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Housing shortage a complex issue with long history

Hank Shell
hshell@skyhidailynews.com

Housing series

This is the second story of a three-part series about affordable housing in Grand County.

Part 1 ran Friday, Oct. 30. Part 3 Friday Nov. 13.

Take a look at the numbers, and it’s obvious that there’s an attainable housing problem in Grand County.

Jim Sheehan is the executive director of the Grand County Housing Authority, which oversees the Section 8 housing program for Grand, Routt, Summit, Clear Creek, Gilpin and Jackson counties.

The program currently has 93 people in its waiting list for 135 slots. Grand County accounts for 34 of them.

“As we’re seeing the need increase unfortunately we’re not able to respond to everyone,” Sheehan said. “That’s what necessitates the waiting list.”

“I don’t think Grand County is really unique whatsoever,” he said. “Obviously Summit County has very costly rental housing and to the extent it’s probably pushing a lot of those folks out of Summit County. Routt County is seeing the same thing.”Jim SheehanDirector, Grand County Housing Authority

The recently completed Winter Park Housing Needs Assessment states that vacancy rates below 5 percent indicate that demand is exceeding supply and rents will likely rise.

In Winter Park and Fraser, the vacancy rate for attainable rentals was 0 percent in August 2015, according to the assessment.

For condos, townhomes and single-family rentals, Winter Park had a 1 percent vacancy rate, while Fraser’s was around 4 percent for August.

Anecdotally, citizens like Shanna Ganne of Fraser and Jessica Jimenez of Granby say there’s nothing in their price range on the market.

Waiting lists, vacancy rates and anecdotes – these are all obvious indications of a shortage, but the underlying intricacies of the housing crunch aren’t as immediately clear.

To properly understand the housing shortage in Grand County, it’s imperative to understand its history.

In the years leading up to the Great Recession, development in the county was in full swing.

Median sale prices of both single-family residences and condominiums were on the rise.

During the first seven months of 2007, the average price per square foot for a new home was $269 in Grand County, up from $141 in 2002, according to county reports.

There was more than $639 million in total real estate sales volume in 2007, according to reports from the Land Title Guarantee Company.

The unemployment rate hit 2.6 percent in June 2007, indicating a labor shortage.

Jeff Durbin started as Fraser’s town manager in 2004.

In 2006 and 2007, there was much new development in Fraser, Durbin said, and it wasn’t all from big developers.

“Lots of people in town were building houses for themselves and for people to live in,” Durbin said.

There was also a concern about affordable housing.

Grand County’s 2007 Affordable Housing Needs Assessment observed that the percentage of renters in the county paying more than they could afford for housing had risen from 13 percent in 2001 to 30 percent in 2007.

The report recommended that the county build 290 units at all income levels just to catch up with its housing needs. It would need to build an additional 791 workforce housing units by 2012 to stay abreast of the growing workforce, the assessment states.

Enter the recession

From 2007 to 2011, total real estate sales volume in the county plummeted from $639 million to $214 million.

The local construction industry was decimated; there was an exodus of workers and job growth declined.

Suddenly, the pressure that had been building on the housing market was relieved, and the need for attainable housing became an afterthought.

“Attainable housing requires long-term focus,” Durbin said. “All of the sudden there was no problem.”

Grand County has experienced an economic resurgence since 2011 in a variety of metrics, and in a lot of ways, today’s Grand County resembles that of 2007.

Real estate sales and sales tax collections have grown countywide, and especially in the Fraser Valley.

The average sale price of a single-family residential home in Grand County was $431,496 through Nov. 5, 2015, according to the Grand County Board of Realtors. In In 2007, the average sale price of a single-family residential home in Grand County was $476,506.

Job growth has also ramped up, increasing 4.4 percent from 2013 to 2014 in Grand County, according to the Northwest Colorado Council of Governments.

Things seem to be improving, but development hasn’t kept pace with the community’s needs.

In many ways, the recession continues to affect the housing market in Grand County by discouraging the construction of units that workers can afford.

For one, the magnitude of the construction collapse in Grand County alone causes trepidation to investors who otherwise might initiate high-risk, federally subsidized housing developments, Sheehan said.

And development costs are high.

“There may be very limited developable land; building costs may be higher because of the difficulties of getting construction workers and materials to these communities, which are sometimes in remote locations,” said Christine Baumann with the U.S. Department of Housing and Urban Development.

The exodus of construction workers from Grand County means there isn’t a local workforce at developers’ disposal, Sheehan said.

Sewer and water taps are expensive countywide, Sheehan said, further discouraging development.

“It continues to become much more difficult to provide for affordable housing based on what the cost is of development,” Sheehan said. “Certainly land is a big factor and I don’t think it’s going to get any better.”

Durbin pointed to a 2005 construction defects law that increased the liability of builders of multifamily condo and townhomes as another factor that has stymied building.

All of these factors have combined to reduce inventory across the board.

Sheehan, who oversees the Section 8 program for six counties, said he sees the same issues in other counties.

“I don’t think Grand County is really unique whatsoever,” he said. “Obviously Summit County has very costly rental housing and to the extent it’s probably pushing a lot of those folks out of Summit County. Routt County is seeing the same thing.”

Baumann echoed Sheehan’s observation.

“We see similar issues in many resort communities,” Baumann said.

improving economy means buyers, renters compete

“To me, it’s an issue of product,” said Winter Park Town Manager Drew Nelson. “Knowing that there’s not a tremendous amount of construction going on, but we just had our best sales tax year ever – people obviously want to be hear. I think it’s just a supply and demand issue right now that’s being dictated by seemingly positive economic forces.”

Indeed, the improving economy has empowered buyers from outside to purchase second homes in resort areas like Winter Park and Fraser.

“As the economy improves, as more people can afford second homes, as the number of visitors increases, these factors are probably adding to the demand in areas like Winter Park,” Baumann said.

That demand is reflected in high sales prices for homes, Baumann said, but it can indirectly affect the tight rental market because small resort communities have a limited total supply of housing units, whether sales or rental, and a limited supply of land.

High development costs are stymieing new building, while economic growth both within and outside of Grand County means more renters and buyers competing for a smaller pool of units – it’s a facile explanation of a truly byzantine problem.

More complicated still is how communities will address it.

“I think there are probably a lot of different ways to skin the cat,” Nelson said, “and we’re going to be exploring all of them, because this is not an easy problem to solve.”


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