A perfect storm.
Read the first part
A daily post reader sent me a link yesterday, to a thoughtful op-ed by real estate commentator John Wake in Forbes magazine, titled “The Real Reason Home Prices Are Skyrocketing: What the Real Estate Industry Won’t Tell You.” You can read the article here. I’m always interested in what people won’t tell us.
Mr. Wake’s theory basically boils down to a significant shift in the real estate market since 2006. When home prices in many communities crashed during the Great Recession, an estimated 6.3 million American families lost their homes due to from a foreclosure between 2006 and 2016. Here in Archuleta County, average home values have dropped about 30%. The construction industry here nearly dried up because houses could not be built and sold for a profit.
Savvy investors, however, understood that house prices would recover. And the only people with money – practically speaking – were investors.
These investors bought homes as “investments” either to hold them, expecting values to rise so they could sell for a profit…or expecting the rental market to head down. stratosphere – what happened, resulting in record profits for homeowners… or alternatively, converting former residential homes into profitable, commercial VRBO vacation rentals.
As these homes were withdrawn from the residential labor market, relatively few new homes were built, due to a cratered construction industry.
A shortage of homes for sale was virtually guaranteed and would generate an imbalance between “supply and demand”, with supply unable to meet demand and causing house prices to soar.
A perfect storm, you might say. A perfect payoff for wealthy and upper-middle-class investors, and a perfect disaster for working families.
After extensive public testimony and debate by commissioners, the Planning Commission – Peter Hurley, Peter Adams, Kristen McCollam, Chris Pitcher and Mark Weiler – voted 4 to 1 to recommend that a complex of 28-unit apartments to be designed to occupy the northeast corner of our existing South Pagosa Park. Commissioner Pitcher, at the corner of the park, voted “No”.
The Commission’s recommendation says the complex should be designed – by potential developer, Texas-based partnership Servitas – to preserve access through the 7th/8th Street driveway, which was shown blocked in the drawing presented to the Planning Commission on Tuesday 12 April. Meet.
As a result of this lengthy debate, two additional projects proposed by Servitas were unanimously recommended to City Council, with very little discussion.
A project is planned for the corner of Apache and South 5th Streets, a neighborhood that offers a mix of modular homes and high-end vacation rentals. Preliminary sketches show twelve small two-story townhouses on a 1/2 acre lot.
The third proposed project would be a three-story apartment building located adjacent to City Hall at the corner of Apache Street and Hot Springs Boulevard.
All three projects require “density bonuses” because they exceed the “dwelling units per acre” limits established in the current Land Use Planning and Development Code (LUDC). But the City Council amended the LUDC in late 2020 — via Ordinance 942 — to give itself the power to waive LUDC requirements whenever the mood strikes.
In the case of the South Pagosa Park project and the Hot Springs Boulevard project, the density recommended by the Planning Commission is approximately twice the density authorized by the LUDC.
Personally, I find the idea of density limits rather fascinating. In 2017, the city received a report on the Pagosa housing crisis from Smart Growth America, based in Washington, DC. (We discussed this study at length last month in a daily post editorial.) The Smart Growth Study broke down the financial implications of low-density versus high-density development, with particular emphasis on the financial health of local governments…and recommended that the city allow the community to grow to higher densities in the future.
But the city’s LUDC – and county government land use regulations – were specifically written to limit density, to bring future development into line with the status quo… with what is already “on the ground.” “.
That is, the current LUDC apparently conflicts with the recommendations for a financially viable community. The way Pagosa has been built for the past 100 years is no longer a practical or affordable option…unless we want to end up like Aspen, Vail and Telluride, like another mountain town where only millionaires can get away. allow to live.
Now that the city government is seriously trying to solve our housing crisis, caused in part by these same density limitations, the Planning Commission was essentially admitting that we won’t solve our housing problem unless we ignore the density rules of LUDC.
Curiously, the City is currently in the process of rewriting its LUDC. Will some new (more sensible?) density regulations appear in the revised Code? Only their hairdresser knows for sure.
A few important questions were not fully answered before the vote.
How much will Servitas spend to build these 64 units?
Will the rents really be affordable for the majority of our workforce, knowing that a typical working household earns less than 100% of the region’s median income?
Will the city government have to subsidize these units on a perpetual basis?
Given that the taxpayers donate free land to the company, it seems to me unconscionable that the taxpayers – and the Planning Commission – have been kept in the dark about the financial details.
Meanwhile, the recommendations coming from the five voting members of the Planning Commission are just that: recommendations. These recommendations were, in turn, based on recommendations made to the Planning Commission by City staff. Ultimately, the seven-member Pagosa Springs City Council and Servitas will make the final decisions on what Servitas will build, and where and how the funding will be shared.
As I’ve mentioned in previous editorials, the 2021 Root Policy Research Report on the Housing Crisis in Southwestern Colorado estimated that Archuleta County lacked 800 homes for working families.
Yet the county is still struggling to add enough units for the workforce. An estimated 800 additional units for permanent residents were needed to fully accommodate job growth and minimize travel.
64 new homes, which will be built over the next two years, may seem like a big number. In fact, that might just scratch the surface.
Bill Hudson began to share his opinions in the Pagosa Daily Post in 2004 and cannot break this habit. He says that in Pagosa Springs, notices are like vans: everyone has one.