Crunch back in post-recession housing market
The Post Independent, Carbondale Creative District and Carbondale’s Third Street Center will hold a public housing forum from 6:30-9 p.m. Feb. 3 at the Third Street Center.
Topics will include housing affordability versus attainability; alternative housing projects; what’s working elsewhere and what’s possible here; and potential next steps. This meeting will focus on the Glenwood to El Jebel area; a similar event is planned for in Rifle in March.
First of two parts.
By most accounts, the Roaring Fork Valley’s real estate market has come nearly full circle since the Great Recession of 2008-09 that was punctuated by a steep drop in home prices and hundreds of foreclosed properties.
According to the Glenwood Springs Association of Realtors “Monthly Indicators” report through December 2015:
• Total sales in the downvalley portion of the market were up 18.3 percent over the previous year, from 619 in 2014 to 732 last year.
• The median sales price was up almost 6 percent, from $329,500 to $349,000 including all types of units.
• The number of days on the market for listed properties was down 13.7 percent, from 95 to 82, which is good news for sellers.
Although the average sales price for a single-family home in the area is still below peak 2007-08 prices, according to the statistics, the latest numbers suggest the boom days are back.
As one consequence of all that, though, an old problem has surfaced again — a shortage of affordable, or even reasonably attainable, housing for middle-income wage earners in the valley.
For the better part of the prior two decades preceding the recession, with the exception of a minor blip here and there, sellers dominated the local market.
By the late 1990s, top-end homes had eclipsed the $1 million mark for the first time in once-affordable places like Carbondale and Glenwood, some even going for $2 million in fancier golf course communities like Aspen Glen.
Demand in the second-home market drove up the primary market, as relatively modest two- and three-bedroom houses began commanding $500,000 or more. The rental market followed suit, as rents skyrocketed and vacancy rates dropped.
For years, area employers, elected officials and various public policy organizations had been grappling with the shortage of worker housing, trying to find ways to create affordable housing through deed restrictions, down payment assistance programs, rent subsidies and the like.
Then came the recession.
“The bottom fell out, and everyone sort of collectively said, ‘OK, problem solved,’” observed Colin Laird, who directed the now-defunct nonprofit Healthy Mountain Communities from the mid-1990s until funding ran out when the recession hit.
All of a sudden it was a buyer’s market again.
Foreclosed properties flooded the market and medium-sized houses came back within reach for those who still had jobs and could obtain financing. Even high-end spec homes could be had for less than a million bucks.
Though the rental market stayed fairly tight, residential rental rates did drop some while demand for low-income rental units grew as the number of unemployed and underemployed increased.
But the underlying problem never really went away, said Laird, who is now director of Carbondale’s Third Street Center for nonprofit organizations.
“In some ways, we stopped worrying about it, because it wasn’t the continual problem it had been for so many years,” he said.
Clark Anderson, director of the newly formed nonprofit Community Builders in Glenwood Springs, agreed that the problem has resurfaced with a vengeance.
“It’s definitely come back,” Anderson said.
“During the recession, people started doing things differently than they were used to,” he said. “You even had people in their 30s moving back home.
“People were suddenly less concerned about where to live and more concerned about getting a job.”
As the economy rebounded and the job situation improved, the housing crunch came back faster than a lot of people anticipated. And, after more than five years of little or no new residential construction, the problem is even worse, he noted.
“When the jobs come back, people go to where the jobs are. And the jobs are here,” Anderson said of the valley’s tourism-driven market that has rebounded faster than most sectors of the economy.
“It’s gone from being a challenge to something bordering on a crisis in a lot of places,” he said.
The Post Independent chronicled the housing issue in its “The Price of Paradise” series that ran last September. It told the stories of Roaring Fork Valley professionals, from teachers and police officers to nurses and architects, who are having a tough go at it given the cost of living here.
As a result, even two-income households have a hard time affording to buy, or even rent, a house. Local governments, schools and hospitals have difficulty recruiting and retaining public safety, education and medical workers. The Roaring Fork School District is seeking to ease the problem by allocating $15 million for staff housing from its $122 million bond issue approved in November.
