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Durango rough on renters

JERRY McBRIDE/Durango Herald

Sara Wakefield, the new executive director of Manna Soup Kitchen, and daughter Ellie, 8, unpack boxes after moving into their rental home in west Durango. Wakefield said finding a rental in Durango was a “nightmare.” She added, “I think I’m pretty lucky I ended up with anything at all.”

By Emery Cowan Herald staff writer

When it came to finding a new rental, Sabrina Buckley quickly realized she would have to look outside city limits. Every apartment in Durango that was big enough for her and her dog cost half her income, she said. Finally, she found an apartment 12 miles north of the city.

“It was absolutely because of the price,” Buckley said. “The only reason why I went and looked at it was because of the price.”

Durango’s rental market has been called overly expensive, intensely competitive and generally nightmarish by those who have navigated it, and many signs point to the situation getting worse. Population growth, business expansion and the postrecession economy are expected to put additional strain on the city’s already-tight rental market.

The rental squeeze

Vacancy rates measure the supply versus demand in a rental market, and Durango’s is among the lowest in the state, according to the Colorado Division of Housing.

In the first quarter of 2012, the average vacancy rate nationwide was 8.8 percent, and statewide the rate was 5.1 percent. In Durango, it was 3.9, a clear indicator of a “tightening rental market,” said Peter Werwath, a consultant to the Regional Housing Alliance.

With demand high and supply low, average rental prices have shot up, rising from $851 to $947 in the last six months, according to the Department of Housing.

“It’s very easy to increase the rents because people are willing to pay it,” said Emil Wanatka, a local developer who owns several rental properties.

But this means that families making less than the average median income for renters – about $59,000 – are priced out of the market. There are almost 2,000 households in the city whose incomes would qualify them for affordable rental programs, said Jennifer Lopez, executive director of the Regional Housing Alliance.

The alliance, a governmental entity, has long focused on affordable homeownership but is broadening its focus to rental housing because of the increasing need in the community.

Waiting lists for affordable rentals have more than 150 names on them and an average of 86 percent of people eligible for rent-restricted housing projects supported by federal tax credits are not served by them, according to the La Plata Homes Fund, the Regional Housing Alliance’s nonprofit arm.

Roger Zalneraitis, executive director of the La Plata County Economic Development Alliance, said cost of living is a concern for many businesses because it inhibits their ability to recruit specialized employees.

“There’s an endless need for affordable housing here,” said Brigid Korce, a resident services coordinator with Mercy Housing, a national nonprofit that runs three affordable-housing projects in Durango.

A bleak future?

In the near term, the rental market isn’t expected to improve.

City officials, developers and housing experts don’t foresee a major change in housing supply, while population will continue to grow.

Population estimates for the next two years from the Colorado Department of Local Affairs show the number of households in La Plata County growing by about 3 percent, or about 680 households, per year. Data from the state demographer’s office predicts the county’s population will reach almost 59,000 by 2015.

The proportion of renters within the population also is growing because of economics and demographics.

According to a 2012 report by Harvard’s Joint Center for Housing Studies, renter households climbed by 1 million in 2011, the largest annual increase since the early 1980s. Locally, the market analysis service Ribbon Demographics predicts the renter population will increase by 75 households per year through 2016.

While homeownership is still a goal, it’s something more people are putting off, economists said.

Millennials in particular are facing a dismal job market, lack of savings, growing student debt and strict loan requirements as they leave their parents’ homes.

“People have to work more to get into the mortgage,” Lopez said. So many turn to rentals instead.

Credit card processor Mercury Payment Systems’ continued growth and expansion will add another layer to the rental market equation, Wanatka said. When it expands to its new campus south of the Durango Mall, the company will have the capacity to add about 200 more employees, said Jan Owen, the company’s spokeswoman.

Those employees will have a “profound impact,” Wanatka said, because their demographics and pay scale almost certainly will make them renters, adding to an already-strapped market.

The influx of Fort Lewis College students this fall and former homeowners forced into the rental market after foreclosures also will be factors in the coming months, said Bob Allen, a local real estate consultant.

Yet as the number of Durango renters balloons, no new multifamily units have been built in the last three years. That’s in comparison to a 159 percent increase in building permits for multifamily construction statewide, according to a May report by the Colorado Division of Housing.

Those projects require more work, more land and more capital, which are all in short supply, Wanatka said. The city has approved parcels in Three Springs and Twin Buttes that allow for multifamily development, but the market hasn’t rebounded enough to propel construction, said Greg Hoch, the city’s planner.

Expensive sewer plant investment fees and police and fire impact fees at Three Springs also make it cost-prohibitive to build in that area, said Wanatka, who owns Timberline Builders.

Looking toward development

The most opportunity for large-scale housing developments exists outside city limits, housing officials said. Current inventory in the city and in Grandview and La Posta, areas the city is likely to annex, won’t be enough for the projected population in the county, La Plata County Commissioner Kellie Hotter said.

Florida Mesa by Elmore’s Corner could be a potential location for new affordable housing development, but it first would need water services extended from the city or a special district, Hotter said.

For its part, the Regional Housing Alliance is planning to build 35 affordable rental units on the Twin Buttes site and another 50 affordable rental units on the old Boker Lumber site on College Drive.

But those developments are just a drop in the bucket, said Wanatka, who is developing the Boker site in collaboration with the housing alliance.

There are 1,703 households eligible for housing supported by federal tax credits, and currently there are only 232 such units available in the city, housing consultant Melanie Rees said.

Wanatka said that adds up to around 1,500 more people than his development could house.

“My 50 units isn’t close to making a dent in that,” he said.

ecowan@durangoherald.com

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