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Clear Creek County Housing Needs and Solutions
2003
Introduction Purpose The intent of the study was to generate sufficient information on the extent and nature of Clear Creek County’s housing problems so that employee housing needs can be addressed thus enabling the county’s economy to grow. Information from this report will be used to develop an actionable housing strategy for the county and will be incorporated into the housing section of the Clear Creek County Master Plan. Organization of the Report Definition of Attainable Housing, which specifies the maximum amount that is affordable for renters and owners in the county by income level. Housing Profile, which summarizes key findings from a four-page compilation of 2000 Census data that is attached as an appendix to this report. Rental Analysis, which examines rental vacancies, rents, affordability and quality of rental units. Homeownership Analysis, which examines the number, type and price of units available for sale and compares this information to the number of potential entry-level homebuyers in the county. Housing and Employment, which covers employer’s perceptions about housing problems, commuting, experience of and willingness to assist employees with housing, and opinions about what should be done to improve housing in the county. Conclusions and Recommendations.
Methodology Ten employers including the school district and county, three restaurants, the Georgetown Loop Railroad, a freight forwarder with offices in the Clear Creek Technology Park, the Loveland Ski Area and a spa located in the eastern portion of the county. The mayors of Empire and Idaho Springs and the town administrator of Georgetown. Three realtors with extensive experience selling homes in the county. Four property managers who lease approximately 120 rental units and managers of two apartment complexes. The representative assigned to Clear Creek County from the Colorado Division of Housing who has been involved with the county’s Affordable Housing Task Force. A representative of Historic Georgetown, a non-profit that recently built two apartments as part of a mixed-use historic preservation project. This report also incorporates information from other sources including: Data on housing units, households and commuting from the 2000 Census. Unemployment rates and labor force estimates from the Colorado Department of Labor and Employment. Information on real estate listings from Metrolist and REColorado web sites.
Definition of Attainable Housing This section of the report addressed the questions that always arise when considering the subject of attainable housing, which are: What is affordable? This section of the report addresses these key questions providing the context for the rest of the report.
What is Affordable?
The amounts that each size of household at each income level can afford varies, thus there is no single figure that can be quoted as the "affordable" housing cost in Clear Creek County. For households at 30% AMI, their maximum affordable housing payment is $438 per month while households at 50% AMI should be able to afford up to $729 per month. Note the term "should be able to afford." These standards do not take into account other expenses or debt above typical averages that a household might incur. For example, someone with a large student debt or unusually high medical expenses might not be able to afford the amounts specified for their income group.
Who Needs Affordable Housing?
How Many Homes are Affordable, or Not? Housing Affordability by Own/Rent (Shading denotes cost burdened.)
Source: 2000 Census Affordability is more of a problem in relative terms for renters; over 37% of all renter households are cost burdened by the cost of their housing. This compares with 25% of homeowners. In absolute numbers, however, there are more homeowners living in housing that is not affordable – 608 compared to 350. This is because owners greatly outnumber renters in the county. It is likely that the situation in 2000 has changed little from a statistical perspective with the sluggish economy. While incomes have risen only slightly, rents and sales prices have recently declined. In both the Rental Analysis and Homeownership Analysis sections of this report, the costs of housing units in the county are examined in greater detail and compared to the incomes of both owners and renters to better understand the gaps in housing affordability.
