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Community Strategies Institute (Part 3) : Rental and Housing Recommendations

 

As part of their study of the housing market in southeast Colorado’s six counties, Community Strategies Institute, (CSI) conducted a comprehensive of the demographics of the region. The study viewed each of the six counties with regard to the number of available units for rent or for sale, wages and income of residents, earning levels needed for house rentals or sales based on market values and potential economic growth and job development for the region.  The study was initiated by SECED, Southeast Colorado Enterprise Development.

CSI conducted a rent survey in July and August of this year of all private landlords and property management companies that could be contacted. Of the landlords reached in the six counties, there were 253 available units for rent.  The majority of landlords said they had no rentals available, but did receive multiple calls each day for any open units while some felt it was difficult to fill units and vacancies are a problem.  The mixed survey results were attributed in part to the location of the units in southeast Colorado as well as their condition and affordability.

CSI calculated a vacancy rate of 4.8% of all units surveyed. Of the 14 landlords surveyed, 11 had no vacancies.  The sampling of this survey was not sufficient to allow for a county by county breakdown.

Rents of course, were priced by size, age and condition of the units. Most rentals were for single family homes, with some mixture of duplex to four-plexes.  In most cases the cost of the unit was separate from utilities which were found to be higher in some of the older, less energy-efficient units.

Figures provided by American Community Survey data from 2015 showed rental units ranged from as few as 154 in Kiowa County to 1,558 for Prowers and 2,566 for Otero County. For Prowers County, the rental rates are indicated in $100 increments for the number of units available in each financial range:

Number of Units

Cost per Month

145

$200-299

274

$300-399

333

$400-499
260

$500-599

116

$600-699
30

$700-799

12

$800-899
42

$1,000-1,249

20

Priced higher than the above amount

Landlords, employers and housing professionals interviewed indicated a need for a larger inventory of newer and larger rentals in each county, especially in those with larger communities and employment centers. New residents, with higher earnings and with children are seeking a minimum of three bedrooms and two bathrooms.  These units are hard to come by with a housing inventory comprised of older, smaller homes with dated amenities.

No newer market rate rental developments for the six counties have been planned. The lack of newer, more accommodating rentals is a difficulty for employers and landlords and the employees who have moved to the region in search of housing to match their needs.

The Colorado Department of Labor and Employment’s average wage data for 2016 presented figures for affordable rents and home sales prices based on averaged income. For Prowers County, assuming a 10% down payment at 4.5% interest, a wage of $33,072 would afford a rental at $827 a month or a purchase price of $155,019 for a property.  Renter households who pay more than 30% of their income for rent and utilities are considered cost burdened.  For Prowers and Otero Counties with higher populations, renters are also cost burdened in the $35 to $49,000 income range.  The study also showed that the development of a modest number of new, modern decent housing units through the region, priced at $150,000 or above could easily be absorbed by current renters and would help business growth and job retention.

Southeast Colorado has not recovered as quickly from the 2008 economic recession as the rest of the state. That has been reflected in the slump in the housing market in that fewer lenders are ready to finance new homes or a housing project.  At the same time, homeowners have been reluctant to spend money on upgrades to their homes as they feel there is no percentage of profit in the expenditure as home values have not appreciated.  As a result, there is a depressed housing market, little available financing and some of those few homes that have been built have been on a cash basis by the owner.

Changes in the local economy, especially in agriculture have also had an impact on housing. Changes in crop plantings and developments in farm machinery and technology have resulted in fewer farm workers in southeast Colorado.  USDA subsidized housing, earmarked specifically for farm laborers has been left unused and without special provisions in policy, these units cannot be rented.

The CSI study recommends the creation of a superfund to develop housing and multi-plex starts, called the Southeast Colorado Housing Improvement Fund. Local governments and regional housing providers would help fund several levels of development to provide capital needed in the region.  The money would be used to create construction of new, single-family units as well as multi-plex units for renters or owners.  The funds would come from Community Development Block Grants to target households with incomes no higher than 100% AMI.

Other goals include the preservation of existing housing stock and older neighborhoods by improving local infrastructure and neighborhood conditions and create ordinances and partnerships between local government and the private sector to expand housing opportunities and support economic diversity. Total initial capitalization would be $1,2M from various sources.  The loan term would be for 5 years for interim financing with up to 18 months for construction financing.    New infusions of capital would be required as needed and as the units are sold, the permanent take-out from the new mortgage loans will help to replenish the fund.  However, the fund will not be used as a permanent funding source.

CSI recommends that state and USDA officials be invited to community discussion for a first-hand look at the current condition of housing in the region, plus future meetings with the State Housing Board to acquaint them with the immediate need and the fact that local communities are willing to support the program.

By Russ Baldwin

Filed Under: AgricultureCity of GranadaCity of HollyCity of LamarCity of WileyConsumer IssuesCountyEconomyFeaturedHousingPoliticsRecreationSchoolTourismTransportationUtilities

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