“A first-of-its-kind survey of thousands of Colorado mountain town residents has delivered the clearest look at the impact of the pandemic on housing, rentals and lifestyles in the high country to date,” says Jason Blevins from the Colorado Sun. The Mountain Migration Report was published in June, 2021 by the United States Economic Development Administration, Colorado Department of Local Affairs, Colorado Association of Ski Towns, and Northwest Colorado Council of Governments. The report studied the 6 major mountain Colorado counties - Summit, Routt, Eagle, Grand, Pitkin and San Miguel.
Amongst a plethora of information worth sharing, mountain town residents ranked affordable housing and the availability of housing as the top two most critical issues facing their communities. The survey reveals a true emergency. Gentrification now applies to households earning less than $150,000 a year.
“The countervailing challenge is this: people really like [the mountains] because it isn’t the city. Periods of intense growth pressure in mountain communities often result in a not-in-my-backyard backlash which creates resistance to the very actions necessary to address the challenges outlined in this report. Such reactions often impact attempts to create affordable housing more than they do higher-end projects. Whether this dynamic can be overcome will require considerable finesse, vision and community buy-in earned by community leaders. We applaud those who endeavor to do so.” - The Mountain Migration Report.
Not a Housing Crisis, a Housing Emergency
Summit County recently fielded 66 applicants for 22 deed-restricted homes. Aspen recently received 77 applicants for 1 one-bedroom, deed-restricted home. Six 900 square-foot apartments in the Roaring Fork Valley that have been historically rented long-term by locals recently sold for more than $1.6 million each and only one has remained a rental. Perhaps most importantly, rents have spiked 20-40% across the board in the six counties studied in less than one year.
“I was recently in Buena Vista as we are looking to help with their critical housing needs,” says Marco Vienna from Four Points Funding. “I was asking some locals about the housing situation and everyone is paying over $1,000 per room. The one individual that stood out to me was an EMT who is paying $1,200 for a room in a three bedroom home in Buena Vista and commutes over an hour per day to Summit County for work because he cannot find housing in Summit County anymore.”
According to the Mountain Migration Report, 70% of households that also work in the same county in which they live earn less than $150,000 per year. On the other hand, 75% of newcomers now residing in the mountains that have out of county jobs earn more than $150,000 per year. The report states that “the majority of full-time residents employed locally cannot successfully compete for housing when escalated demand and prices are driven by households earning much higher incomes.”
Impact on Local Businesses
About 60% of newcomers and 70% of part-time residents who responded to the Mountain Migration Report work for an employer outside of the county, compared with only 25% of full-time residents. It’s the local workforce - teachers, nurses, ski area employees, restaurant owners and workers, etc. - that makes these towns operate.
Without the workforce, the much wealthier newcomers, as well as the locals, do not have the town to enjoy, the reason they arrived in these towns in the first place. Bottom line is that newcomers are not filling local jobs while out competing locals for housing. “It is an ironic cycle – many home contractors cannot hire laborers because there is no housing,” reads the report.
“Market rents have skyrocketed beyond the level that most locally employed renters can afford... While rents have long been high in Colorado’s ski towns, this rate of increase was unprecedented.” Interestingly, “rent delinquencies were not a widespread problem” like a lot of the country, showing that the local workforce want to be good tenants to ensure they keep their housing and their jobs.
In February and March 2020, prior to the pandemic, tracking of online listings in the six counties identified a total of 260 listings for long-term units. This equated to an extremely low vacancy rate of approximately 1.5%. The vacancy rate is expected to be even tighter now.
Perhaps most interesting is the change in demographics of who is renting in these communities. “Historically, renters moving to mountain ski towns have been singles and younger couples who do not have children until after becoming established in communities. The new renters are generally older (30’s and 40’s), well established in their careers, and have children.”
Most importantly, the “increase in rents and lack of inventory led some long-time residents to move away. Residents who sold homes when prices climbed were seldom able to find a rental that would allow them to stay in their communities. As one property manager in Telluride said: Our community has moved to Ridgway.” Ridgway is an adjacent community to Telluride that is not considered affordable by any means. This piece is vital to understand - people that are already living in expensive mountain communities are moving to adjacent communities that are marginally more affordable and have slightly more availability. Crested Butte residents are moving to Gunnison, Summit County to Buena Vista, Aspen and Vail to Glenwood Springs, and people from across the state to Grand Junction. In addition to mountain town residents moving to these communities, lots of newcomers are too. This is where Four Points Funding has focused our investing.
The Capital Dilemma
The root of the capital dilemma begins in the towns that we cherish and are investing in. They are generally too small to attract investors alone and do not have the local tax base to invest in the needed infrastructure, especially workforce housing, to support the ongoing growth. In turn, the workforce is out-priced. Smaller markets are harder to attract capital to, even when Colorado is nationally renowned to be one of the fastest growing states. Even Denver has just achieved status as a secondary market.
The counties represented in the report remain ignored by investors, even when “prior to COVID-19, the housing markets in the six-county study area were already in a state of too much demand,” reads the report. “The COVID pandemic rapidly accelerated trends that have been going on for years in amenity rich mountain communities. High part-time resident demand for homes, visitor demand for vacation rentals, and investment buyers were all competing for the scarce housing inventory with residents who make their living locally.”
Our mission at Four Points Funding is only part of a solution. More private investment focused on workforce housing is surely an essential piece to the capital dilemma, but that alone accomplishes only so much. There is the need for cooperation from town leadership with zoning, desire from residents with ballot initiatives, and ensuring that the quality of life that has existed for decades remains intact.
Some towns, such as Crested Butte and Frisco, are planning to or already have declared a Local Disaster Emergency, providing the town more power to combat the housing crisis. The Colorado Sun article explains how “Crested Butte’s resolution allows the town to bypass provisions in the municipal code. It can allow for speedy approvals of residential use in the tourism district. It can allow the council to suspend the requirement demanding two parking spaces per residential unit. The declaration also removes limits on camping and RV occupancy on private property inside the town limits. The emergency declaration also allows the town to ‘be more creative’ when securing private partners to develop affordable housing, Crested Butte administrator Dara MacDonald said.”
The Mountain Migration Report suggests that towns embrace density for workforce housing developments. In most of these towns, the housing stock is primarily single family homes. Denser multifamily housing stock has yet to be built and needs to include “negotiations that typically occur during the discretionary development approval process, too often resulting in fewer homes for local employees than zoning or land capacity allows, and sometimes halting projects altogether. Communities should evolve zoning and policies to reflect this necessity,” reads the report.
Although only 12% of survey respondents say quality of life has diminished, it needs to remain in the forefront of conversation with housing as the priority to ensure quality of life. According to Jon Stavney, the head of the Northwest Colorado Council of Governments. “I do think there is going to be renewed conversations about how we preserve our quality of life… to preserve our quality of life and sustainable businesses, we are going to have to build our way through this.”