16 years, 736% Rise in Home Prices

Good morning readers,

Good article in the Gunnison Country Times recently regarding Gunnison County’s 16 year, 736% rise in real estate values and the impacts, issues and recent policy decisions this community now faces from such a dramatic climb in home prices.

The overarching problem (the same problem Aspen, Telluride, Jackson Hole and other exclusive Western resort communities face) is the fact that the average median income for locals has not grown anywhere near what it needs to keep pace with the skyrocketing property values. Like our other destination resort community counterparts in Colorado and Wyoming, local workers are being forced farther away for their housing, requiring longer commutes to get to where the jobs exist.

Interestingly, the article does not mention the most recent Stallion Park affordable housing development that EagleBrooke Realty represents in Crested Butte. Today, a local making 80% of their income in Gunnison County can purchase a 1 bedroom, $160,000, 2 bedroom, $200,000 or 3 bedroom, $ 235,000 brand new condominium that includes a garage, located only 5 minutes from Crested Butte. Stallion Park represents 32 new units for locals only at a price that is comensurate with local’s salaries. (shameless, honorable plug for what our company has accomplished in this community)

Read on and learn!
Thanks for visiting today!

Channing Boucher
Learn about Stallion Park at EagleBrooke Realty

August 14, 2006

Behind the housing eight-ball
Are government regulations, more free market supply – or both – the answer?

Chris Dickey

The prices of homes and land in the resort community have jumped so astronomically over the years that government intervention in the housing arena has become a common, and accepted, practice.

"In 1990, the median sales price of a single family home in Crested Butte was $104,000," explained that town’s planner, John Hess. "In 2003, that figure rose to $375,000. In 2005, it was $873,000.

"That’s a 736 percent increase in the cost of a single family home." Comparatively, to say that income levels haven’t risen at the same pace is an understatement. In 1990, the average household earned about $27,000 annually. In 2003, median household income was in the $50,000 range, Hess said.

As a result of this glaring disparity, town governments in Crested Butte and Mt. Crested Butte have had regulations on the books for about a decade aimed at making home-buying or renting a possibility for locals living off of local wages.

The community is "very accepting" to regulations that make developers contribute to the affordable housing pool – generally either by donating land, contributing impact fees or selling a percentage of their units at below market prices.

Nonetheless, Crested Butte Mayor Alan Bernholtz said it’s not enough.

"We’re 10 years into it and still can’t catch up," he said. Bernholtz was one of the invited speakers at a county-hosted meeting last week that brought together government leaders and major employers throughout the valley to discuss the housing issue. Those present relayed similar problems that they’ve experienced – difficulty attracting and retaining employees chief among them – but there was also acknowledgment that solutions aren’t easy to come by. The Gunnison County Commissioners recently adopted their first affordable housing regulation – a "linkage fee" that taps residential and commercial builders for money that goes into an affordable housing pot – but not before receiving a substantial amount of resistance from the real estate community. The City of Gunnison currently has no regulations pertaining to affordable housing on the books, but community leaders are in the early stages of exploring the possibilities.

Bernholtz believes it’s past time for the government to intervene in order to "preserve the diversity of the community." He was among those at the meeting who spoke in favor of a variety of affordable housing regulations, valley-wide.

"I feel like Gunnison looks to Crested Butte like Crested Butte looks to Aspen," he said. "We’re not that far away. In eight to 10 years, we’re going to be like Telluride. "And Gunnison, I’m afraid, is going to be not that far (in housing costs) from the north end of the valley." To this point, the City of Gunnison generally has taken on an "open for business" stance regarding the issue, explained City Manager Ken Coleman. The thinking is that if they could attract more residential development, supply would catch up with demand and prices would stabilize, said city councilman Bill Nesbitt.

But the city has also begun looking for support from the north end of the
valley to address escalating home prices here. City councilman Rick Miller relayed at the meeting the story being told with increasing frequency of the up-valley resident who sold his home – most likely as a vacation home or rental to someone living elsewhere – and bought a place in Gunnison with the excess profits.

"That pushes our real estate up," Miller said.

What happened when Gunnison Mayor Stu Ferguson approached his Mt. Crested Butte counterpart, Chris Morgan, about an affordable housing partnership? The resort town mayor said that if Gunnison had a specific set of affordable housing plans – i.e. regulations – on the books, they could talk.

"Until you do that, I don’t think we’re going to be willing to spend any money down in Gunnison," Morgan said.

Mt. Crested Butte, where only half of the town employees live in the town and the rest are pushed down valley because of affordability, has a multi-layered affordable housing plan. They have an inclusionary rule, where 15 percent (or cash in lieu) of all new units must be set aside for affordable housing. And they have a job generation schedule that dictates how many "employee" units a new development must provide.

More and more government controlled units are going on-line in Mt. Crested Butte, plus the town’s affordable housing pot will exceed $2 million in the next few months, Morgan explained. Still, he echoed Bernholtz’ opinion that they are playing a game of catch-up at this point.

"We are the last emerging resort community in the state," Morgan said. "And every single one of them says the same thing (regarding affordable housing) – we should have done more and should have done it sooner."

A few employers are taking matters into their own hands. Crested Butte Mountain Resort has had housing for its temporary, seasonal employees for years. But its needs are changing, partly because a more diverse range of employees need assistance with housing, explained CEO Randy Barrett. A new 40-unit employee housing project at its Prospect development will reflect that change and others.

Sixteen of CBMR’s Prospect units will be allocated to the Town of Mt. CB. The remaining will be earmarked for a variety of CBMR employees – from those seasonal lift-operators to year-round, mid-level managers. The units will have qualifying restrictions to ensure that the people renting and owning homes there will meet tiered income guidelines for affordable housing units with various pricing levels.

Gunnison County Electric Association has implemented a couple of home-buying assistance programs for its employees. One offers a zero-percent down payment loan, in the other the employer will basically team with the employee – up to $100,000 – and become an equity-holding partner in purchasing a home.

More and more small business owners in Gunnison are beginning to look into purchasing housing to then rent out to employees before prices grow even higher here, city officials noted.

John Sowell, longtime professor and administrator at Western State College, said high housing costs are "very much an issue" with both recruiting new professors and other campus professionals – and with retaining students.

"We can pay professors comparatively to our peer institutions," he said. "But when they start to compare the costs of living, that’s where we start losing candidates.

"And, the most commonly cited reason for students leaving Western is financial."

Sowell explained that the affordability conundrum is also changing the make-up of Western’s staff. More and more of the campus’ new professionals are "mid to late career individuals" who have built up enough equity elsewhere to be able to afford buying a home here.

That means that fewer of Westerns’ 200 or so professional staff members have children still in the home, which helps explain RE1J School District’s continued drop in enrollment.

So while the problem of local employees struggling to meet the seemingly ever-increasing cost of local housing is fairly well established, finding solutions is anything but simple. And the reluctance to any type of government intervention is palpable, especially in Gunnison.

One Gunnison realtor recently faxed a copy of the county’s new linkage fee ordinance to dozens of his colleagues with the words "read it and weep" written in bold letters on the cover page.

Some think today’s situation is simply a continuation of the struggles this community has always faced.

"There’s been a housing problem in Gunnison since the ’70s when I was in college," Nesbitt said. "It’s not going to go away over night."

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