Housing Profile Housing Unit Estimates and Physical Characteristics including occupancy, use, tenure, type of structure, number of units in structure, overcrowding, type of heat, year structure built and year occupied by current resident. Household Demographics including average household size and persons in units, race/ethnicity, presence of seniors, presence of children and composition. Income, Housing Costs and Affordability covering household, family and per capita median incomes, the percentage of income spent on housing, the number of cost burdened households, values of owner-occupied units, mortgage amounts and rent rates. Trends and Comparisons, which provides the percentage change between 1990 and 2000 for 16 key indicators and compares selected statistics for the coverage area to figures for the State of Colorado as a whole. Key findings that can be drawn from the data include: The County has a high ownership rate of 76.1%, which compares with 67.3% for the state as a whole. The rate increased 5.8% between 1990 and 2000, which was slightly lower than the state average. Increases in homeownership were fueled statewide by low mortgage interest rates and a strong economy. 78% of the residential units in the county are single-family homes. There are implications for housing affordability with this relatively high percentage of single family homes and limited supply of less expensive multi-family units. 397 of the county’s housing units are mobile homes, which is a significant proportion of the housing supply. While many of the units in the county are historic (1,230 units or 24% were built prior to 1940), the 1970’s saw the greatest amount of residential growth when home construction was fueled in anticipation of the Olympics. The quality of those units today is a concern. Clear Creek County did not experience the boom in residential development that swept much of the state in the 1990’s; 730 units were constructed between 1990 and March 2000, which compares with 1,318 built in the 1970’s. The lack of new units has been repeatedly mentioned as a problem during interviews conducted as part of this study. Of the housing units that were vacant in 2000 (21.6% of all units) the vast majority were for seasonal/recreational use (83%) and therefore not available to house year-round residents. The number of units used as second/vacation homes declined between 1990 and 2000, however, a trend that indicates that the housing supply has expanded beyond what has been added through new construction. Nearly 11% of the county’s households are headed by a person age 65 or older. This percentage is low compared with the metro region but high compared to what is found in most mountain areas. As baby boomers become seniors, the percentage of the population that is in need of easily maintained, low cost housing for frail persons on fixed incomes will increase. While the total number of housing units in the county increased only 6.6% between 1990 and 2000, the number of overcrowded households grew by more than 50%. The increase in overcrowding should not be attributed to a growing Hispanic or Latino population as is the case in some communities; only 2.3% of the households in the county in 2000 were headed by a person of Hispanic or Latino origin. Over 28% of the county’s 4,019 households (958 households) do not live in housing that is affordable given their incomes. This number included 608 homeowners (25% of all owners) and 350 renters (37.2% of renter households). The number of households living in housing that is not affordable increased 41.3% between 1990 and 2000. The value of owner occupied homes and rents increased at rates faster than household income between 1990 and 2000. The median value was up 121% and contract rents rose 72% while household incomes only increased 54%. Nearly 30% of the county’s households include at least one child. This percentage is slightly lower than in many areas of the state but indicates that families and their needs are sizable – at least 1/3 of the units in the county should be appropriate for children in terms of condition (no lead based paint or wiring problems), location and cost. Approximately 8% of the county’s households are comprised of unrelated roommates living together. This compares with 27% of households that consist of only one person living alone.
Rental Analysis Vacancies
Vacancies appear to be higher among one-bedroom units though not consistently. There appears to be a correlation between unit quality and occupancy rates. Nicer, newer apartments have fewer vacancies than older units in need of repair. For example, of nine new apartment units in mixed use buildings in Georgetown, all were occupied as of mid August and have been since they were completed. Managers anticipate that vacancies will decline somewhat with the start of the ski season. There is typically some seasonality in the rental market in Clear Creek County with winter having the highest occupancy levels.
Rents
Despite the increase in vacancies and the recent decline in rent rates, leasing agents are not offering discounts like one month free rent or incentives like free cable TV. They are instead lowering rents.
Affordability There are nearly 260 renter households in Clear Creek County with extremely low incomes at or below 30% AMI. At the most, there are 239 units that are potentially affordable for them – 84 on which no cash rent is paid and 155 priced at or under $438 per month in gross rent. In a perfect market, there would only be about 20 renter households living in units that are not affordable.
Source: 2000 Census data and Rees Consulting, Inc. calculations. The number of renter households who reside in housing that is not affordable given their incomes is much larger, however. According to the 2000 Census, over 37% or 357 of the renter households in the county do not have affordable housing. The reason is simple – renters with higher incomes compete for lower priced units. There is not a sufficient supply of higher-quality units priced for households with incomes above 60% AMI. It should be assumed that affordability has remained relatively constant since 2000 since rents have leveled off and incomes have probably not increased significantly.
Source: 2000 Census Quality of Rental Units While age alone is not an indicator of quality, examining when the county’s rental units were built clearly shows that Clear Creek County did not have the boom in apartment construction that much of the rest of the state experienced in the 1990’s. Over 37% were built prior to 1940 and another 25% were built in the 1970’s. Only 34 rental units have been built since 1990.
