The last 10 years have been good to Denver’s housing market. A booming local economy, an unemployment rate of less than 3% and seemingly weekly announcements of companies with high-paying jobs moving into the Mile High City have made Denver one of the “healthiest” housing markets in the country, according to SmartAsset.

New high-rise construction in Denver’s downtown has been so ubiquitous during these last few years that the Denver Post began a weekly feature called “Crane Watch” just to document all that construction.

So…what’s not to like? Buyers in Denver, just like buyers everywhere else (New York City, Seattle, San Francisco), are at their breaking points. Breakneck price increases far exceed income gains and people cannot afford to become/remain buyers. Both sales and construction are slowing down, asking prices are being slashed and homes that would have elicited bidding wars just months ago are now sitting on the market for weeks and months, not days.

Denver’s median single-family home prices came in at $410,000 in August 2018 and condominium median prices came in over $300,000. These prices are still up +8% over last year, according to the S&P CoreLogic Case Shiller Price Index, but +8% is not the same as the double-digit increases Denver ‘s housing market has been experiencing over the last couple of years.

More people continue to move to Denver rather than away from Denver but that in-migration has tapered off recently. JJ Ament, CEO of the Metro Denver Economic Development Corporation, said, “I wouldn’t use the word ‘crisis’ when talking about fewer people moving to Denver,” but others do. A Shift Research Lab report this year concluded, “…the region is in crisis…it has a short-fall of tens of thousands affordable housing units…while new construction is too expensive for people to afford.”

Most of Denver’s new housing lists for $400,000 as hardly any builders can sell properties for under $300,000 without government subsidies. Meanwhile, many builders worry they’re pricing themselves out of the market. Gene Myers, CEO of Thrive Home Builders, said, “I see the biggest threat to our business as being affordability…we’re building homes that people can’t afford.”

Myers points to cost as the central problem…the cost of land, the cost of building permits and fees, the cost of labor and materials, restrictive zoning, the cost due to tariffs. Add up those items and the cost of a single-family home is close to $150,000 BEFORE the house is even built.

Sam Khater, chief economist with Freddie Mac, said, “(Builders) are producing what they can produce. The problem is that it’s uneconomic for them to produce affordable (housing).”

Denver’s housing conundrum is spreading. Priced out, displaced San Francisco people moved to Seattle and Portland and drove up prices. Displaced people then moved to Denver and Austin. And now, displaced people are moving to Boise and Nashville.

“City after city is going to face this ‘net outflow of users,’” said Redfin’s Glenn Kelman. “At some point, buyers step back and say, ‘Enough is enough.’”