The disagreement about the cause — and it is a real one

Colorado passed HB25-1272, the “Colorado American Dream Act,” on the theory that construction-defect litigation exposure is what killed condominium supply. Signed May 12, 2025 and effective August 6, 2025, it raised the CCIOA owner-approval threshold for an association defect action from a majority to at least sixty-five percent of allocated votes, required net recoveries to be spent on the repair first, and opened a builder warranty programme — the Multifamily Construction Incentive Program — on January 1, 2026.

The practitioners quoted in the column say the binding constraint is insurance, and that insurers and builders remain “extremely doubtful the reforms will materially change underwriting behavior.”

The state's own actuarial evidence supports their diagnosis at least as well as the legislature's. The Division of Insurance's HB24-1108 study found association property insurance written premium up 115% between 2020 and 2024, average premium per $1,000 of insured value up 44%, the top five carriers moving from 26% to 48% of written premium, and about 37% of carriers reporting reduced risk tolerance. Stakeholders told the study that “insurance is becoming a barrier to affordable housing development, with projects canceled” and that few carriers can write properties above roughly $50 million in insured value.

We are not going to adjudicate which cause dominates. Both instruments are in force, and the outcome is measurable over the next few years in Colorado permit data.

Why new construction it will never own matters to a sitting board

Because the supply picture is what sets the resale market for the units the association already has — and because the financing bar for those units is rising at the same time.

Fannie Mae retired its Limited Review process for loan applications dated on or after August 3, 2026, and Freddie Mac retired Streamlined Review on the same date. Every conventional loan on a unit in a project over ten units now goes through a full review of the association's budget, reserve funding, insurance, delinquency rates, litigation, special assessments and inspection reports.

And on January 4, 2027 both agencies raise the minimum replacement-reserve allocation from 10% to 15% of annual budgeted assessment income — with special assessment income excluded from the denominator, so an association cannot special-assess its way to the ratio.

Put those together with the market: Denver-metro condominium prices were reported in August 2026 down about 14% with roughly six months of inventory, against single-family homes moving in about seventeen days.

That is the argument a board can make to owners resisting a reserve increase, and it is stronger than any appeal to prudence: the resale value of their unit now depends on the association's financial documents passing a full lender review, in a metro where condominium inventory is long and prices are soft.

The one thing that changed on the insurance side

Not much, but not nothing, and it points the right way. Both agencies' March 2026 packages made master-policy requirements meaningfully easier for a hail-exposed Colorado association: roofs may now be insured on an actual-cash-value basis rather than replacement cost; the inflation guard endorsement requirement is retired; the per-unit deductible cap is a flat $50,000 in place of the old 5% cap; and Freddie Mac expressly permits a deductible buy-back policy to meet its deductible requirements.

Those are lender accommodations to a hard insurance market, not fixes for it. They make it easier for an existing Colorado association to buy a master policy a conventional lender will accept. They do nothing about the 4% to 6% of hard costs a builder pays to insure a new condominium project — which is the number the column identifies as the reason so few get built.

What to watch

Recorded notices of election under the Multifamily Construction Incentive Program. A builder opts in by recording a notice in the county real property records before a unit is offered for sale, in exchange for a warranty of one year on workmanship, two on plumbing and electrical, and six on major structural components, plus a third-party inspection regime. Counting those notices over 2026 and 2027 is the most direct available measure of whether the reform is being used at all.

And whether condominium starts move. If the 14-to-1 ratio in the legislature's findings narrows over the next two years, the litigation-exposure theory gets support. If it does not, the practitioners quoted in April were right, and the answer lies in the insurance market the state has so far only studied.