Property managers have been dealing with the problem by eliminating their contracts on the lower-quality units which has reduced the overall number of units they manage. Solutions that involve rehabilitation of existing units or replacement of those without historic significance should be considered to preserve the County’s supply of rental units. While demand does not exceed the supply at this time, the percentage of units in the county that are renter occupied is relatively small (23.9% as of the 2000 Census) and will again be inadequate when employment levels rise. As to the type of units that should be developed in the future, property managers feel that townhome-style units with private ground-floor entrances would be the most desirable. Renters want direct outside access from their units to enjoy the mountain environment in which they live. New units should offer amenities typically found in new apartments but not generally available in Clear Creek County, like in-unit washers and dryers. Modular construction would be appropriate. It is not necessary, however, to replace aging trailers with new mobile homes if apartments provide the space and outside area that renters prefer. Homeownership Opportunities
Demand for Entry-Level Homeownership In Clear Creek County, nearly 27% of the renter households have incomes at or below 30% AMI. These households could likely afford a purchase price of no more than $46,900. Given the amount of subsidy required to develop units below this price and the difficulty qualifying these households for mortgages, it seems inappropriate to consider these households as candidates for homeownership. Just over 20% of the county’s renter households have incomes between 30% and 50% AMI. These households could potentially afford to purchase homes priced up to $94,400. Given that these households comprise such a significant portion of the market, opportunities for them will be evaluated. Approximately 24% of the renter households residing in Clear Creek County have incomes ranging from 51% to 80% AMI. At 60% AMI, they could possibly afford up to $114,700. At 80% AMI, their home purchasing ability rises to $165,700. This group of an estimated 226 households generates the greatest demand and presents the greatest opportunity for entry-level homeownership. Estimates of Potential Demand by Income Level (Shading denotes prime target for entry-level homeownership.)
* Based on 3% down, 30-year fixed rate financing at 6.5% with $150 per month covering taxes and insurance. It is unrealistic to expect, however, that all of the 226 households with incomes from 51% to 80% AMI can or want to buy. Some are settled and ready for the responsibilities of homeownership. Many will not qualify for mortgages. It is reasonable and conservative, however, to assume that 25% are candidates for ownership. This equates to demand for close to 60 units priced starting at $95,000 to a maximum of $165,000. It should be noted, however, that this estimate of demand is conservative since it only considers renter households now residing in Clear Creek County. According to realtors, the majority of buyers in this price range work outside of the county and many lived outside of the county before they purchased. Also, since the estimates only consider renters and do not count owners who want to move up or down due to changing incomes or household size, they likely under-represent all of the demand that exists.
Supply of Entry-Level Homes
Mobile Homes Seven of the 10 units listed were priced for $35,000 or less. These older units located in mobile home parks are very difficult to sell since they do not appreciate in value and are therefore not considered a good investment, and since the future of mobile home parks is uncertain. The other three listings were for newer double-wide units priced between $132,000 and $179,900 and located in rural areas on large lots or small acreage.
Condominiums Single-Family Houses Cabins
Supply and Demand Compared It should be noted that these estimates slightly overstate the supply of affordable units. The calculations do not take into account condominium dues, which typically run about $100 to $180 per month and reduce purchasing power by about $20,000 to $30,000.
Market Conditions Units priced under $200,000 are generally on the market for 60 to 90 days. Single-family homes and multi-family units in the lower price ranges sell provided they are in reasonable condition. The main impediments to sales are condition and the inability of buyers to qualify for mortgages. Mobile homes in parks are the most difficult project to sell though modular units on lots do very well. Priorities for New Development Realtors seem to agree that increased availability of new units that are not "fix it uppers" should be the priority. They report that some of the housing is in such bad condition that it could be considered unsafe with faulty wiring, old plumbing, lead-based paint, structural problems and miscellaneous deficiencies associated with shoddy construction in the 1970’s. Realtors generally agree that new townhomes priced between $150,000 and $200,000 would sell especially well. The supply of two- and three-bedroom units with two baths and garages is not sufficient. New mobile homes or modular units, and condominiums priced between $75,000 and $150,000, are also needed. While low priced single-family homes would be desirable, buyers seem to accept that they can only afford attached product. Development within or close to the county’s towns is important. Realtors do not feel that employee housing should be built in remote areas, like St. Mary’s.
Homeownership Education/Credit Counseling
Housing and Employment This section of the report combines input obtained through employer interviews with Census information on commuting and unemployment data from the Colorado Department of Labor and Employment. It covers employment problems related to housing, the types of housing problems experienced by employees, commuting, priorities for housing development, and responsibilities for housing.
