Business

Sky-high rents squeeze long-time residents

Housing prices put the hurt on workforce

Posted 9/25/17

Mary Ann Parker can’t talk about her apartment search without crying.

The 58-year-old on disability rents a room in a house in Commerce City for $750 a month, which eats up most of her $840 a month disability check. She longs to live closer to …

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Business

Sky-high rents squeeze long-time residents

Housing prices put the hurt on workforce

Posted

Mary Ann Parker can’t talk about her apartment search without crying.

The 58-year-old on disability rents a room in a house in Commerce City for $750 a month, which eats up most of her $840 a month disability check. She longs to live closer to her daughter and her newborn grandchild in Castle Rock, but after months of searching, she’s discouraged.

“I can’t even afford to put in application fees,” Parker said. “I can’t part with $50 for every place, just to be turned down over and over. And first and last month’s rent and a security deposit after that? It’s just impossible.”

Parker has moved several times over the last few years, chasing cheap rents that keep creeping up. She narrowly missed a slot in a south metro housing authority when a change-of-address form didn’t go through, and she missed the notification. She’s been trying to apply to other housing authority boards around the metro area, but most aren’t accepting new applicants because the waiting lists are already years long.

Things are tense with the other boarders in the house, and one of her few sources of comfort is Butterfly, her certified therapy dog Papillon, who eases the symptoms of Parker’s PTSD, depression and anxiety.

“She keeps me from getting so lonely,” Parker said.

Parker’s story is emblematic of the challenges faced by renters across the metro area, where rents climbed 52 percent between 2005 and 2015, according to Apartment List, a rental listing site that also researches industry trends. An influx of people lured by a healthy job market have strained the capacity of the construction industry and pushed people like Parker to the margins.

“It’s basically two camps: The first is those that have moved here from somewhere else, many times with a job, many times from a more expensive market,” said Ron Throupe, the author of the quarterly Denver Metro Apartment Vacancy and Rent report and a professor at the University of Denver. “For them, the prices are not much of a burden.

“But those that have been here a long time, they’re living on the economy they grew from, and they’re on different footing than those in-migrating. They’re the ones feeling the pressures.”

‘People won’t want to stay’

The median rent in the Denver metro area was $1,377 in the second quarter, according to Throupe’s report, and builders can’t cut the ribbon on new apartments fast enough.

More than 11,000 new apartments came online last year, and 10,000 more opened in the first half of 2017. Vacancy rates remain low, around 5 percent. Colorado’s population continues to grow by roughly 10,000 people a month, with the overwhelming majority settling along the Front Range.

Skyrocketing housing prices have many young people looking elsewhere to start a family, said Sydney Bennet, a researcher with Apartment List. A recent study by the company found that two-thirds of Denver renters want to settle down somewhere else.

“If these cost trends continue, people won’t want to stay,” Bennet said. “People from San Jose, San Francisco or New York move here because it’s comparatively more affordable. But for people who have lived here for 20 or 30 years, it’s unprecedented. You have a lot of strain on lower- and middle-income families who have never had to spend so much toward housing.”

Bennet said eventually the trends are likely to flatten out some, with in-migration slowing and apartment construction catching up, but prices aren’t likely to come down.

That’s because the vast majority of new rental stock is high-end, Throupe said, with few builders bothering with workforce housing. That leaves low-income earners with little wiggle room, and even exerts upward pressure on the rents on mid-range apartments.

A shortage of starter homes has meant many people can’t make the jump from renting to owning, Throupe said, after the recession knocked many custom home builders out of business and with tract home builders only now back in full swing.

What’s the solution?

One barrier to making the jump has been unintended consequences of Colorado’s decade-old construction defects law, which allowed as few as two owners in a condominium development to file class-action lawsuits against developers and builders for defective units for years after they were completed, said Republican state Sen. Jack Tate, who represents District 27, covering a swath of the southeast metro area, including Centennial and parts of Aurora.

Tate said the law meant that nearly all condo builders in the state were mired in excessive litigation, and made builders gun-shy about building more condos when apartments were much lower risk. Condos are generally considered a starting point for new homeowners because of their lower cost than single-family homes. Tate said the law meant that condos went from 20 percent of the metro area’s new housing stock in 2005 to only 2 percent today.

Tate cosponsored a bipartisan reform bill aimed at reducing the law’s impact by upping the class-action requirement to a majority of a condo development’s residents, and narrowing the timeframe to a 90-day election period.

The law, signed by Gov. John Hickenlooper in May, took effect in early September. Tate said it’s too soon to know if the law will spur condo development, but he hears optimism among builders.

“Homeownership is important,” Tate said “We should not underestimate how critical condominiums are as an entry point for young people and a place for older folks to downsize.”

More action on the part of governments may be necessary, said Brad Evans, a former real estate agent turned consultant and self-proclaimed “professional agitator” for smart growth.

Evans, who lives in Lakewood, said some cities are turning toward growth restrictions that only send rents and housing prices even higher. He’s fighting a proposal in Lakewood that he said will turn it into “the next Boulder.”

“Growth restrictions will murder people,” Evans said. “Tax rates will skyrocket. Granny in her 1960s ranch will be on the hook for a lot more in taxes.”

Evans said that both restricting and encouraging sprawl have their drawbacks.

“We need intergovernmental agreements on developing workforce housing,” Evans said. “We need a healthy mix of condos, townhomes, single family and for-rent product. We can’t be afraid of change. Instead of battling, how do we collaborate?”

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