DEVELOPMENT collapsed by 82 % in just five months. In the Netherlands, policies intended to control costs led to a housing shortage that actually drove prices up.
A recent study by MetroSight found that common regulations designed to protect residents, such as Source of Income Prohibitions and Eviction Limitations, resulted in increasing rents by between 3.4 % and 5.9 % when applied individually and by 9.0 % when the policies were enacted together.
PROBLEMS AT HOME
Unfortunately, an observer need not look far to find an example of capital flight in progress.
By requiring developers to set aside between 8 % and 15 % of new units as affordable, effectively offering them at a discount, Denver’ s“ Expanding Housing Affordability”( EHA) ordinance of 2022 reduced the ability of new properties to pay for the capital required for them to be built.
In 2023, Scott Rathbun, President of Apartment Appraisers & Consultants, showed that permit applications for market-rate apartments in Denver fell by 92 % in the six months after the ordinance took effect on July 1, 2022.
Permit applications fell to 2,119 units in the second half of 2022 as compared to 24,970 units during the first half.
While some of the pre-ordinance surge was undoubtedly attributed to developers rushing to file permit applications before the new rules took effect, the permit pace did not rebound. A full year after the implementation of the ordinance, developers filed permit applications annualized pace of just 864 units.
Rising interest rates in 2022 increased the cost of borrowing nationwide, creating significant headwinds for all real estate developers. However, Denver’ s regulatory burdens amplified this national trend, pushing projects that were marginally feasible even in a high-interest environment completely into the red.
Because buildings take a long time to complete, the pipeline of projects permitted prior to mid-2022 continued to deliver new homes in Denver for several years. But that new supply buffer has been largely exhausted.
In Q2 2025, approximately three years after the ordinances and the rise in interest rates, the music stopped for Denver apartment completions.
A SUCCESS STORY AND A CAUTIONARY TALE
Over the past decade, and the past five years in particular, the amount of new supply flowing into Denver’ s housing market has been a success story for housing affordability advocates. The collapse in new permits in 2022 and subsequent deliveries in 2025 demonstrate the fragility of that story and the risks both from internal and external forces.
While Colorado policy makers can do little about interest rates, pursuing thoughtful housing policy and creating a predictable regulatory environment is essential for attracting the billions of dollars needed to build new housing in Denver. This means avoiding the constant " legislative churn " of new rules and regulations that chases capital away.
Housing affordability will continue to be an urgent issue in Denver and across the country. If policymakers create a stable, predictable place to build, the capital that’ s available for apartment development will flow into the city, the chairs will be built, and there will be a seat for everyone.
Teo Nicolais, MSRED, CRE, CCIM, CPM, CAPS, is a Lecturer in Urban Planning and Design at Harvard University. www. aamdhq. org TRENDS JANUARY 2026 | 25