The look of Denver’s suburbs is changing, but who will be able to afford live in them?
From the front porch of his newly built ranch house in Aurora’s Painted Prairie neighborhood, Michael Kearns can see a wide array of homes — duplexes, single-family, townhomes.
It’s a departure, as Kearns sees it, from “the cul-de-sacs, the row after row of garage doors out front,” that has typified suburban development over the last few decades. Having moved to Painted Prairie from a home in Denver’s Central Park with his wife and daughter in November, he calls his new neighborhood “a porch community where everyone sits out front.”
“It doesn’t feel like a suburb to us.”
But Painted Prairie is very much a suburban community, 17 miles from downtown Denver, just south of the giant Gaylord Rockies Resort & Convention Center and perched on windswept land that hugs the metro area’s E-470 beltway. Like other communities rising out of the ground nearby — with grandiose names like Montaine, Harmony, Sky Ranch, Aurora Highlands and Horizon Uptown — it’s a glimpse of where Denver’s suburbs are headed.
Things are going to be denser, more urban, more self-contained. And the region’s new homes are largely headed east, to available land.
“Where do we have the capacity to grow?” said John Covert, regional director for real estate analytics firm Zonda.
Sixteen of the top 20 best-selling residential developments in metro Denver are in Adams, Arapahoe and Douglas counties. And those three counties alone account for 76% of all metro area lots under development, according to Zonda data. But there are problems as the building boom moves east: the metro area’s median home price is creeping toward the $600,000 mark.
That raises the vexing question: Who exactly will be able to afford to live in these evolving suburbs?
The extraordinary tightness of the market — record-low inventories, lightning-fast transactions and sales prices well over asking — have some affordable housing officials declaring the metro area’s residential home market “unhealthy,” “not functioning well” and “at a tipping point.”
“We are in an extreme crisis of supply,” said Peter LiFari, executive director of Maiker Housing Partners, the agency charged with providing affordable housing for residents of Adams County.
And that’s before the arrival of a projected 1.1 million newcomers who will call metro Denver home by 2040, according to the state demographer’s estimates.
“With the cost of raising a family on my own, I don’t think it would be possible to buy a place,” said Stephen Barmore, a restaurant server who rents a home in Lakewood and splits the monthly cost with his adult daughter and her boyfriend. “Colorado, for the foreseeable future, is a hot spot and I don’t see that changing anytime soon.”
Less cul-de-sac, more density
For those who are fortunate enough to buy into Denver’s suburban housing market, new design notions and novel layouts will be part and parcel of what they find in new communities.
Midtown, an Adams County community with a distinctively urban feel, rose from an old industrial site at West 67th Avenue and Pecos Street nearly a decade ago. To the north in Broomfield, the planned Baseline neighborhood at the corner of Northwest Parkway and Interstate 25 will feature retail and commercial districts and will serve as the new home of the popular Butterfly Pavilion, as well as a mix of home styles on 1,100 acres.
Nearly 40 miles south, RidgeGate in Lone Tree has 10,000 homes on tap that will run the gamut from “compact urban apartments” to row homes to single-family houses, according to the project’s website. RidgeGate will be within a short distance of a light-rail line linking the community to Denver’s downtown.
“This is what you’ll start seeing in the suburban ring — it’s the stuff you see in the urban core,” Zonda’s Covert said. “They look different, they feel different. You’ll see things that you’d never see 20 years ago.”
Painted Prairie, with its range of housing styles, is in the first phase of development, with 350 homes currently on a 628-acre parcel southwest of Denver International Airport. By 2027, there will be 3,600 homes, ranging from the mid-$300,000s to $900,000.
Micayla Miller and her husband moved here in September from Denver’s Green Valley Ranch neighborhood, where they got tired of sharing a driveway with their neighbor. The Millers’ new home is located across the street from Painted Prairie’s main gathering spot, High Prairie Park with its community garden and dog run.
“When my kid is older, I want to be out on the porch with a glass of wine watching her in the park,” the 27-year-old Miller said as she monitored her sleeping seven-month-old daughter via video on her phone.
She said she likes the “vibe” of Painted Prairie, which is racially diverse and “welcoming.” Her only complaint is that amenities, like shopping and restaurants, are far away.
That won’t be the case for long, said Chris Fellows, the man in charge of building the subdivision. That’s because a future town center, with up to four hotels, 10 restaurants and “really urban housing” is coming to Painted Prairie by 2023, he said.
The easiest and cheapest thing to do in planning and building the new community, Fellows said, would have been to sell lots to one builder for a singular type of product.
“But that would be homogenous,” he said. “We’ve brought the most cutting-edge urban and semi-urban design to the suburbs.”
“It’s just so tight”
Painted Prairie’s diverse housing stock helps on the affordability front by providing a range of home prices, Fellows said, including the oft-mentioned “missing middle” segment that is more feasible for first-time buyers.
