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Life in northern Colorado is pretty damned wonderful. But for some people living here—not so much. Trying to find an affordable home has become much more challenging as housing prices and rent trends upward and the region experiences a significant and sustained population influx.

By definition, the term “affordable housing” describes rental or owner-occupied housing, that is affordable regardless of one’s income. The U.S. government regards housing costs should be at, or below, 30 percent of one’s income, allowing affordable rent, whether your annual income is $30,000 or $300,000.

Sara Reynolds, executive director of Housing Colorado, stated in a 2016 Denver Post article, that one in every four Colorado renters is spending more than 50 percent of their income on housing. Northern Colorado renters are not strangers to this bite in their paychecks. It takes an income of $23.50 per hour ($48,880 annual income) to be able to afford a two-bedroom apartment in Fort Collins.

A recent report issued by Freddie Mac, a government-backed mortgage company, found that the amount of affordable housing in Colorado for those making less than half the median income decreased by more than 75 percent between 2010 and 2016. It’s among the largest decreases in the entire country.

Another study released by the Piton Foundation Shift Research Lab in January of this year suggests that the Great Recession of 2008 continues to have a ripple effect. Initially looking to housing affordability in the Denver metro area, its findings also strike close to home here in Northern Colorado and throughout the state. The study cites a recent poll by Mesa State University, “Statewide, 14 percent of respondents said housing/real estate was the biggest issue facing their community, while 10 percent said the economy was the most important problem. 9 percent of respondents listed crime/drugs/violence, 7 percent said education, and 6 percent said government was the biggest issue facing their community.”

The Shift Research Lab study reports that, on average, households earning $50,000 or less are spending 35 percent of their income on housing and 50 percent of Colorado renter households are cost-burdened, with more than 30 percent of their household income earmarked for rent or mortgage costs. 

Part of the overall problem is that wages have not kept up with the increase of rental rates—again a lingering result of the Great Recession. According to the study, Colorado wages increased by 11.4 percent since 2011, while Denver metro rent went up by 46.2 percent and housing prices are up by 48.7 percent.

When such significant percentages of income are dedicated to housing, it impacts the overall economy of a region. The study found that “Colorado households earning less than $50,000 annually are spending an additional $2 billion over the 30 percent standard to support their housing.” This means that the $2 billion housing expenses, prevent the allocation of that money towards “food, clothing, healthcare, recreation and other household [expenses]” expenditures.”  The money being funneled to housing costs could be used to infuse local business, in turn, enhancing the quality and sustainability of the community and local economy. 

What does it take to live comfortably in northern Colorado? Are Fort Collins and Loveland turning into offshoots of Denver and Boulder? Are housing costs simply out of reach for many residents? Let’s take a look.

The NoCO Rental Market

Windemere Real Estate, a Fort Collins brokerage, presented a comprehensive 2018 forecast of the regional real estate market earlier this year. A recap video is posted to their YouTube channel, if you’d like a closer look. Winderemere examines different aspects of the market and presents data to back it up.

All it takes is a drive around Fort Collins to see that an apartment boom is taking place. Currently, just over 4,000  apartment units are under construction or have been recently built. Another 4,000 are in the planning stages. That’s double the volume of 2012.

That amount of  rapid construction should indicate that vacancy rates are on the upswing. meaning rental rates should go down, right?. Wrong. Current vacancy rates stand at approximately 4 percent. With about 16,000 people every year making the entire northern Colorado region their new home, vacancy rates aren’t likely to swing in favor of renters any time soon, and rent will continue to climb. In just four years, the average apartment rental in Fort Collins and Loveland jumped from $997 to $1,324. Greeley saw more modest increases. In 2013, the average monthly rental was $716 and in 2017, it was $1,080.

That’s a big nut. New construction just isn’t making a significant impact.

Liz Gaylor, a musician with several bands (Wasteland Hop, Mirror Fields and jinnjinni) and founder and owner of Mountain Aven Herbal, a bath and body care business, moved to Fort Collins in 2002 from Brooklyn. “I was was surprised that the cost of living did not balance out- wages were a lot less and expenses were not that much less,” she said. “Both housing prices and rents have more than doubled since I moved here.”

Liz and her partner, a fellow member in two of her bands, live and work in a 300 square foot studio apartment over a garage. She’ll be moving the bath and body business out of the living space soon, but she and her partner will continue to record and mix music in the tiny apartment. “It works and I can afford it,” said Liz.

Others enter into roommate situations to offset the cost of rent. The Fort Collins “U Plus 2” occupancy ordinance limits how many unrelated people can live in a rental property. Loveland and Greeley have city occupancy limits as well.

Short term rentals also burden the housing market. When units are taken off the market, available housing decreases and rents increase. An independent study conducted by economists at  MIT, UCLA and USC analyzed data collected from 100 metro areas across the country and found that for every 10 percent growth in Airbnb listings, a ZIP code’s average rent increased by 0.4 percent. 

Buying—Or Not

Home ownership can be tough for those trying to enter the market. It’s no surprise that prices continue to jump higher and higher. Browse the realtor listings and be prepared for some serious sticker shock.

“I scoffed at spending $250k on a house in Old Town in 2002, and now I choke on the $800k price tags on these same homes,” said Liz Gaylor.

It’s not uncommon for sellers to receive multiple offers over the asking price within hours of hitting the market. Many houses are sold without ever going on the market at all. The inventory for Fort Collins homes in the $300,000-$350,000 range is ten days, meaning that every single home in that price range will be snapped up in less than two weeks.

Buyers are getting more creative with their offers, as well. Many of them write personal letters to the seller, providing compelling reasons why they should be the Chosen One. They are waiving inspections, buying properties as-is and crossing their fingers there won’t be big, expensive surprises after the closing.

New construction has doubled since 2012. But only 36 percent of new housing builds fall under the $400,000 sweet spot. Reasonably, it is not profitable for developers to build single-family homes for less than that. Higher density projects, such as townhomes and condos can give them—and the buyer—more bang for the buck, as the fastest growing market segment right now.

It’s Not All Doom and Gloom

Despite increasing housing costs for renters and home buyers, there are resources available for northern Colorado residents that help with affordable housing. They range from subsidized housing to homebuyer assistance programs. In the second part of this two-part series, we’ll take a look at them.