This summer, Real Estate Weekly presents a monthly series of articles on the challenges and barriers to getting housing here in Grand Valley. Last month we turned to affordable rental housing. This month we look at the rental market at market rates. For clarity, affordable rental housing refers to any type of government-sponsored rental housing, whereas a market rent is simply a rental property that has a market value.
Like anyone who has read Real Estate Weekly or paid attention to the local market, Grand Valley is experiencing an acute housing shortage, and this is not limited to the homes that are available for sale. There is also a shortage of homes, including apartments, townhouses, condominiums and single-family homes that can be rented out.
“We currently have six properties available,” said Cindy Hoppe, manager of Bray Property Management. “I expect them to leave by the middle of next week.”
Usually, people move in the summer, and in a typical year, Bray may have 20 or more apartments available to rent.
Catholic Outreach, which maintains a list of Nearly Homes of rentable units representing dozens of property management firms and individuals throughout the Grand Valley, typically has 20 or more pages of available properties for rent. Right now, this list is only six pages long.
Some landlords, especially those who have owned single-family properties for years, take advantage of the current sellers market and choose to sell their rental properties, recognizing that this is the best market for sellers they have ever seen. New owners can keep their rental property, but they can increase the rent to offset the price they had to pay to buy the property.
Rentals are rising across the board, reflecting the realities of supply and demand, as well as the costs associated with owning rental properties.
“Tenants need to understand it won’t end up in the homeowner’s pockets,” Hoppe said. “Taxes and insurance are going up and owners need to do repairs and maintenance. These costs are going up. “
There are several large apartment buildings in Grand Junction right now in various stages of construction and planning, but even if they are all completed by next week (and some will not yet have the foundation laid), there will still be a shortage of affordable rental properties.
“HUD needs market research,” said Bruce Milliard, who recently completed part of the funding for his project, The Lofts at East and West 10th and Grand corners, through the Department of Housing and Urban Development (HUD). “Market research (which was completed a year ago) shows that we need 3,600 units.”
After completing the study, Railyard at Rimrock began adding residential homes to the local market and currently has no vacancies in any of the completed buildings. Construction of the last buildings is still ongoing, but the next apartments will only be commissioned in November. Railyard, with 200 apartments, is currently the largest residential project under construction.
Lofts will add 78 more units to the market, but construction has not yet begun. Milliard hopes to begin rehabilitating asbestos in the building currently at 950 Grand Ave. within 30 days so he can demolish it and build apartments. While asbestos is being recovered, Milliard will begin building blocks of flats on the east side of 10th Street.
“The first 30 units will be operational in about eight or nine months,” said Milliard, who expects the entire 78-unit project in seven different buildings to be completed in spring 2023.
Construction has also begun on Eddy of Grand Junction, a 96-unit residential complex on the east side of Las Colonias Park. A project representative could not be contacted for comments on the construction schedule.
Developer Front Range has acquired 178 acres of land near Community Hospital and plans to build both affordable housing and housing for workers (like market rent), among others, but the project is still in the design stage.
While new apartment designs are currently being developed that will help reduce the need for renting apartments in the Grand Valley, they will not solve the problem of affordability. The cost of building a new apartment building means that new units will be higher than existing apartments. According to a preliminary report requested by the City of Grand Junction from Root Policy Research, 53% of tenants already bear the burden of spending here in Grand Valley, which means they pay over 30% of their income for housing.
An increase in the supply of new apartments and rental units may ultimately reduce demand and prevent further rent increases, but finding land on which to build a large apartment complex is a challenge, especially if a developer wants to implement an infill project. The same Root Policy Research also found that while most residents agree that more multi-unit housing is needed, very few people wanted this to happen in their area.
Next month, Real Estate Weekly will continue its series of articles on achievable housing issues, looking at self-help housing, programs for new buyers, and challenges for builders trying to build at a lower price range.