In El Paso County, a significant shift is underway in the construction of multifamily housing. A Pikes Peak Housing Network quarterly report reveals that after a decade-low number of multifamily housing permits pulled in 2024 so far, the pace of construction is expected to slow dramatically. This contrasts with the years prior when there was a dramatic spike in permits, with 3,847 units in 2021 and 4,955 units in 2022. Currently, only 501 units have been permitted in 2024.

Unraveling the Impact of Multifamily Housing Permit Trends in El Paso County

Current Status and Past Trends

The Q3 report clearly shows a nearly 90% decrease in multifamily housing unit permits compared to 2022. This significant drop raises concerns about the future supply of multifamily housing. Jill Gaebler, the Executive Director of the Pikes Peak Housing Network, points out that many of the units permitted in 2021 and 2022 are now coming online, which has led to a large increase in apartment properties in downtown Colorado Springs. This boost has helped meet the demand for apartments across the city. However, she is concerned about a worsened housing deficit down the road due to the continued decrease in apartment permits pulled this year.

Reasons for the Slowdown

Thomas Garmong, former President of the Housing and Building Association of Colorado Springs, believes that the previous boom in apartment construction was likely caused by higher demand for multifamily housing as home prices and interest rates soared. But now, with higher costs for builders when financing construction projects and increased cap rates, it has become much harder to finance these projects. This, he says, is also contributing to the drop-off in permits.

Future Outlook and Cushioning Factors

Although there are concerns about a future housing deficit, Laura Nelson, Executive Director of the Apartment Association of Southern Colorado, believes that the large number of properties coming online now will cushion any shortage. She is not overly concerned about the low number of permits pulled this year as long as the trend does not continue year after year. The Q3 housing data report shows that the average monthly rent for a one-bedroom apartment in Colorado Springs remains consistent at $1,467 compared to last year. In downtown Colorado Springs, the average one-bedroom monthly rent is $1,834, which is a slight decrease. This indicates that the rental market is still relatively stable for now.