SPONSORED: REMI Partners latest study: decreased housing growth could lead to unforeseen economic repercussions
Author: Tim Brown - June 19, 2018 - Updated: June 19, 2018
A new study released by the REMI Partnership, a partnership of public and private organizations including, Colorado Association of REALTORS®, the Colorado Bankers Association, Colorado Concern, Common Sense Policy Roundtable and Denver South Economic Development Partnership found that a decline in housing growth in the front range region could have massive economic repercussions.
The report, “Economic Impact of Restricting Housing Growth to No More Than 1% in Colorado,” finds that a mandatory cap on annual housing growth, such as that proposed by Initiative 66, could have massive repercussions that transcend housing concerns in Colorado. Initiative 66 was originally slated to appear on the November ballot. Proponents of the measure withdrew it last week. The initiative proposed capping annual housing growth in Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas, El Paso, Jefferson, Larimer, and Weld counties at 1%.
“Although Initiative 66 was recently withdrawn from the ballot, this is an issue that is of great concern to Colorado,” said Tyrone Adams, CEO of the Colorado Association of Realtors and REMI Partner. “Restrictions on growth will have a severely negative impact on our economy.”
According to the study, limiting housing growth could, according to the report, not only decrease the number of new houses being built annually but also contribute to subsequent declines in job numbers and residential investment.
The report asserts that a cap on housing growth would remove $54 to $80 billion in new residential investment spending and would reduce the number of jobs in the affected region by between 36,000 and 55,000 annually. Mike Kopp, President and CEO of Colorado Concern and REMI partner said, “A cap like this would bring about disastrous consequences for our state. The job loss and income loss resulting from this initiative would have been felt by tens of thousands of Coloradans.”
The report used two separate economic projections to estimate how housing growth would occur in each affected county relative to the projected level of household growth. According to the report, this has become an important comparison to consider as the recent history has shown new housing units have not kept pace with household growth, causing vacancy rates to drop and housing prices to soar.
The report also contends that businesses that build, sell, finance, or manage homes would be impacted by a mandatory cap on housing growth. As the report states, “as they [the businesses in the affected counties] lose business and the industries around residential construction shrink so will their employment base, causing incomes to fall and consumer demand to shrink.” Given that these businesses will then have to decrease their costs significantly, the report claims, it is likely that employment will decrease as cuts to labor are made.