As Colorado Springs’ apartment vacancy rates decrease, inexpensive housing is drying up. And that has more low-income renters turning to affordable-housing providers, like the Division of Housing and Greccio Housing.
The city’s apartment vacancy rate is 5.6 percent, a 10-year low, and apartment owners have stopped offering incentives like discounted rent as thousands of troops return to Fort Carson after deployment. Foreclosures have also forced families out of homes and into rentals.
The Colorado Division of Housing’s annual Housing Need and Rent Burden report, released earlier this month, estimates that there are two families for every available unit in Colorado within an affordable range for those who earn less than $20,000 a year.
In Colorado Springs, there are 1.7 households earning $20,000 to $25,000 for every available unit within range.
There are 2.7 households For those earning $15,000 to $20,000, and 2.3 households making $10,000 for every unit.
Rent-burdened households are fewer in Colorado Springs than in high-rent parts of the state like Boulder and Fort Collins, according to the report.
Rent-burdened households are defined as those that spend more than 30 percent of their income on rent. In Colorado Springs, 22 percent of households fork over more than half their monthly income for rent.
Another 37 percent pay 35 percent or more of their income for rent and almost 46 percent pay more than 30 percent.
Colorado Springs Housing Authority issues 2,800 Section 8 vouchers a quarter, Assistant Executive Director Chad Wright said. Section 8 vouchers allow the city to subsidize rent for poor workers in approved buildings throughout the city.
The agency also manages 1,400 to 1,500 affordable rental units in various parts of Colorado Springs, Wright said.
“We’re really trying to serve a subset of the population that makes 30 to 40 percent of the area median income,” Wright said. “That’s the hardest part of the population to hit. The less money you have, the harder it is to find an affordable place to live.”
Wright said his agency has inquiries daily about rentals and thousands of families on its waiting list.
“We opened the list for one week in October and allowed people to sign up,” Wright said. “We had 3,000 people sign up in just one week.”
He said 2011 Federal budget cuts to the U.S. Department of Housing and Urban Development and other programs are starting to filter down to his level on the ground and he’s not sure yet how they will impact the Colorado Springs Housing Authority.
“The cuts will be significant despite the fact that there is a real need in our community,” Wright said. “One thing I can say we do anticipate — when you factor in unemployment and very little being added to the multi-family inventory and a tightening rental market — it’s going to become an even more difficult situation than we think.”
Greccio Housing Executive Director Lee Patke wasn’t quite as concerned about funding cuts as he is about his agency expanding affordable housing options.
Greccio manages 351 affordable units and owns 214 of those, Patke said.
The agency looks for distressed and foreclosed properties along with grants and no or low-interest financing to buy them with so it can keep its debt service low and, in turn, offer low rents.
“Part of our commitment is to constantly grow our capacity,” Patke said. “We hope to have another 40 units by the end of the year.”
There are other new affordable rentals going up in town as well. Mark Hendricks of Hendricks Communities is building two affordable housing developments for seniors and one for families near Penrose St. Francis Hospital. The projects will total more than 160 units.
Greccio doesn’t keep waiting lists because administrators have found that most people who come in looking for housing need it right away and when they get a call a few months later, they’ve already found a place.
But people do request moves within the Greccio properties, Patke said.
He said there are probably some free market properties that could match their rents, which average $420 for a one-bedroom, less than $500 for a two-bedroom and about $700 for a three bedroom. Some units are reserved for people with specific incomes and they’re all priced 20 to 40 percent below regular market value, Patke said.
The maximum monthly rent for someone making $10,000 a year is just $250. It’s $375 for someone making $15,000 and $499 for someone bringing in $20,000 a year, according to the division of housing report.
Greccio is considering its first rent increase in five or six years, Patke said.
“With increasing costs, we have to consider it,” Patke said.
Still, rent increases would be nothing like the 40 percent and $200 hikes some have reported around town, Patke said. Any increase would likely be in the neighborhood of $5 per month for smaller properties and $10 per month for three-bedroom units, which would still keep them within the realm of affordability for many.
Rent increases are bound to become more common over coming months, said Kevin McKenna with Apartment Realty Advisors.
“It’s very possible there’s going to be a double-digit rent increase soon,” McKenna said. “A $100 swing in rent for someone not earning a lot will be trouble.”
While it’s bad news for the renters, the shift in the current apartment market is welcome news for apartment owners.
Just as Greccio has experienced increased expenses over the years from higher utility prices, gas prices and labor, so have other apartment complex owners, said Doug Carter at Sperry Van Ness.
He looked up rental histories for properties built in the 1980s as a gage of what is happening, especially for lower-end properties.
“Rents peaked out in 2002,” he said. “And they platteaued after that. The result is that the rents today are basically the same as they were 11 years ago.”
That has allowed a lot of class C properties to offer competitive rents, rents that people earning a fraction of the area median income can still afford, Carter said. And that explains why the rent burden in Colorado Springs is better than it is in most parts of the state. Only Grand Junction, Greeley and Pueblo offer more affordable rentals, according to the division of housing report.
Carter said there is a greater supply of those low-end properties in Colorado Springs because builders in the city tend to overbuild and create too much supply during building booms.
Ken Greene of Apartment Realty Advisors agreed that there is a healthy supply of low-end rentals in Colorado Springs. And it’s been hard for apartment owners and managers to keep them afloat.
“The truth is, we’ve been through a rough time in the apartment industry,” Greene said. “There are a lot of properties that aren’t designated for low-income households that have become affordable units.”
Now that the market is shifting, investors are starting to pick up the struggling properties and turn them around.
Ray Rhodes and his family have been buying some of those class C properties in foreclosure and renovating them. While he operates a for-profit business and does make money, his aim is to increase the inventory of affordable rentals in Colorado Springs, he said. Most of his rents are just over $500 a month including utilities, he said.
The properties have all been gutted after years of neglect and abuse and refitted with new windows, doors and nicer finishes, including tile floors and laminate wood flooring.
“I just feel like everyone deserves a nice, safe, comfortable place to live,” Rhodes said.