In Garfield County, with the better-paying resort and service-oriented jobs situated farther upvalley and the more-affordable housing located west along Interstate 70 in Silt, Rifle and Parachute, it means long commutes from home to work and back every day.
The alternative is to work multiple jobs to be able to afford to buy or rent a home on the more pricey eastern end of the county or in the midvalley communities of Basalt and El Jebel.
“Going back even as far as the mid-1980s there has been a middle-class worker housing shortage in the resort region,” said KT Gazunis, who directs the Garfield County Housing Authority and formerly worked in a similar capacity in Eagle County.
“What we’re seeing again now is a very, very tight market with very little affordability in the middle income ranges,” she said.
The most recent area median income for Garfield County was $73,300 for a household size of four.
“In our area, that’s a two-person income, and two-and-a-half jobs is pretty typical to even make that income,” Gazunis said.
The best home price that household could hope to afford is $242,000, she said.
“There is not anything available east of New Castle for a family making $73,300, except the deed-restricted units,” Gazunis said of the 215 units in Garfield County and the Basalt area that the organization administers that use a mix of income restrictions, appreciation caps and residency requirements to keep them in the affordable range.
Real estate statistics seem to suggest things aren’t slowing down any time soon.
According to the most-recent Garfield County Market Analysis compiled by Land Title Co. in Glenwood Springs, through November of 2015 gross sales in the county were up 7.5 percent and total transactions were up 21.9 percent.
In fact, 2015 sales had already far surpassed the five-year high for transactions, at 1,377 through November compared with just 921 for all of 2011.
Countywide, the average single-family home sale was $386,938 through November; not quite back to the peak of $448,000 in 2008-09, according to the latest stats, but steadily increasing nonetheless.
A stark contrast in home prices still exists between the east and west ends of the county, however.
In Carbondale, the average single-family home sold for $749,461 last year, up 4 percent from 2014, while in Glenwood Springs the average single-family home price was $462,795, up 6 percent.
By comparison, the average single-family home in Rifle sold for $228,706, and the price was less than $200,000 in Parachute/Battlement Mesa.
Multifamily units were selling for an average of $361,106 in Carbondale and $224,904 in Glenwood Springs, compared with $129,765 in Rifle, according to the November analysis.
Rent prices are also inching back up as the vacancy rate for available units is going down.
According to the Colorado Multi-Family Housing Vacancy & Rental Survey for the third quarter of 2015, the vacancy rate for rental units in Glenwood Springs had dropped to 1.8 percent, compared with 2.4 percent the prior year.
In 2013, as the new Glenwood Green low-income apartment complex at the Glenwood Meadows development came on line, the vacancy rate was as high as 23 percent.
But that didn’t last long. All 60 of Glenwood Green’s one-, two- and three-bedroom apartments are now full with a waiting list of 189 would-be renters, according to Lou White, manager for the apartments.
no new inventory
Contributing to the problem is the fact that there hasn’t been much new residential construction in the last five or six years, whether it’s for-purchase housing or new rental units.
Gazunis, whose organization also oversees 500 rent-controlled units in the county, said that up until about the middle of last year it typically took about 30 days for someone to find an affordable place to rent. That has now increased to between 60 and 90 days, she said.
“Our turnover rate is about seven to 10 people per month,” she said.
A lot of the individually owned single- and multi-family units that fell into foreclosure after the recession went into the rental market for a period of time. But, as the market has rebounded, many of those have now been resold.
“There is no new inventory being built, which is not helping the situation,” said Bob Fullerton, a real estate agent with Glenwood Brokers who also chairs the Garfield County Planning Commission.
Many of the developments that have been approved in recent years, even dating back before the recession, have also not taken off, he said.
“The market hasn’t quite come back enough to create that new inventory,” he said. “Through the recession, lending on spec homes was brutal. That has also played into what developers can do, and what the market will support.”
Wednesday: What one developer thinks needs to happen in order to spur development of more affordable rental units in Glenwood Springs, and a look at some of the housing solutions, past, present and future, that are being discussed.
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