Nature and Extent of Problems Related to Housing Filling Jobs Employers indicate there is a direct correlation between the unemployment rate and their ability to hire workers. The unemployment rate has remained relatively steady in the past year from 5.6% in June 2002 to a preliminary estimate of 5.8% for June 2003. The number of persons working has increased however, along with gains in the size of the labor force. As of June 2003, 5,429 of the county’s labor force were employed up from 5,057 one year previously. None of the employers that were interviewed feel their hiring problems are over for good, however. They remember the difficulty they had filling positions just a couple of years ago, do not feel that any permanent improvements have been made in the availability of housing, and worry that they will again have unfilled jobs when the economy rebounds. Attracting Quality Employees Turnover Tardiness/Absenteeism
Types of Housing Problems Housing Quality Opinions are split on the extent to which quality is a problem. Employers who have resided in the county for a long time generally feel the poor quality of much of the housing in the area, particularly rentals, is not a major problem. They feel it is adequate given the quality of the jobs they offer. Newcomers, however, feel that the quality of housing is far inferior to what is available elsewhere and a deterrent to working in Clear Creek County. Employers who offer mid-level positions or who want to increase the quality of the employees they hire for service positions report that the lack of good quality housing is an impediment. Housing Affordability Employers in the eastern part of the county, report that housing affordability is more of a concern than employers in the central and western portions. Housing costs in the Evergreen area are very high and above what is affordable for all but the highest-paid employees. Housing Availability
Commuting In Commuting by Business Type and Location Employers in the central and western part of the county who offer a wide range of positions report that about 75% to 80% of their employees live in the county. Most of their employees who commute from outside of the county hold mid-level jobs and upper-level positions. Employers in the east part of the county report much higher levels of in commuting. The majority of their employees live outside of Clear Creek County. Most drive further than Evergreen, however, when forced to seek more affordable housing in Lakewood, Golden, Westminster or more distant communities. The ability to impact in commuting levels by improvements to the housing supply in the county appears to be limited. It is unlikely that the majority of in commuters would choose to move to the county based on current perceptions. Lifestyle considerations, like shopping availability, social opportunities, and where spouses work impact where they choose to live. Commuting Quantified The number of residents who commute to jobs in Gilpin County and Summit County was far lower (431 combined) than the number holding jobs in the metro Denver region (2,601). The number of workers commuting into Gilpin County (278) had increased 8.6% from the 256 estimated by the Colorado Division of Gaming in 1997.
In commuting of employees for work is much lower than out commuting of residents to jobs elsewhere. According to the 2000 Census, 78.3% of the persons who work in the county also reside there. In other words, nearly 22% of the county’s employees live somewhere other than Clear Creek County. Most of the in commuters reside in Jefferson County where 14.5% of the persons working in Clear Creek County live.
On a net basis, there were 2,460 more persons leaving the county for jobs than commuting in for work in 2000. In other words, Clear Creek County’s housing serves primarily as a workforce for other areas and could be considered a bedroom community.
Implications of the Jobs/Housing Imbalance Housing prices are driven up by incomes earned in the metro region. While rents are affected little since low wage employees generally do not commute, the purchase price of homes in Clear Creek County is largely set by the salaries and wages paid to employees working in the metro region. With more than half of the homeowners in the County employed outside of the county, those working in the county are at a disadvantage given the lower wage scale in Clear Creek County. The municipalities and county are burdened by the cost of providing services to residential developments without the revenues that would be produced if commercial development and jobs were in balance. On a net basis, residential development uses funds while commercial development generates revenue. Areas that serve as bedroom communities to employment centers elsewhere generally have financial strains than areas where jobs and housing are more in balance. Mid-level employees who leave their jobs for homes in the metro region or Summit County take their salaries with them. Commuting out from jobs in Clear Creek County to homes elsewhere has direct financial cost in addition to increased absenteeism and tardiness. The ability to diversify the economy is hindered by the lack of choice, variety and price range in housing. If the labor force can not afford homes in which they are willing to live, they will not be a sufficient labor force for economic growth. At present, it is clear that the housing supply in the county primarily serves employees at the lower end of the wage scale and in upper-level positions.
Priorities for Housing Entry level homeownership About half chose entry level homeownership as their top priority while the other half picked better or more affordable rental housing. Those who chose rental housing indicated that better quality was more a concern than price based on current rent levels but emphasized that the cost of new rental housing could not be much higher than prevailing today. Employers agree that housing for employees, both entry-level homeownership and rentals, should be located in the towns. Having employees commute to areas like St. Mary’s is not desirable. Generally, Idaho Springs was considered to be more preferential than Georgetown due to its more central location. Employers in the east end of the county feel that affordable housing is needed nearby indicating that employees would be more likely to commute to the Denver area than west for housing.
