moved into their current home before 2010. Meanwhile, the share of households with children under 18 dropped from 34% in 2005 to 27% in 2024, with nearly three in four new households during that period containing just one or two people. The combination means household size is projected to keep falling to 2.34 people by 2050, with about one in five of the 652,000 new households expected by that year coming from shrinking households rather than population growth.
Meeting that demand at current vacancy rates would require approximately 31,000 new units annually over the next decade, the report concludes, close to the 32,200 permits issued in 2024 but well below the 56,500 permitted in 2021. The authors note that housing demand now depends not just on how many people live in Colorado, but on who they choose to live with—a reality that simple counts of homes per resident fail to capture.