Do we need housing subsidies in the current Summit County market?
April 12, 2011
As both Frisco and Breckenridge move forward with workforce housing projects, some in the real estate industry are questioning the need for additional deed-restricted units while the housing market remains weak.
Since a 2007 housing demand survey indicated a need for thousands of new affordable-housing units in the county, officials, backed by funding from the 2006 voter-approved 5A tax measure, have focused on meeting a goal of 2,500 new units priced to meet the needs of the local workforce.
Some real estate professionals say, in a market still reeling from the economic downturn that began in 2008, it’s not the time to be saturating the market with affordable housing units, which will compete with lower-priced properties that are not deed restricted.
“The world has changed since 2007, the market’s changed,” said broker Daniel Webster Johnson of Resort Brokers Real Estate in Breckenridge. “When the market is in need of affordable units, let’s subsidize them. But if there’s already enough for the market, it doesn’t make sense to subsidize them.”
But others say as long as teachers, firefighters, nurses and other members of the local workforce are leaving the county because they can’t find housing or commuting from other places, there is still a need for new attainable units. Jennifer Kermode, executive director of the Summit Combined Housing Authority, said the properties competing with subsidized affordable housing are likely not offering members of the workforce the space or options they need.
“It comes back to: does it provide a reasonable residence for local workforce?” Kermode said of the properties competing in the same price range as attainable housing. “Obviously not, because if it did people would be buying those units and staying in the county.”
Kermode said the units that compete in the affordable-housing price range are often too old or too small for workforce members with families.
The debate has heated up as the Town of Breckenridge prepares to move forward with the second phase of the Valley Brook affordable housing neighborhood.
Kermode said the town has continued to move forward with the project, despite the instability of the housing market, because it made fiscal sense to do so.
“The cost of construction and materials was lower, land was available and ready (and) demand was there,” Kermode said. “It was the appropriate time for them.”
She noted that Frisco’s Peak 1 neighborhood has continued to move forward on a contractual basis – building to demand – thereby not over-supplying the market, while Silverthorne has halted construction plans for workforce housing on the Smith Ranch Parcel pending the return of the real estate market.
But, pointing to a surplus of unsold deed-restricted properties at the Wellington neighborhood in Breckenridge, many in the real estate industry say Summit County just doesn’t need new houses right now.
“I totally agree with the fact that we’ve got to have affordable (housing),” said Mike Krueger, a broker and partner at Breckenridge Associates Real Estate. “For me, it’s a question of timing. There are a lot of deed-restricted units that are available for sale right now. That would not indicate to me that we have to have a whole bunch more, at least today. Tomorrow’s a different story.”
Johnson cited an individual in the Wellington neighborhood who is trying to sell his market-priced home for $20,000 less than what he paid and has been unable to, as well as one of his own experiences with a buyer who pulled out of a deal to buy a home in Valley Brook.
He said he doesn’t mind competition in the market, but struggles with the idea of competition subsidized by taxpayers.
Kermode noted that the taxpayer backing for affordable housing comes from 5A funds, which cannot be used for any other purpose.
The combined housing authority, as well as the Town of Breckenridge, are currently exploring other options to create new workforce units, including buying down the cost of existing properties and deed restricting them for resale as affordable housing, as well as subsidizing the cost of rental properties.