Does Colorado Springs Need More Housing, or More Affordable Housing?

Colorado Springs has a documented housing shortage, and it also has a balanced resale market. Both are true, and the reason they are both true is the point of this analysis: the shortage is an affordability shortage, not a raw-numbers shortage. The region's own 2025 Housing Needs Assessment counts a 27,712-unit deficit today and roughly 60,000 more needed by 2035, yet the for-sale market is sitting at about 5.5 months of supply, which is balanced. The deficit is concentrated in homes families can actually afford, not in homes at any price.

That distinction decides whether a policy works. Building 60,000 market-rate homes at today's roughly $460,000 average would not close the gap, because the households who are short cannot qualify at that price. A home a local family cannot afford does not house that family. It sits, or it is bought by someone from somewhere else. The right measure is not how many units get built. It is how many get built at prices the local workforce can reach.

What the official assessment says

The shortage is real and documented, and this analysis does not dispute it. The December 2025 regional Housing Needs Assessment found:

• A 27,712-unit shortage in Colorado Springs today, and about 60,034 additional homes needed by 2035. County-wide the figures are 36,779 now and 82,242 by 2035.
• That "no market segment is adequately served" - the core problem is a mismatch between the housing stock and who needs housing (single-person households, seniors, young professionals, and low- to moderate-income workers).
• The average home value of about $457,000 requires an income above $150,000 to buy, and only about 30% of local households earn that much.
• A production gap: the region permitted about 3,021 single-family homes a year (2006 to 2024) against an estimated need near 8,500 a year.

Read closely, the assessment is not simply saying "build more." Its own numbers say the stock does not match local incomes. That is the affordability gap, stated by the official source.

What the resale market shows right now

The for-sale market is balanced, which is the first clue the shortage is not a simple unit count. Across the Pikes Peak region there are about 5,500 active residential listings against roughly 1,000 sales a month, about 5.5 months of supply, the balanced-to-slightly-loose "normal." But that balance is not even across price points:

Two things stand out. The cheapest tier (under $300K) has the most months of supply at 8.1 - it moves slowest, because that inventory is largely older condos, manufactured homes, and fixers. The tightest, highest-demand segment is $300K to $500K (4.4 to 4.6 months) - the attainable-family range that clears fastest and is hardest to find. Everything above $500K already carries more supply than that demand zone.

A balanced resale market sitting on top of a documented 27,712-unit shortage is the whole story in one line: there are enough homes at the prices the market builds, and a deep deficit at the prices families earn.

The affordability gap, quantified

The gap is the distance between what households earn and what homes cost. The median El Paso County household income is about $90,778 (U.S. Census Bureau). At a healthy 28% of income toward housing, that household can carry roughly a $350,000 home at today's rates. The median home sells for about $463,000. The assessment puts it even more starkly: the average home needs a $150,000 income, which only about 30% of households have.

That is a six-figure gap between the typical income's reach and the typical price. No amount of construction at $450,000 and up closes it, because the constraint is not the number of homes. It is the price relative to local pay.

Why units are not the same as demand

This is the piece most "we need 60,000 homes" arguments skip. Housing demand is not the number of people who want a home. It is the number who can qualify to buy one at the price it is offered - what economists call effective demand, or a market's absorption capacity.

Build 60,000 homes at a $500,000 average into a market where most households top out near $350,000, and the market does not absorb them. They do one of three things: sit unsold, sell to higher-income buyers moving in from elsewhere, or get bought as investments and rentals. None of those three house the local families the shortage is actually about. The projection of El Paso County approaching one million residents by 2050 only becomes effective demand if the jobs that bring those people pay enough to afford the homes being built.

Counting units counts the wrong thing. Count the units priced where the workforce can reach.

The honest counterargument, and why it underdelivers here

The strongest case against this view is filtering: build any housing, even expensive housing, and it eases the whole ladder - buyers move up, freeing older and cheaper homes behind them. In a normal market that works, and it is a real reason not to block market-rate construction.

But filtering depends on a functioning move-up chain, and two things have broken it here:

• Rate lock-in. Owners holding 3% mortgages will not trade them for 6.5%, so they stay put. The homes that should filter down never list.
• The bottom is already stuck. If filtering were clearing the low end, the under-$300K tier would be tight. Instead it has the most months of supply (8.1). The cheap homes that exist are not the ones selling.

Filtering is slow in the best of times, and it is stalled now. Waiting for $500,000 homes to trickle down to a $90,000 household is not a plan on any timeline that matters to that household.

What would actually close the gap

If the deficit is affordability, the fixes have to produce homes at attainable prices and types, not market-rate volume at any price:

• Target the attainable band. New production aimed at the $300K to $450K range and at missing-middle types - townhomes, duplexes, small-lot and cottage homes - where demand is tight and the stock is thin.
• Change what pencils. Builders cannot deliver below roughly $400,000 at current land, fee, and construction costs without policy help: zoning for density and smaller lots, reduced or deferred impact fees, and faster approvals.
• Build permanently affordable supply. Deed-restricted and income-qualified units, manufactured and modular housing, and accessory dwelling units add stock that stays within reach instead of pricing up.
• Close the income side too. Affordability is a ratio. Higher-wage job growth, and eventually rate relief, move the same payment-to-income number from the other direction.

The goal is not fewer homes. It is the right homes, at prices the people who already live and work here can actually pay.

Methodology and sources

Methodology. Months of supply by band is active residential listings divided by the last 30 days of closed residential sales, from elevateMLS (Pikes Peak region) data as of October 2026. Median income is the U.S. Census Bureau estimate for El Paso County. The attainable-price estimate assumes 28% of gross income toward the payment at current rates. Months of supply is a short-term resale-market snapshot; the assessment's shortage is a longer-term structural measure of units relative to households, including rental need. The two are not contradictory, and this analysis treats both as valid. Nothing here argues against housing. It argues for building at the price points and types the data shows are short.

Sources: Colorado Springs / El Paso County Regional Housing Needs Assessment (December 2025); Colorado Politics coverage; Colorado Public Radio; U.S. Census Bureau median household income for El Paso County (FRED series MHICO08041A052NCEN); elevateMLS active and closed residential listings, compiled by Rob Thompson, Realtor.

See also the companion Colorado Springs Housing Affordability Data Sheet and the months-of-supply history.