Colorado Condos Discussion Post-6 (Last Call -- for Now)
Analyzing Builder Participation
Reviewing Deed transactions again, specifically looking at the type of builder and breakdown of 2005 versus 2022-2023 across the Front Range. I manually went through all 4,082 deeds in 2005 and 931 between 2022-2023 combined and labelled them: Affordable, LLC, Local, and National-Regional. Here is how the mix broke out focused on the latter three:
** National/Regional builders accounted for 11% of the builders in 2005, and 27% of the condo deeds.
** Local builders registered 41% of the builder count and 54% of deeds.
** LLCs (a mix of GCs, one-off projects, and unidentified parent companies if applicable) accounted for 46% of builders and 18% of deeds.
This mix changed in the combined total of 2022-2023, with the most noticeable declines in national/regional builders. They fell from 11% to 9% of the (already reduced) builder count, and from 27% of deeds to only 6%. Now, some of these 2005 builders no longer exist, but many do --- and still build condominiums. Just not here in Colorado.
Local builders also fell in the builder count from 41% to 28%, with a gain in deeds from 54% to 67%. So much less builder share, but those that are, have captured more of the diminished business.
The LLCs moved up from 46% of the builder count to 63%, and gained share, up from 18% of deeds to 21%.
Back to 2005. Of those 201 different condo builders, how many still exist today? About 28%, and back then, those businesses accounted for approximately 41% of 2005’s activity.
How many of those 2005 builders, that still exist, have actually built a for-sale condo since 2020? Less than 7%. The balance of them have moved away from for-sale condos into either commercial, MF, or other for-sale product.
How many of those same 2005 builders closed a condo unit in 2022 or 2023? Only 2%.
Fix the environment. Simply removing barriers that would encourage more large nationals who are already building condos elsewhere would bring significant numbers. Add in more local builder volume and we might actually have a reasonable amount of supply. It is also likely that some of those builders who were burned in the past decade-plus, will not return to this segment even if policies improve. But if the environment becomes more encouraging, I believe over time large, local, and new builders will do what they do best ---- build. ~t
#HousingAffordability #ColoradoHousing #housing #buildingconstruction #corealestate #newconstruction #buildcondos
Ted Leighty
Peter LiFari
Homeownership Opportunity Alliance (Colorado)
HBA of Metro Denver
And thank you to Tim Sullivan and Zonda for the data information to continue this effort.