Living in or near the city ranked second best in the United States comes at a price.
“Rents and home prices keep going up. So does the number of people moving into the region,” said Steve Posey, the Department of Housing and Urban Development director for Colorado Springs. “Even though there are a lot of well-paying jobs in the community, household incomes aren’t keeping up. The situation is particularly difficult for fixed-income households such as seniors and the disabled.”
The city’s affordable housing issue is complex — with no quick fix, said Marla Novak, the director of government affairs for the Housing & Building Association of Colorado Springs, in an email.
“Regulations in general can cause homes to be more expensive to build, along with many other factors like rising material cost and labor shortages,” she said. “Colorado Springs is no different than any other place across the country. There is no silver bullet to fix the issue.”
The average home sale price in Colorado Springs was about $340,000 in March, which is a roughly $72,000 increase from March two years ago, according to housing stats gathered by the Pikes Peak Association of Realtors.
Most zoning restrictions or building regulations are enforced at the local level, although state and federal laws can add to the cost of building a home, said Ed Gonzalez, vice president of Campbell Homes.
“A big component of the cost of a home is not just building the house, it is the regulations,” he said.
For instance, there are federal regulations that dictate how builders deal with erosion on construction sites.
“Those regulations have changed quite a bit and have become more stringent,” Gonzalez said. “Of course the more that happens, the more expensive they become to follow.”
Utility installations also can increase the overall price of a new home.
“You have one set fee for utility hookups inside the city of Colorado Springs, and then you go outside of it, in areas like Monument and Fountain, that … have radically different fees,” Gonzalez said. “A water tap fee can vary as much as two or three times the cost that it is inside the city of Colorado Springs.”
The Housing and Building Association of Colorado Springs is working with Colorado Springs Utilities to overcome several barriers that may help lower building costs in the Springs, Novak said.
Meanwhile, home builders also have to contend with soil variations on a more frequent basis than peers in other states.
“Here, sometimes, we will run into one soil type, and then, on the very next site next door, we’ll run into another type just 20 or 50 feet away,” Gonzalez said. “Each one of our foundations are individually designed for each individual lot, however, what we did next door might not apply to the one we’re working on now, which means more money to adjust.”
A lack of new construction workers entering the workforce also is affecting the cost and production of homes.
“What we are finding in the construction industry, in general, is that since the last turn in housing, there have been a lot of folks who used to be in construction who’ve gotten out because there were no construction jobs,” Gonzalez said. “Because this last downturn lasted so long, a lot of people just basically changed careers, and they aren’t coming back.”
Furthermore, Gonzalez believes high schools cutting vocational programs decreased the number of new, younger construction workers coming on board.
“We have an issue with the graying of construction workers,” he said. “There’s a lot of folks who are getting ready to retire, and there aren’t enough younger tradesmen coming in behind them to fill those gaps.”
In 2015, the Housing & Building Association of Colorado Springs launched its Careers in Construction Program to help bring shop class back to high schools, Novak said.
“The HBA is working with a lot of our local home builders to get younger folks interested in the construction trade, so they can then take the jobs of those wanting to retire,” Gonzalez said.
Campbell Homes is currently experiencing about a three-month backlog of homes waiting to be built.
“We have not experienced anything like this in the last 52 years we’ve been in business,” Gonzalez said. “This is a new problem for us to deal with, and unfortunately for the typical buyer, they don’t really have too many choices. If they don’t like our three-month backlog, they can go talk to another builder who has a two-and-a-half-month backlog, or one with a five-month.”
Simultaneously, the competition for affordable rentals in Colorado Springs is fierce, Posey said, adding that 42 percent of the city’s households are renters.
Rent prices in Colorado Springs were 6.5 percent more expensive in February compared to the same month in 2017, with the average price of an apartment at $1,071, according to Yardi Matrix, a commercial real estate research and data platform.
“Colorado Springs needs more affordable rental units available to low- to moderate-income community residents sooner than later,” Posey said. “Developers who want to build multi-family projects on parcels already zoned for that purpose need to know that they can get their projects approved and under construction without unnecessary delays.”
Each year, the city of Colorado Springs receives about $4 million in Housing and Urban Development funds. Just over $1 million of that is designated for the development and preservation of affordable housing, Posey explained.
“Typically, the city uses these funds to leverage private investment in the form of tax credits that are used to build affordable housing,” he said. “Even though it may seem like the pace is slow, there is a lot of activity under way. By the end of 2019, the city expects to see 800-plus units placed in service, including over 250 units specifically for seniors and the disabled.”