A new report from the Common Sense Institute finds that government-imposed fees, taxes, and permitting delays add more than $40,000 to the cost of building a typical new single-family home in Denver before construction even begins. This is more than double the average among comparable metropolitan areas.
The report, The Cost of Homebuilding in Colorado, examines the regulatory and policy-driven costs associated with building a standard 2,000-square-foot single-family home, comparing Denver and Colorado communities with peer cities across the Mountain West, Sun Belt, and Midwest. While material and labor costs in Denver are near the national average, policy choices substantially increase the cost of new housing.
Among the report’s findings:
- Denver’s government-imposed costs exceeds $40,000 for a typical new single-family home, more than twice the average among 12 peer cities.
- Denver’s affordable housing linkage fee totals $16,360 for a typical home, making it one of only two peer cities with a comparable mandatory fee and more than five times Portland’s equivalent charge.
- Denver’s average residential plan review timeline of 209 days adds an estimated $9,625 in financing costs per home compared with Salt Lake City’s permitting timeline.
- Water and sewer development charges vary dramatically across Colorado, ranging from $2,994 in Lamar to $46,800 in Arvada, with seven Front Range suburbs charging even more than Denver.
- Denver’s sales tax burden on construction materials is the highest among peer cities, adding an estimated $7,686 to the cost of building a typical home.
- Single-family home permits in Denver have fallen 43% since their 2021 peak, the sharpest decline among the peer markets studied, even as several competing metros maintained or increased production.
The report also finds that Denver’s underlying construction costs are not unusually high. Instead, the city’s elevated regulatory fees, taxes, and permitting timelines are layered on top of otherwise average material and labor costs, leaving little opportunity for builders to absorb additional expenses without increasing home prices.