Responsibilities for Housing Establishing a Housing Authority/Similar Entity Employer Assisted Housing There are several examples, however, of employers providing rental units for their employees. An employer developed seven one-bedroom apartments on the upper floor above a restaurant. Five of the seven are occupied by employees with the other two rented to non employees. The units rent for $300 to $400 per month. The experience has been very positive for the employer. Having employees living so close to their jobs has worked out well and rents have contributed to debt retirement. Issues related to such close proximity between work and home have not arisen. Another employer master leased five rental units for their employees but has discontinued this practice with the rise in apartment vacancies. In the past, one employer offered down payment assistance to employees matching the down payments for qualified employees up to $10,000 each with the loans forgiven over a five year period. The program was successful but has since been abandoned due to increasing personnel/health care costs and the economic decline that has made it easier to hire qualified employees. When the economy rebounds, this employer will likely reinstitute their down payment assistance program if employee housing becomes the crisis it was in the later 1990’s. Employer Fees Financial Support by Towns and County Contribution to Employee Housing by New Development
Conclusions and Recommendations Housing Affordability The high percentage of homeowners that are cost burdened by their housing payment should be a concern. While rents have been declining recently, owners are faced with fixed payments during a time when their incomes may be decreasing as a result of economic downturn. An increase in the number of foreclosures should be expected. Providing credit counseling services could perhaps help reduce the occurrence.
Employment and Housing While the increase in unemployment has made it possible to fill positions since employees are willing to drive farther for work, many employers felt that their inability to attract workers during the late 1990’s reached a crisis. Some offered housing assistance in order to fill jobs. Employers do not seem to feel that the problem of insufficient, poor quality and over-priced housing for employees is fixed but rather is just temporarily not as severe as it was a couple of years ago. Though it is unlikely that they would be willing to or could afford to until there are strong signs of an economic recovery, employers should be considered as a resource when considering ways to provide employee housing in the future. Commuting in and out of Clear County for work will continue but there are ways to improve the balance between housing and jobs. As new high-end residential development takes place, which primarily serves persons working in the metro Denver region, housing for lower-wage employees who work in the homes and in commercial service/retail support jobs could be required. As new jobs are created, housing to match the types of positions to be offered could be required or could be a priority for public/non-profit development efforts. Because residents working in neighboring counties compete with Clear Creek County employees for housing and drive up prices with their higher wages, preferences should be set for any projects that are in some way subsidized giving priority to renters/buyers who are employed in Clear Creek County.
Rental Market Conditions There does not appear to be adequate demand at this time for the construction of additional rental units, with the possible exception of a moderate-size project in the east end of the county. Improvements to the cost and quality of existing rental units should be considered, however, including replacement of dilapidated mobile homes, rehabilitation/renovation of apartment properties and acquisition of additional Section 8 rent subsidy vouchers.
Entry-Level Homeownership Small for-sale projects on lots within or adjacent to towns should be pursued. Demand appears to be greatest for development of units in the $75,000 to $165,000 price range. Realtors suggest that townhomes with two or three bedrooms would be the most appropriate product. Mobile/modular homes would likely also be popular for the lower end of the price range. Condominiums in buildings similar in size and appearance to single-family homes would be an attractive alternative to the units now available for sale. Entry-level condominiums in the Evergreen area would likely also be successful given the lack of competition there and the number of jobs being created in that end of the county. The lack of homeowner education and credit counseling services is an impediment to the sale of entry-level homes in the county. Any effort to increase the availability of for-sale units priced under $200,000 should be complemented with the establishment of a homebuyer education program that includes working over the long term (one to two years) with households to improve their credit rating, reduce their debt and save for down payments. Quality of Housing Realtors report that conditions are often unsafe and that buyers have problems getting mortgages for units in need of repair. They also report that many of their clients are not interested in buying homes that need to be repaired and remodeled. Employers report that they have difficulty hiring high-quality employees for entry level jobs and persons to fill mid-level positions because they are not willing to live in the units they can afford. Furthermore, employers recognize the importance of a diverse housing supply in economic development efforts and feel that the low quality of housing in Clear Creek County is an impediment to growth. Property managers indicate that it is becoming more difficult to fill their units, particularly ones in need of repair and updating. The nicer units are remaining full but the ones that are dated and not in good condition are not performing as well. Programs for rehabilitation of both rental and owner occupied housing are clearly needed. Preserving the existing supply of units and increasing their livability and safety would cost less than new construction and would be more in keeping with the historic, small town character of Clear Creek County’s communities. Some units are beyond repair and should be replaced, however. The rehabilitation program should allow additions that increase the suitability of units for larger households. Between 1990 and 2000, overcrowding increased in Clear Creek County. The number of overcrowded units grew by more than 50%; based on one person per room (not bedroom) 98 units were overcrowded in 2000.
Mobile Homes As had been stated often by community officials, employers, realtors, property managers and others who care about housing in the county, something needs to be done to replace mobile homes. Replacement with apartments, condominiums or townhomes would mean a major increase in housing payments for mobile home park residents given the costs of new construction. Sources of subsidies need to identified. Replacing them with new single-wide units could be less expensive. Using modular construction for multi-family units might be an alternative. |
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