Colorado’s reasonably priced housing scarcity is crushing everybody

After doing some of my adult daughter’s home searches, I was amazed why rents in Colorado had soared.

Housing is being built everywhere, especially in northeast Colorado Springs and across the Denver metropolitan area. But rents started at over $ 1,000 for a one-bedroom and rose from there. Are so many people making enough money to be able to afford these places?

Depends on your definition of affordability – and in many cases, what else you are giving up.

According to a Harvard study, since 2011 more and more tenants with incomes below 75,000 US dollars have been “burdened”. In other words, they are paying too much for their homes. The study breaks the problem down into income subgroups, suggesting that the group that earns $ 30,000 to $ 45,000 annually saw the largest increase in those who pay more than 30% of their income for rent.

A staggering 10.9 million tenants, mostly low-income tenants, spent more than half of their income on renting in 2018, according to the study. That is every fourth tenant.

Potential tenants know what they are dealing with and want to quickly find out the affordability formula: Does the landlord use 2.5 or 3?

Translation: If your annual salary is a modest $ 40,000 and they use “3”, you can afford up to $ 1,100 in rent. If they use 2.5 you can pay up to $ 1,300 and you could just move into one of these sleek newer apartment buildings.

If you haven’t shopped an apartment in a couple of years let me tell you something: there are plenty of add-ons, starting with the registration fees and the cost of background checks for each adult (so if you have an 18 year old one year old, moving into a rented apartment with you, a background check must also be carried out).

Would you like a covered parking lot to protect you from the hailstorms in Colorado? That’s extra. Garages are even more. Do you have a cat? There is a pet rental – sometimes up to $ 50 a month, along with a non-refundable security deposit of $ 200 to $ 300. Do you need a pantry? That’s extra too. You pay your own electricity bill, and then there are the “normal” utilities. Another $ 100 a month to water the grass, keep the hallways warm and clean the pool.

I saw a lovely apartment in Aurora with a balcony that looked straight out onto a Walmart parking lot, and people who I suspect were homeless slept on a bus bench across the street. The base rent was $ 1,400 a month. Apartments without this view and the annoying noise and nighttime lighting were more expensive.

The lack of decent, affordable housing in Colorado – and across the country – isn’t a new problem, but it’s growing. And how many social and financial problems have the housing inequalities exposed by the coronavirus pandemic.

“Social inequality has increased in the US over the past few decades, and affordable housing only reflects that story,” said Stephen Billings, associate professor of real estate at the University of Colorado Boulder.

I’ve scoured many rabbit holes in search of causes and solutions, and most of the time I’ve got stuck in a muddy tangle of roots that goes deep into the past and cuts through other critical issues (such as wage equity, resource availability, and climate change) and the American psyche. Not where you’d like to be when you’re trying to lose perspective on a subject simply and succinctly.

The analysis, studies, and experts I’ve spoken to agree that the challenges are big and require big, multi-layered solutions. Every level of government needs to be involved, along with nonprofits and every community member.

Still, I found hope in some small but innovative ideas that could be replicated and at the Ivory Innovations Center at the University of Utah’s David Eccles School of Business.

First, however, a few frequently cited factors that have caused housing costs to rise faster than wages:

  • Demand exceeds supply, which drives prices up. After the real estate crisis and recession of 2008, construction activity slowed dramatically and in some cities builders are still catching up with demand.
  • Commercial base prices and construction costs continue to rise; Government regulations and additional development costs in many locations also contribute to higher construction costs. This makes single-family houses more expensive and means higher rents in multi-family houses.
  • The number of high-income tenants has risen, also because people in many markets find it too expensive to buy a house. New home construction is pursuing this market with “amenity-rich” complexes that include things like washers and dryers in every unit and garbage collection at your door.
  • The not-in-my-backyard factions (NIMBY) who are working to limit solutions like building secondary housing or renting in the neighborhood with independent roommates for fear that such moves will lower property value or the character of a neighborhood change. We demarcate ourselves in neighborhoods through income levels and renewal programs that often lead to gentrification.
  • Smaller multi-family houses (five to 24 units), which were traditionally privately owned, are increasingly being bought by corporations or real estate investment groups and converted into higher-income rental apartments. Often times, the value of the land is greater than the value of the building.
  • Between 2012 and 2017, rents below $ 600 per month dropped dramatically and rents in the $ 600 to $ 1,000 per month category fell moderately as supply shifts to serve higher income tenants.

