One of the few certain things about the regional and local housing crisis is that it is absolutely a crisis.
There is no doubt that the spiraling cost of apartment and house rent in Aurora and across the metroplex — even across the state — is creating a vast economic conundrum that will plague the region for, possibly, decades.
The economic crisis for tens of thousands of people and families in Colorado is profound.
Economists have seen and studied this problem many times over. Hit first and hardest, the working poor become the working desperate as inflation hikes virtually everything they could barely afford before. The crisis among the poor and middle class then balloons as rising housing rents gobble paychecks already too small to live on.
The landlords’ dream — endlessly growing rents with a seemingly endless supply of people, unhappily, willing to pay — creates an unsustainable community. The pressure for workers to find the highest paying job possible creates an unstable and equally untenable labor market. That creates more pressure to raise consumer prices, and so the cycle of inflation spirals upward, economists agree.
The wealthy are miffed and inconvenienced. The poor and middle class are crushed.
You don’t have to look back any further than the 1970s inflation crisis to see how the problem mushrooms, and how everyone clamors for someone to do something.
Although President Richard Nixon is long dead, those who lived through the attempts to “do something” to restrain prices and wages well-remember what a disaster that became.
Clearly, there aren’t enough of those people at the state Capitol to recall how rent, price and wage controls simply do not work.
State House lawmakers have given the first OK to a measure that would end a statewide ban on rent controls. If approved by the state Senate and Gov. Jared Polis, the change would allow communities as varied as Aurora, Denver, Durango, Aspen and Commerce City to create some kind of rent cap or control, well-intentioned and well, disastrous.
Economists and sociologists have long looked at whether rent caps or controls work. The studies for years have been somewhat mixed but consistently point out that rent control creates new problems while temporarily slowing rent growth.
A 2018 comprehensive report by the Brookings Institute makes clear, however, that overall, and in the long run, rent control works against those it’s intended to help: the working poor and middle class.
“While rent control appears to help current tenants in the short run, in the long run it decreases affordability, fuels gentrification, and creates negative spillovers on the surrounding neighborhood,” Rebecca Diamond, associate professor of economics at the Stanford Graduate School of Business.
She details how landlords get around rent controls, how controls dramatically change the nature of neighborhoods, communities, schools and even the construction industry.
The bottom line is, they do not substantively save financially struggling residents money right away and really not at all in the long term.
Rent controls impact the ability to move, often forcing empty nesters to remain in homes too large and forcing larger families into too-small quarters.
What does save struggling renters money are rent subsidies, similar to food stamps and more affordable rentals than there are tenants seeking them out.
That has prompted another contingent in the state to investigate ways to “create” more affordable housing in the market.
Those notions are equally as well intentioned and potentially as disastrous as would be rent control.
One proposal would allow the state to override or direct local zoning and land use plans in an effort to impose high-density homes where, allegedly, local communities prohibit them.
It’s essentially a ruse in most of Colorado. Aurora, like many metro communities, have grown according to complicated and well-considered land-use and density plans. There is no shortage of land waiting for new apartments. The shortage is in developers, water, builders, employees and materials permit ready to build and occupy.
Even more dangerous is a proposal to bring back the dreaded threat to end “construction defect” lawsuits.
This ill-advised scheme would end the ability of homeowners to sue builders for blatant construction mistakes previously dumped on unsuspecting home and property owners.
Colorado has twice lived through the scam of builders trying to persuade lawmakers that immunity from sloppy, malfeasant construction is a way to save everyone money.
Just ask any of the thousands of homeowners in Douglas and Arapahoe counties, among others, saddled with hundreds of millions of dollars in costs to repair defects and mistakes imposed on them by shoddy, irresponsible builders.
The cost of proper inspections, quality control and insurance does not prevent affordable projects, and it hasn’t for decades. Just like almost every other industry and business, the courts are the best way to decide culpability and liability, not construction industry lobbyists among state legislators.
All this doesn’t mean that state and local governments should not work on ways to promote the construction and management of affordable places to buy and rent, but rent control, state-imposed zoning controls and the end of construction-defect protections positively are not good answers.
Families that OWN their home, are best positioned to create lasting housing security and build financial wealth. They have a vested interest in their home, community and neighborhood schools. Government has facilitated home ownership in the past and it is needed now. Legislative efforts should focus on helping families buy their first home. Cities and planning agencies should insist that newly built communities all include some small, basic, affordable homes for owner occupancy. That stock of small homes should be protected from becoming rental investment property.
They can’t own a home if they’re unable to save any money due to high rental prices. Aren’t we supposed to be saving money? That’s the American dream right? Money = more savings = down payment on new home. It’s simple math.
We are both pulling for the same American Dream. The supply of homes, especially modest homes, is at a historic low in Colorado, so building modest homes is one(!) of the necessary steps forward.
Let’s be clear Dave. We live in a duopolistic oligarchy where the homebuilders decides what’s safe while the civil engineers and local elected officials both cower in fear. The building codes and city inspections are a joke and no one can remember the last time the DA prosecuted a case of government corruption involving a builder.
The duopoly exists to cheapen our democracy for the oligarchs and special interests. In this regard, we’re no better than Russia.
I have tried for years to get medium density on a couple lots I own- the city wants no building as it is a crash lot for Buckley Air Force base- but they will build next to the base and high rises everywhere around it- city zoning needs a revamping to consider other than slum ending apartments- and let small multifamily builders help fill the gap. The city will throw money to large developers- but penalize small developments
I support your medium-density push and I appreciate your distaste for “slum ending apartments.” The last thing we need is large concentrations of low-income residents living in marginally maintained apartment complexes owned by for-profit investment companies. Medium-density buildings, including duplex, fourplex, cottage courts, etc… have so many benefits. They can easily be inserted into single family neighborhoods without disrupting the feel of the neighborhood and/or they can be the foundation for new larger developments.
With respect, this article only references a small handful of bills while being framed as a critique of the entire housing legislative agenda. It may have been more appropriately framed as primarily a critique of the local rent control ban repeal, whose fate is pretty uncertain at this point. There’s a whole lot more going on at the Capitol this year pertaining to housing—lots of innovative ideas and evidence based bills making their way through the chamber. It might also be helpful for readers to hear what the Editorial Board’s alternative recommendations or policy proposals might be—as it stands this piece dresses down lawmakers and points to potential pitfalls, but does not offer any solutions.
Very well said, Local Man. It is a complex issue to create financial and zoning conditions that offer all families an affordable home in which to live…and hopefully thrive.