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Looking for an affordable apartment in Colorado? Prepare to feel the squeeze

For Renters

Looking for an affordable apartment in Colorado? Prepare to feel the squeeze

After tagging along on a few of my adult-daughter’s apartment-hunting trips, I was perplexed about why rent had skyrocketed in Colorado.

Apartments are being built everywhere, especially in northeast Colorado Springs and throughout the Denver metro area. But rents started above $1,000 for a one bedroom and went up from there. Are there that many people making enough money to afford these places?

Depends on your definition of affordability — and in many cases what else you give up.

Since 2011, an increasing number of renters with incomes below $75,000 are “cost burdened,” according to a Harvard study. In other words, they are paying too much for their apartments. The study breaks the issue down into income subgroups and points out that the group making $30,000 to $45,000 annually has had the largest increase of those paying more than 30% of their income for rent.

A staggering 10.9 million renters, mostly those with low incomes, in 2018 spent more than half their income on rent, the study found. That is one in four renters.

Prospective renters know what they are up against, and quickly want to know the affordability formula: Does the landlord use 2.5 or 3?

Translation: If your annual salary is a modest $40,000 and they use “3” then you can afford up to $1,100 in rent. If they use 2.5, you can pay up to $1,300, and might just squeak into one of those sleek newer apartment buildings.

If you haven’t been apartment shopping for a few years, let me fill you in on something: there are lots of add-ons, starting with application fees and the cost of background checks for every adult (so if you have an 18-year-old child moving with you into a rental, they need background check, too).

A staggering 10.9 million renters, mostly those with low incomes, in 2018 spent more than half their income on rent, the study found. That is one in four renters.

Prospective renters know what they are up against, and quickly want to know the affordability formula: Does the landlord use 2.5 or 3?

Translation: If your annual salary is a modest $40,000 and they use “3” then you can afford up to $1,100 in rent. If they use 2.5, you can pay up to $1,300, and might just squeak into one of those sleek newer apartment buildings.

If you haven’t been apartment shopping for a few years, let me fill you in on something: there are lots of add-ons, starting with application fees and the cost of background checks for every adult (so if you have an 18-year-old child moving with you into a rental, they need background check, too).

I saw a lovely apartment in Aurora with a balcony that looked directly out on a Walmart parking lot and folks who I presume were homeless sleeping on a bus bench just across the street. Base rent was $1,400 a month. Apartments without that view and the encroaching noise and nighttime lighting were more expensive.

The lack of decent affordable housing in Colorado — and nationwide — is not a new problem but it is a growing one. And like many social and financial issues, the inequities in housing were made bare by the coronavirus pandemic.

“Social inequality has grown in the U.S. in the last couple of decades and affordable housing is just mirroring that story,” said Stephen Billings, associate professor of real estate at the University of Colorado Boulder.

I went down a lot of rabbit holes seeking causes and solutions and mostly got stuck in a muddy tangle of roots that go deep into the past and cut across other critical issues (such as pay equity, resource availability and climate change) and the American psyche. Not where you want to be when you’re trying to shed perspective on an issue simply and concisely.

Analyses, studies and experts I spoke with agree that the challenges are daunting, and call for large, multi-layered solutions. Every level of government must be involved, along with nonprofit organizations and every community member.

Yet I did find reason for hope in some small but innovative ideas that might be replicated, and in the Ivory Innovations center in the David Eccles School of Business at the University of Utah.

First, though, here are some oft-cited factors that have caused the cost of housing to rise faster than wages:


  • Demand outpaces supply, pushing prices higher. After the housing crisis and recession of 2008, building slowed dramatically and in some cities builders still are catching up to demand.

  • Commercial land prices and construction costs continue to climb; government regulations and add-on development costs in many locales also contribute to higher building costs. That increases the price of single family homes and means higher rent in multifamily complexes.

  • The number of high-income renters has climbed, in part because people in many markets are priced out of buying a house. New apartment construction is going after that market with “amenity rich” complexes that include such things as washers and dryers in every unit and valet trash pickup at your door.

  • The not-in-my-back-yard (NIMBY) factions that work to limit solutions such as construction of accessory dwelling units or neighborhood rentals with unrelated roommates out of fear that such moves will decrease property values or change a neighborhood’s character. We are walling ourselves off in neighborhoods by income level and renewal programs that often lead to gentrification.

