Is litigation really at root of Colorado’s high-priced housing? Even developers don’t think so

Author: Jonathan Harris - November 10, 2017 - Updated: November 10, 2017

Jonathan Harris
Jonathan Harris

Developers and builders had an opportunity to discuss the many reasons they believe Colorado is experiencing an affordable housing shortage in recent media coverage. I girded myself for much ado about what the “business community” has convinced elected officials is the number one barrier to new builds — Colorado’s so-called unfair construction-defect laws.

But wait — this time, construction defects wasn’t even mentioned by Colorado’s well-known developers and builders! Could they have been pushing a false narrative at the legislature and in municipalities for the last few years?

By virtue of my unlucky experience of buying a poorly built condo, I am a veteran of the construction-defect wars. Reluctantly I became the chair of Build Our Homes Right, a coalition of similarly unfortunate homeowners and our legal advocates, formed to protect the rights of homeowners, like me, who are shocked to discover their new homes have crumbling foundations or water streaming down their living room walls during monsoon rains. Not only is it an unhappy fellowship but unsatisfying, too, since we’ve been forced to play non-stop defense across from deep-pocketed developers and builders at the state legislature the last few years.

So what were the significant challenges to building affordable housing in Colorado identified by the development community in the recent coverage? Specifically:

  • Time and process in acquiring land.
  • Material costs and impact fee increases.
  • Construction labor that is more expensive and harder to find.
  • Financing barriers for smaller, local builders.
  • “Margin squeeze,” i.e., with costs going up, their profits are less generous than in the past.

Three years ago we distributed a Pacey Economics research report to legislators showing that increases in construction labor costs and other elements of the producer price index like materials, paired with demand problems like increased buyer debt and increased fees was the actual problem in building affordable housing.

The sad thing is that some well-heeled insiders repeated a false argument about rampant construction defect litigation over and over until public perception was that it is true. The economic report doesn’t matter. Testimony from re-construction experts and owners of defective homes doesn’t matter. Statistics about how many cases actually go to trial doesn’t matter.

As a regular, everyday Coloradan, I find it discouraging to realize that many legislators, mayors  and city council members listen to industry lobbyists rather than making decisions based on facts and what their constituents want. What are the “little guys” like me, armed just with facts and our personal stories, supposed to do when faced with the odds stacked against us?

Every legislative session, wronged homeowners gear up to contact legislators, appear at hearings and get the word out about homeowners’ rights — not for ourselves, because we’ve already fought the builder battles — but for future homebuyers who should be able to hold developers responsible for building shoddy homes. We are Republicans, Democrats and independents — and all of us are frustrated that our elected officials are willing to put our rights at risk year after year.

I do agree with Gene Myers, CEO of housing developer Thrive Home Builders, when he was quoted in the recent coverage as saying, “Our industry will adapt…It’s our customers that I worry about.” Sadly, in today’s hot-hot-hot housing market, it’s clear that some in the homebuilding industry are more interested in increasing their margin than in delivering the best product they can. Perhaps building homes right the first time should be the subject of the development community’s attention and our elected officials’ concern.

The bottom line is that it’s hard to take the word of developers and metro mayors about what is broken here. What is easy to believe is Colorado is growing at a record pace and so are the profits of builders and developers.

Jonathan Harris

Jonathan Harris

Jonathan Harris is chair of Build Our Homes Right.