Affordable housing: Prices depend on a lot, even if a lot gets little

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AURORA | While metropolitan areas across the country struggle to figure out how to tame the growing cost of housing, one group is proposing that Aurora offer smaller lot sizes to homebuilders in an effort to achieve more attainable housing.

Colorado homebuilders want Aurora to reduce its single family small lots in the E-470 and Northeast Plains zoning districts by 1,500 square feet. Essentially, the homebuilders argue, lot sizes would become smaller but houses would stay the same size because the area equates to a few feet on each side of the home.

By reducing the lot from a 55-foot lot to a 50-foot lot, Carl Nelson, vice president of land at Century Communities, said a homebuyer could potentially see around a $50,000 cost reduction in a new home because more homes could be built in a development.

“This (the current size) isn’t necessarily cost effective for buyer or builder because they are required to have a 5-foot side setback,” said Diana Rael, who works with Norris Design, at an Aurora Planning and Economic Development policy committee meeting last month. “Everything you see in the market is trending toward smaller.”

The city started receiving applications requesting more than 35 percent small lots in early 2016, according to city documents. Those applications require waivers and can be challenging — which is why the city started looking into what could be done to create smaller lots, and generally city staff support the plan, but believe it’s a piece of a much bigger discussion.

“From the staff perspective, we were really focused on accommodating the desire for smaller lots but doing that in the context of creating great neighborhoods,” George Adams, director of Aurora’s planning and development services department, told the Aurora Sentinel.

So far, the city and stakeholders, including many homebuilders and the Home Builder Association of Metro Denver, have met nearly 20 times since the beginning of last year, including this week at a special city council study session.

There, HBA reiterated their pitch.

But questions from council members and the mayor still remain whether the change would make housing any more attainable or would serve the city well. HBA Senior Vice President Cherie Talbert pointed out that 83 percent of residents in Aurora can’t afford the homes that are currently being built.

The current average home price for a new build in Aurora is $503,178, according to Metrostudy, which compiles data on the building industry across the country. In Colorado, the firm works with around a dozen local governments.

The required household income to afford the price of a newly-built home is around $114,000, according to Metrostudy. And the current average annual wage for Aurora residents is $72,228.

With only 17 percent of Aurora residents being able to afford that price tag on new homes, it’s more often residents from other parts of the metro area or state who buy new Aurora homes. That statistic points to the bigger picture in affordability Adams’` has been arguing: it’s going to take a lot more work than changing lot sizes to bring down the cost of living.

“If you look at that overall spectrum of factors the only one that is being addressed is the land,” Adams said. “That’s not a real comprehensive strategy to get to affordability.”

All builders in the Denver metro area have 40-foot houses, Nelson said at a committee meeting last month. And so a smaller lot would translate into about a $10,000 savings on land and $50,000 on the sales price. That may mean a new home starts in the mid-400s.

“And the house is the same house,” he added.

Adams said he’s heard some references to how much cheaper a new build could be, but hasn’t received any official numbers from builders.

Smaller lots would allow builders to build more homes, increasing population density, but not more than what is currently permitted, the builders said. So far they’ve been building less than what Aurora allows them to.

But Aurora is trying to avoid neighborhoods that are textbook cases of suburban sprawl.

“We think more diversity in housing types is not only good for neighborhoods but it’s good for affordability so you don’t have a monoculture for acres and acres out on the plains,” Adams said. “Let’s get the bones right and the open space right. Let’s provide places where you can have retail and business spaces (too).”

This week’s special study session sent the proposal back to the Planning and Economic Development Policy Committee for further work.