CREJ - Multifamily Properties Quarterly - August 2016
It’s difficult to discuss the multifamily housing environment without first mentioning how strong the Colorado market is. But as demand grows, vacancies decrease and rents skyrocket, a new topic of discussion becomes unavoidable – can people afford to live here? The topic is complex, ranging from legislative and environmental causes for the crunch to negative implications it could bring if we continue at this pace without addressing it. In the cover articles, Denver Mayor Michael Hancock and City Council Members Robin Kniech and Albus Brooks lay out the argument for their proposed permanent affordable housing funding plan. NAIOP Colorado executives, meanwhile, share a counter perspective, stating that the proposed development impact fee is unfair. They argue that affordable housing is a communitywide concern, which means the revenue for the solutions should come from the entire community, not just one sector. In an effort to encourage more affordable housing developments, we also have two articles that address funding these types of projects. Kenneth Puncerelli with LAI Design Group gets into the nitty-gritty on how developers can take advantage of low-income housing tax credits as a financial source for these projects. And Michael Thomas with Gershman Mortgage writes about the available funding programs to make these communities come to fruition. We’ve all heard that Denver is a millennial hotspot. We also have heard that this generation is saddled with crippling student debt, making many delay homeownership. In a diverse market, many of these individuals might look to affordable condominiums as their first real estate purchase. However, those opportunities are very limited in Colorado. While some municipalities are enjoying a little relief on the construction defect front through local ordinances, the state’s Legislature remains at an impasse. Developers and contractors find little incentive to build affordable housing when the estimated threats of costly construction defect litigation diminishes expected returns. As a result, affordable condominium development is being written off as largely unfeasible, Jared E. Berg with Sherman & Howard LLC writes in his article on Page 12. And while the Denver market can, at times, be the focal point in the affordability discussion, it is not an isolated issue. Mountain towns are experiencing an extremely tight market as limitations to new developments combine with record-setting population growth, making it difficult for many high-country residents to find places to live where they work. Greg Price, with Marcus & Millichap, breaks down the escalating supply-and-demand challenges for the area on Page 8.