Posted by Damon L. Chavez on Monday, May 23rd, 2016 at 10:35am.
May 20, 2016 / Denver Post - Real Estate, by Aldo Svaldi
Colorado’s population rose by almost 102,000 people last year, but the state added only 25,143 new homes, condos and apartments to accommodate those newcomers, according to updated estimates from the U.S. Census Bureau.
The division of those two numbers explains the multiplication of headaches for anyone trying to buy or rent a home along the northern Front Range: The average household size in Colorado is 2.5 people. That means the state should have added 40,500 housing units. Instead, it is running 15,000 homes short of where it should be, adding to a deficit that has been mounting since 2012.
“This is a perfect cocktail for a really bad housing outcome,” Washington-based housing economist Elliot Eisenberg said. “There is no solution except building more houses, but no one is going to do it.”
On a visit to Denver in December 2014, Eisenberg warned that the region needed to open the construction floodgates. But census counts released Thursday show that didn’t happen. New units have risen 1.1 percent a year the past two years. Population gains are running 1.9 percent, measured in the 12 months ending July 1, when the Census Bureau does its measuring.
In 2012, the shortfall was greater — 19,000 units. That year, population increased 72,251 people, and only 9,251 new homes and apartments were built.
But there was a big difference back then.
Colorado, like many states, was shaking off a recession that followed loose lending and overbuilding. Homes were vacant, and a super-tight market that caused home prices to skyrocket seemed unthinkable, given the sharp price declines of the recent past.
But since 2012, the state is about 55,000 homes and apartments short of what it needs based on population growth, not accounting for vacant units that got absorbed.
A long list of maladies follows when supply chronically lags demand, Eisenberg said, and metro Denver is showing all the symptoms —apartment rent hikes that outstrip income gains, a record low number of homes for sale triggering heated bidding wars, nation-leading home price gains, gentrification in once-affordable neighborhoods and widespread scraping.
Denver native Richard Lopez bought a home near Sloan’s Lake in 1990 that has surged in value in the past few years. That’s a positive, but his property taxes have nearly doubled and represent a huge financial burden that could push him out.
The property next door was scraped and replaced with a $1.25 million house that blocked the mountain views from Lopez’s second-story windows. Neighbors he knew for years are gone, replaced by out-of-state strangers driving BMW and Lexus vehicles, not Hondas and Chevys. And while there are tons of new restaurants in the neighborhood, he says he can’t afford to eat at them.
“It is alarming,” he said. “Gentrification is pushing people out who have lived here their whole lives.”
According to the data released Thursday, the city of Denver joined the list of the 20th most populous cities in the U.S., moving up two points to 19th. Colorado Springs moved up to become the 40th most populous city. Greeley hit the population 100,000 mark for the first time during that period.
Denver had the fastest growth rate among big cities in the U.S., with a 2.8 percent population gain during the 12-month period that ended July 15. Broomfield’s 5.2 percent population gain to 65,065 residents put it at the 9th fastest growing city overall, according to Census data
Colorado has proven especially popular with young adults. And state demographer Elizabeth Garner said household sizes are getting smaller, especially in hot spots such as Denver.
That requires that even more housing be built. But rising costs will force coping strategies, such as households doubling up and homeowners renting out basements and spare bedrooms, Eisenberg predicts.
Ad hoc housing units — like a room in a basement — don’t show up in official census counts, but they can relieve pressure in tight housing markets. They are, at best, stopgap measures.
Assuming the northern Front Range remains a popular destination to relocate, there is a risk that housing shortages will become chronic and high costs entrenched, a problem California has long struggled with.
“The best you can do is to hope to build enough houses so the situation doesn’t get worse,” Eisenberg said.