All of this means that if you don’t belong to this “high income” group, your options are limited. The middle-income bracket – people like teachers, nurses, and retail managers – are looking for cheaper housing, which puts an additional burden on low-income tenants.

Sure, there are some rental assistance programs, but only about one in four eligible people get help and have luck on their side: The Denver Housing Authority (like most) runs a lottery once a year to see who gets help. You could apply for five or ten years and never get help or apply once and win the lottery.

President Joe Biden has vowed to fully fund the home voucher program known as Section 8 – at a cost of $ 640 billion over 10 years and the abolition of the game show-esque way of getting aid. This is a huge undertaking, not only because of the costs, but also because of the housing shortage and necessary political changes that are not easily possible.

Meanwhile, the number of homeless continues to grow, with well over half a million people sleeping in shelters or outside every night, according to a 2019 census. About 9,600 of them live in Colorado. That number has undoubtedly increased during the pandemic.

Others seek temporary accommodation with friends or family to save on a rental deposit or while waiting for something they can afford. Finding one or more roommates is an option, but it’s not always legal and sometimes doesn’t end well.

The city of Denver just made it easier by allowing up to five unrelated people to live together instead of just two, opening the door to more co-living arrangements. But that change took years and was rejected by some homeowners worried about their property values.

However, communal living is only a solution for some of the tenants, or perhaps as a short-term agreement. There usually comes a time when most young couples or single young adults just want their own space.

On the hopeful side, there seem to be a growing number of small and medium-sized solutions deployed in Colorado and across the country.

“There are many great examples of small-scale success,” said Billings. “Scaling it up is a big challenge.”

Habitat for Humanity, a Christian organization founded in Georgia in 1976 and made famous by former President Jimmy Carter, is a rare example of an affordable housing program that has had a lasting impact around the world. According to its 2020 annual report, it has helped 35 million people around the world with new or improved housing.

It works through local affiliates who are figuring out how to best serve their communities, and often work with organizations such as housing authorities, school districts, and employers. There are 20 Habitat subsidiaries in Colorado and projects include teacher housing in Chaffee County and workers housing in Fairplay.

Several Colorado communities and agencies have tried their own solutions, including subsidized housing for teachers in Custer County and for artists through the state’s slow Space to Create program.

There are small aid programs across the state, including the Rocky Mountain Land Trust program, which helps low-income tenants buy homes in Colorado Springs and El Paso Counties.

While these efforts should be commended, without expansion and replication, the impact will be limited. Many experts, including Harvard researchers, say that only the federal government has the resources to meet the growing need for housing assistance.

But at the University of Utah, Abby Ivory is promoting innovation, policy change, and public-private partnerships to find and sustain the best solutions to the housing crisis.

The three-year Ivory Innovations Center came into being when her father, the well-known house builder Clark Ivory in Salt Lake City, suggested that her international impact investment work should be geared towards the domestic real estate crisis. The center deals with policies and regulations that constrain potential solutions, construction costs and barriers, and financial barriers, Ivory said. And it provides $ 200,000 in ivory prize money annually to support those who provide solutions. (The top 25 of the third round of the competition will be announced on March 1.)

Ivory expects the center to grow and potentially become a clearinghouse for sustainable ideas and projects aimed at ensuring that all people can afford and maintain housing. It is already bringing together entrepreneurs and investors as well as researchers and student projects. You will see how regulatory changes such as the repeal of single-family home use laws in Oregon and the rules of various communities on ADUs are playing out.

It is a holistic approach that is uniquely geared towards finding, replicating or scaling and maintaining solutions rather than wallowing in the enormity of the problem.

“Our number one is that there is hope and solutions,” she said. “How do we encourage and support this?

“We look at success in terms of the number of people who can be affected.”

Sue McMillin is a longtime reporter and editor from Colorado who worked for The Gazette and Durango Herald. She is now a regular columnist and freelance writer for The Denver Post and lives in Cañon City. Send her an email at [email protected]

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