Why It Matters
Colorado faces a critical housing affordability crisis as the state loses affordable rental units faster than it can replace them. For every two affordable housing units Colorado builds, the state loses one existing unit—a net loss that threatens the stability of working-class families across the state. The problem is compounded by state funding decisions that prioritize new construction over preserving existing affordable housing stock, leaving nonprofits and community organizations unable to rescue deteriorating apartment buildings from market pressures and gentrification.
What Happened
Colorado is projected to lose 24,000 affordable housing units over the next 15 years, even as the state invests heavily in new construction. This loss reflects a fundamental mismatch between housing supply and market forces—existing affordable units are being converted to market-rate housing or demolished faster than new affordable units can be built.
The problem is illustrated by a specific case in Denver. When an apartment building at 1371 Xenia St. in Aurora went up for sale in 2024, the East Colfax Community Collective, a nonprofit organization, sought to purchase and rehabilitate the structure. The 1961 building housed low-income families, many of whom faced inadequate heating during winters despite rising rents. The nonprofit cobbled together financing to acquire the property, repair deteriorating conditions, and preserve affordability for its current residents.
The organization applied for funding through Proposition 123, a voter-approved initiative specifically designed to support projects preserving affordable rental housing for low-income families when the private sector will not. The state rejected the application. Governor Jared Polis and state housing officials have prioritized new construction over preservation of existing affordable stock, according to reporting on the state’s housing strategy.
By the Numbers
Colorado faces a projected loss of 24,000 affordable housing units over a 15-year period. The state’s construction rate does not offset this loss—for every two affordable units built, one existing unit is lost from the affordable housing inventory. This represents a net loss of approximately 1,600 affordable units annually. The 1371 Xenia St. building serves as one example among thousands of aging rental properties across Colorado where working-class tenants face displacement without intervention. In the East Colfax neighborhood where this building sits, approximately one in four households live in poverty, making preservation of affordable housing particularly critical.
Zoom Out
Colorado’s affordable housing crisis mirrors challenges in other fast-growing states. Major metropolitan areas across the West—including California, Utah, and Washington—struggle with the loss of naturally occurring affordable housing as neighborhoods experience gentrification and property values increase. Many states have implemented preservation programs to combat this trend, allocating public funds to help nonprofits acquire and maintain existing affordable rental properties.
Proposition 123, which Colorado voters approved, was designed to address this exact problem by funding preservation projects alongside new construction. However, the state’s implementation has favored new development, leaving preservation efforts underfunded. This policy choice represents a broader national debate about housing strategy: whether public funding should prioritize adding new units or preventing loss of existing affordable stock. Preservation advocates argue that maintaining existing buildings is typically more cost-effective and faster than new construction while immediately serving vulnerable populations.
The rejection of the East Colfax Community Collective’s application reflects a statewide pattern. Nonprofits across Colorado report difficulty securing state funding for preservation projects, even when those projects align with voter-approved initiatives.
What’s Next
The state’s continued rejection of preservation funding applications will likely intensify pressure on policymakers to reassess housing strategy. Community organizations and affordable housing advocates are expected to push for reallocation of Proposition 123 funds toward preservation, arguing that current spending patterns fail to address the root cause of affordability loss.
Additional nonprofit applications for preservation funding are pending before state housing agencies. Each rejection strengthens the case for policy review, particularly as the projected loss of 24,000 units approaches implementation. Legislative action or executive policy changes could redirect state resources toward preservation in upcoming budget cycles. Without intervention, gentrification along East Colfax and similar neighborhoods across Colorado will accelerate, displacing low-income residents and further reducing the available affordable housing stock.