  • Smaller apartment buildings (five to 24 units) that traditionally were owned by individuals are increasingly being purchased corporations or real estate investment groups and converted to higher-income rentals. Often, the value of the land is greater than the value of the building.

  • Dramatic decreases between 2012 and 2017 in the number of rentals under $600 a month and a modest decrease in rentals in the $600 to $1,000 a month category as the supply shifts to serve higher income renters.



What all this means is that if you are not in that “high income” group your options are limited. The middle-income group – people like teachers and nurses and retail managers – seek cheaper apartments, which puts additional strains on low income renters.

Sure, there are some rental assistance programs, but only about one in four of those eligible receive help and they must have luck on their side: Denver’s Housing Authority (like most) holds a once-a-year lottery to determine who gets assistance. You could apply for five or 10 years and never get help or apply once and win “the lottery.”

President Joe Biden has vowed to fully fund the housing voucher program, known as Section 8 — at a cost of $640 billion over 10 years and eliminate the gameshow-esque way of receiving help. That is a monumental undertaking not only because of the cost but also because of the housing shortage and needed policy changes that will not come easily.

Meanwhile, the homeless population continues to grow, with well over a half million people sleeping in shelters or outside every night, according to a 2019 count. About 9,600 of them live in Colorado. That number undoubtedly grew during the pandemic.

Others find temporary housing with friends or family to save up for a rental deposit or during the wait for something they can afford. Finding one or more roommates is an option, although it is not always legal and sometimes doesn’t end well.

The city of Denver just made it easier by allowing up to five unrelated people to live together rather than just two, opening the door to more co-living arrangements. But that change was years in the making and opposed by some homeowners worried about their property values.

Still, communal living is a solution for only a portion of renters, or perhaps as a short-term arrangement. There usually comes a time when most young couples or single young adults simply want a place of their own.

On the hopeful side, there seems to be a growing number of small and mid-size solutions being employed in Colorado and around the country.

“There are lots of great examples of small-scale success,” Billings said. “Scaling it up is super challenging.”

Habitat for Humanity, a Christian organization started in 1976 in Georgia and made famous by former President Jimmy Carter, is a rare example of an affordable housing program that grew to have sustainable impact worldwide. According to its 2020 annual report, it has helped 35 million people worldwide with new or improved housing.

It works through local affiliates who figure out how to best serve their communities, often partnering with organizations such as housing authorities, school districts and employers. There are 20 Habitat affiliates in Colorado, and projects include teacher housing in Chaffee County and workforce housing in Fairplay.

Some Colorado communities and agencies have taken a stab at their own solutions, including subsidized housing for teachers in Custer County and for artists through the state’s slow-moving Space to Create program.

There are small assistance programs throughout the state, including the Rocky Mountain Land Trust program that assists low-income renters buy homes in Colorado Springs and El Paso County.

While these efforts should be lauded, without expansion and replication the impacts are limited. Many experts, including the Harvard researchers, say only the federal government has the resources to meet the growing housing assistance needs.

But at the University of Utah, Abby Ivory is promoting innovation, policy changes and public/private partnerships to find the best solutions for the housing crisis and sustain them.

The 3-year-old Ivory Innovations center came about when her father, prominent Salt Lake City homebuilder Clark Ivory, suggested she target the impact investing work she was doing internationally on the domestic housing crisis. The center looks at policies and regulations that limit potential solutions, construction costs and obstacles and financial barriers, Ivory said. And it puts up $200,000 a year in Ivory Prize money to support those offering solutions. (The Top 25 in the third round of competition will be announced March 1.)

Ivory expects the center to grow and potentially become a clearing house for sustainable ideas and projects aimed at ensuring all people can afford and attain housing. Already she is bringing together entrepreneurs and investors, as well as researchers and student-run projects. They are watching as regulatory changes such as Oregon’s elimination of single-family zoning laws and various communities’ rules about ADUs play out.

It’s a holistic approach that is uniquely focused on finding, replicating or scaling up and sustaining solutions rather than wallowing in the enormity of the problem.

“Our number one thing is there’s hope and there are solutions,” she said. “How do we incentivize and support that?

“The way we’re looking at success is by the number of people who can be affected.”