Denver is booming, you can see signs of this everywhere you look.
New buildings in our skyline, transit projects opening, and home prices skyrocketing. Between 2009-2014, Denver experienced the highest migration gain of any metro area in the US - 12,682 moremillennialsper year moved here than left (Hanc, 2016). The migration into Colorado has benefited our economy in many ways, but has led to a major shortage of housing. Migration is NOT the only culprit that has led to the rising cost of living in Metro Denver - the Construction Defect Law has effectively stopped all new construction of for sale condominiums (aka condos).
I urge you to take the time to learn about the Construction Defect Law to understand how this legislation is leading to rising home costs and take action to keep Denver an affordable and friendly place to live by contacting your congress person.
The Construction Defect Law was intended to protect consumers from shoddy construction, however it has effectively led developers to completely stop building affordable condos in Denver. Only 3.4% of home starts in 2015 were condos, down from 25% in 2007 (Aguilar, 2016). A condo, for sale unit in a building with an HOA, is typically the most affordable housing option for first-time home buyers. The construction defect law makes it extremely easy for only a few members of an HOA board to file a class action lawsuit. Stefka Czarnecki Fanchi, executive director of Habitat for Humanity of Colorado, said there is an immense risk factor for builders in the state pursuing condo projects, particularly those in the lower price tier, because of the specter of being dragged into court (AGUILAR, 2016). In fact, between 2003-2013, 80% of condo builders were sued by the building HOA (Tom Clark, 2016). The average price of new condos and townhomes in metro Denver surged 25% in the year after the law was passed compared to a 4.8% increase in the average price of new single-family homes (Perrault, 2006). Although this law was originally meant to protect homeowner's rights, it has in effect threatened the ability for many to even become homeowners. With extremely limited supply, many first time home buyers are giving up their rights to ask for repairs during inspection, paying over asking price, and bringing cash to cover a low appraisal. This law in fact has had an extremely adverse effect on homeowners rights.
Building condos is good for our economy, our city, and Denver residents. Construction projects create high paying jobs for trades people, developers, architects, etc. Affordable housing attracts companies and workers to our economy. For sale units (condos) are better for the city than for rent units (apartments) becausehomeowners are embedded into the same community for a longer period and there are proven social benefits which include higher educational achievement, greater civic participation, health benefits, crime reduction, and superior property maintenance (REALTORS, 2012).
Due to the Construction Defect Law, builders have focused all development on the construction of apartment buildings. Without competition of for sale units, rental prices have increased 42.5% while the medium income in Denver has only risen a meager 3.4% (Tom Clark, 2016). Experts generally use 30% of income as the threshold of affordable housing. Forty percent of Colorado renters paid more than 30% of their pre-tax income on rent (RUSCH, 2016). The Construction defect law stifling construction has already caused prices to soar uncontrollably and we are just beginning to experience the adverse effects on our communities.
CALL TO ACTION
Bills to reform this law have been rejected in the Colorado legislature five times, twelve cities have made reform to their municipal legislation, and the Supreme Court MAY hear a case on this topic. However, none of these measures have changed the current climate. I believe change is made through education.
Congrats, by reading this article you are halfway to creating change. The next step is to tag Representative Dickey Lee Hullinghorst (Speaker of the Colorado House of Representatives) using @hullinghorst and Senator Bill Cadman (President of the Colorado Senate) using @ColoradoSenateGop in the comment section of this post. Tell the leaders of Colorado's legislator how unaffordable housing has impacted your life.
REFERENCES:
AGUILAR, J. (2016, June 7). www.denverpost.com. Retrieved from Colorados Construction Defects Bill Dies In Committee: http://www.denverpost.com/2015/04/27/colorados-construction-defects-bill-dies-in-committee/
Hanc, J. (2016, July 20). Denvers Appeal to Millennials? Jobs, Mountains and, Yes, Weed. Retrieved from www.nytimes.com: http://www.nytimes.com/2016/07/21/us/denvers-appeal-to-millennials-jobs-mountains-and-yes-weed.html?_r=2
Perrault, M. (2006, March 19). Prices soar for condos, townhomes. Retrieved from www.bizjournals.com: http://www.bizjournals.com/denver/stories/2006/03/20/story2.html
REALTORS, N. A. (2012, April). Social Benefits of Homeownership and Stable Housing. Retrieved from http://www.realtor.org/: http://www.realtor.org/sites/default/files/social-benefits-of-stable-housing-2012-04.pdf
RUSCH, E. (2016, May 6). 40 percent of working Colorado renters spend more than a third of income on housing. Retrieved from www.denverpost.com: http://www.denverpost.com/2016/05/02/40-percent-of-working-colorado-renters-spend-more-than-a-third-of-income-on-housing/
Tom Clark, C. o. (2016, June 2). Construction Defects Update with Tom Clark [VIDEO]. Denver, CO, http://www.dmarealtors.com/construction-defects-update-tom-clark-video: Denver Metro Association of Realtors.
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