But having less expensive homes in the mix is only helpful if you can buy one — not an easy feat in the current market. Nearly three out of four listings in April went under contract within a week, according to Zillow, making Denver and its suburbs the No. 2 fastest-moving housing market in the country. And most sellers got more than their listing price during the first quarter of 2021, according to Your Castle Real Estate in Denver.
Throw in the metro area’s anemic inventory, with only 1,921 homes and condos available for sale at the end of March, and buyers find themselves in epic bidding wars. At the lower end, the competition becomes that much fiercer.
“If you’re a builder and looking to be profitable, you’d have to sell a lot more of the low-margin units to get the same profit as the higher-end product,” said Phyllis Resnick, executive director and chief economist with the Colorado Futures Center, a think tank at Colorado State University that studies public policy and fiscal issues. “The developers seem to be building to that socioeconomic category of middle-high to high.”
As for existing homes, Resnick said they aren’t “churning at a healthy rate.” Part of the problem is older homeowners who have been aging in place in spacious homes instead of downsizing.
But Ted Leighty, CEO of the Colorado Association of Home Builders, said there are multiple factors playing into the unbalanced market, including rising land prices, increased costs for building materials like lumber and steel, more resistance to new development from neighbors and a lengthier and costlier approvals process at the local government level.
“It takes a lot more time to go from raw dirt to a community,” Leighty said. “We’ve got some headwinds ahead of us.”
Tough rental market
And if suburban home seekers can’t buy — or can’t afford to — they rent.
Though metro area rents held steady over the past year — averaging $1,544 during the first quarter of 2021 — making rent became a nightmare for 42-year-old Stephen Barmore, who lost his job as a waiter at the beginning of the pandemic.
Barmore’s household is among the thousands in Colorado that have been forced to “double up” — live with family, friends or unrelated roommates. Shift Research Lab, in a 2019 report, found that one in four Colorado households lived this way, up from one in five in 2006.
Last year, Barmore had to move out of his rental house in Morrison, where he had been for four years. He eventually got another restaurant job and with the help of The Action Center, a Jefferson County nonprofit that helps those in need, he landed a rental in Lakewood where he and his adult daughter split the $2,000 rent.
“The biggest fear is if I miss one shift, I risk a month of major stress and juggling,” Barmore said. “If I miss multiple shifts, I run the risk of losing my house. It’s just so tight.”
The region’s apartment vacancy rate fell from 5.8% in the fourth quarter of 2020 to 5.5% in the first quarter this year. Parker has seen the fastest rent growth in the metro area, with a year-over-year increase of 10.2% while Lone Tree has the most expensive rents, with a two-bedroom median of $2,203, according to Apartment List.
Laurie Walowitz, director of programs at The Action Center, said an even bigger problem looms at the end of this month: The eviction moratorium that the federal government put in place during the pandemic expires.
“We are bracing ourselves for a tidal wave of people coming to us with eviction notices,” she said.
The Action Center gave out $1.8 million in rental assistance to Jefferson County residents in 2020, far exceeding the $120,000 the organization provides in a typical year. It helped 600 families last year compared to the usual 50, Walowitz said.
“The demand is still outpacing the supply,” she said. “There’s not a lot of affordable housing in Jeffco and those who have it are hanging on to it.”
On the other side of the metro area, one in three suburban residents in Arapahoe County is “cost-burdened,” county Housing and Community Development Manager Linda Haley said. That means housing costs account for more than 30% of income.
“What can you afford for rent if you’re making $15 an hour?” Haley asked. “It’s pretty ugly.”
Teresa Pilson, 52, moved between hotels and a homeless shelter after her adult son told her she had to move out of her Denver home. All the while, she was receiving treatment for cancer.
Pilson managed to land a $1,400 one-bedroom apartment in Aurora a few months ago with help from ACCESS Housing in Commerce City. She lives there now with her daughter and four grandchildren.
“Trying to find something safe and something that is affordable — you have to make that choice,” Pilson said. “It’s hard, I don’t know how families do it.”
One way is by embracing innovative solutions, LiFari with Maiker Housing Partners said, adding there are viable ways to fill the need for more homes in Colorado’s suburbs while the market inevitably adjusts. Accessory dwelling units, tiny homes, wee-Cottages and modular homes all cost less and have a smaller footprint, he said.
“If we can start to envision the suburbs with multiple types of housing and more density, then we’re going to see a bright future,” LiFari said.
Covert, with Zonda, said the power lies in large part with developers and homebuilders and whether they push for something novel — and more affordable — or end up with just another collection of high-end homes on a tangle of cul-de-sacs punctuated by strip malls.
“The developers recognize that people want something a little different,” Covert said. “We’re at the precipice where homebuilders have the opportunity to redefine suburban living.”
Source: Read Full Article
