Affordable Housing Policy Risks in High-Growth Tourism Towns: The Breckenridge Runway Neighborhood Case Study

In the shadow of the Rocky Mountains, Breckenridge, Colorado, has long epitomized the allure of high-growth tourism towns. Its ski slopes, luxury resorts, and year-round outdoor attractions have fueled a real estate boom, but this prosperity has come at a cost: a housing crisis that threatens to displace local workers and destabilize the community. The town's latest initiative, the Runway Neighborhood, aims to address this imbalance through a mix of deed-restricted housing, accessory dwelling units (ADUs), and geothermal energy systems. Yet, the project underscores a broader tension between short-term rental growth and long-term affordability—a tension that investors must navigate carefully in mountain markets.

The Runway Neighborhood: A Model for Equity-Driven Development

The Runway Neighborhood, a 148-unit for-sale workforce housing project on 24 acres of town-owned land, represents Breckenridge's most ambitious effort to date. Approved in May 2025, the development includes single-family homes, townhomes, and duplexes priced between $351,000 and $1.3 million. Approximately 95% of units are deed-restricted to residents earning 85% to 180% of the area median income (AMI), with annual appreciation capped at 3% for certain units. The project also incorporates geothermal energy, reducing long-term utility costs and aligning with the town's sustainability goals.

However, the initiative has faced pushback. Critics argue that even with AMI-based pricing, the units remain unaffordable for many local workers when factoring in childcare, groceries, and heating. The Breckenridge Social Equity Advisory Committee has called for a points-based lottery system to prioritize longtime residents and local employees, while others warn that accessory dwelling units (ADUs) could inadvertently benefit higher-income buyers. These debates highlight the fragility of balancing affordability with market realities.

Eminent Domain and the Limits of Policy Tools

While the Runway Neighborhood relies on voluntary agreements and subsidies, the absence of eminent domain in its development is notable. Unlike some high-growth cities that use the tool to acquire land for public housing, Breckenridge has opted for negotiated land swaps and public-private partnerships. For instance, the town exchanged part of the McCain property with the Summit School District to secure 35 units for educators, ensuring that workforce housing remains a priority even if the project's second phase is delayed.

This approach reflects a broader caution in mountain towns, where the emotional and economic stakes of land use are high. A recent $115,000 payout to homeowners after a government land acquisition sparked national attention, underscoring the risks of overreliance on coercive measures. For investors, this signals a shift toward community-centric planning, where transparency and stakeholder engagement are critical to project success.

ADUs: A Double-Edged Sword for Affordability

Accessory dwelling units (ADUs) have emerged as a key strategy for expanding housing supply in Breckenridge. The Runway Neighborhood includes ADUs in higher-priced units, a move intended to maximize density and flexibility. Yet, this has raised concerns that ADUs could become a vehicle for wealthier residents to circumvent affordability caps.

The town's development code revisions in 2025—such as increased setbacks and height restrictions—aim to prevent the proliferation of oversized, out-of-scale homes. However, the lack of explicit ADU regulations creates ambiguity. Investors must weigh the potential for ADUs to enhance rental income against the risk of regulatory tightening if affordability goals fall short.

Short-Term Rentals vs. Long-Term Stability

Breckenridge's tourism-driven economy has made short-term rentals (STRs) a lucrative asset class. However, the Runway Neighborhood's focus on deed-restricted, owner-occupied housing signals a deliberate pivot away from this model. By prioritizing local workers, the town seeks to stabilize its labor force and reduce reliance on transient visitors.

This shift carries implications for investors. While STRs offer higher rental yields, they also contribute to housing shortages and regulatory scrutiny. The Runway Neighborhood's success could prompt similar initiatives in other mountain towns, reshaping the real estate landscape. Investors should monitor policy trends and consider diversifying their portfolios to include affordable housing assets, which may offer long-term resilience.

Investment Implications and Strategic Recommendations

For investors, the Runway Neighborhood exemplifies the growing importance of policy alignment in real estate. Key takeaways include:
1. Prioritize Equity-Driven Projects: Developments with deed restrictions and community benefits are more likely to withstand regulatory shifts and maintain long-term value.
2. Diversify Rental Strategies: While STRs remain profitable, a mix of owner-occupied and affordable housing units can mitigate risks associated with market volatility.
3. Engage with Local Governance: Proximity to town councils and planning commissions can provide early insights into policy changes, enabling proactive adjustments to investment strategies.

The Runway Neighborhood's success will depend on its ability to balance affordability with financial viability. If it achieves this, it could serve as a blueprint for other high-growth tourism towns grappling with similar challenges. For now, investors must tread carefully, recognizing that the future of mountain real estate lies not in speculative gains but in sustainable, inclusive development.