Introduction
On May 13, 2024, Colorado took a bold step toward addressing its housing crisis by passing House Bill 24-1152, which paves the way for increased Accessory Dwelling Unit (ADU) development across the state. This legislation represents a turning point for homeowners, investors, real estate agents, and contractors, offering new opportunities for growth while challenging local governments to modify outdated zoning regulations. Here's an in-depth look at the bill's key provisions and what it means for various stakeholders.
Key Provisions of HB24-1152
House Bill 24-1152 requires certain municipalities and counties—referred to as "subject jurisdictions"—to allow one ADU per single-family home in areas zoned for single-family dwellings. Starting June 30, 2025, local governments will no longer be able to enforce laws restricting ADU construction or conversion, effectively overriding many zoning regulations.
To encourage ADU development, the bill establishes the Accessory Dwelling Unit Fee Reduction and Encouragement Grant Program, with $5 million in grants available to local governments that promote ADU construction. An additional $8 million is allocated to the Colorado Housing and Finance Authority to assist low- and moderate-income residents in building ADUs.
Opportunities for Stakeholders
Homeowners
Homeowners stand to gain significantly from this legislation, both financially and practically. With HB24-1152, they can:
- Generate additional rental income by adding an ADU to their property
- Increase their property value with an ADU addition
- Access financial assistance, especially for low- to moderate-income families
Real Estate Agents
For real estate professionals, HB24-1152 unlocks new market opportunities:
- Increase listings with ADU potential, expanding client portfolios
- Higher property values translate into potentially larger commissions
- Specialize in a growing niche of properties with ADU prospects
Contractors
The construction industry will likely see increased demand for ADU-related projects:
- Expanded opportunities for ADU construction and conversion work
- Potential to specialize in ADU development, which may lead to higher demand and profitability
- Access to grant-funded projects as local governments adopt ADU initiatives
Investors
Real estate investors can leverage the benefits of this bill by:
- Exploring new investment opportunities in properties with ADU potential
- Participating in grant programs that reduce ADU construction costs
- Expanding into the affordable housing market, particularly with ADUs in demand
Challenges and Controversies
Despite the potential advantages, HB24-1152 has faced opposition. The Colorado Municipal League (CML) initially opposed the bill due to concerns over home rule and local governance. Some municipalities worry that the bill will override their existing ADU programs and challenge their local zoning authority.
Looking Ahead
As Colorado communities work to implement this new legislation, we can expect:
- A gradual increase in the housing supply, which may alleviate rental price pressure
- More diverse housing options, particularly for multigenerational living arrangements
- Greater emphasis on energy-efficient and affordable housing, especially in urban areas
HB24-1152 marks a significant shift in Colorado's housing strategy, offering opportunities for growth while presenting challenges to local governance. As the law goes into effect, its long-term impact on the state's housing landscape will be closely monitored by policymakers, investors, and residents.
Conclusion
Colorado's HB24-1152 is a groundbreaking law with the potential to reshape the state's housing market by promoting ADU development. Although it presents challenges for local governments, the opportunities it offers to homeowners, investors, and real estate professionals are immense. As the legislation comes into play, it will be crucial to watch how communities adapt and the overall effects on Colorado’s housing crisis.
Call to Action:
Interested in learning how HB24-1152 could affect your real estate decisions? Contact us to explore the potential for ADUs in your area and how to take advantage of this new legislation.
