A 500 square foot Edgewater home for sale at a list price of $475,000 (Photo from Zillow)
This past week the housing market in Edgewater went to a new level when a 500 square foot home on Ingalls Street was listed for $475,000 on Zillow. This one bedroom, one bath home on a small lot typifies how buying a home in Edgewater is out of reach for even those with middle class incomes. According to Zillow’s calculations, the estimated monthly cost of owning this small home would be $2,459. Even crazier than the price of this home, is that it will probably sell for more than the listing price as potential homeowners are scrambling to buy anything they can in the Metro Denver area. The Denver Post just published a report showing that the Denver area has the second most competitive housing market in the country.
Since Edgewater Collective began tracking rising home prices and rental rates back in 2013, we’ve been wondering what the role of the City of Edgewater is in maintaining affordable and attainable housing in our community. There is no property tax levied by the City of Edgewater, so most of the revenues for the City of Edgewater come from sales tax. This has resulted in a prioritization of sales tax potential in the sale of City-owned last over the last seven years. The sale of City-owned properties at 2oth and Depew as well as 25th and Gray all are being utilized for commercial use. The former City Hall at 24th and Sheridan was also slated to be sold for commercial use, but the deal fell through. If the City of Edgewater valued creating affordable housing opportunities, they could have prioritized those uses in the sale of properties they owned. We advocated for the inclusion of affordable housing in the redevelopment of 2oth and Depew, but sales tax revenue was prioritized over housing.
Our community has missed opportunities to create new, affordable housing in the last ten years, but what can be done now? What is the role of the City of Edgewater in creating these housing opportunities and ensuring current affordable housing is maintained?
Here are some ideas for discussion:
- A majority of the lots in the core of Edgewater (south of 26th, east of Pierce, north of 20th and west of Sheridan) are zoned for single family homes. How could changing single family zoning increase density and create more affordable housing?
- Though most of 25th Avenue east of Harlan is zoned for commercial use, there are many single family homes along 25th. How could the City of Edgewater think strategically to phase in mixed use developments long 25th with retail on the first floor and residential on the second floor? Currently, there are examples of mixed use buildings on 25th Avenue in the spaces that house Griffin Coffee and Sparrow Hair Parlour as well as at 25th and Eaton (home of Bonnie Brae Lighting and Old Gold Barbershop. This idea for mixed use along 25th Avenue was even in the 2013 Edgewater Comprehensive Plan, but no action has been taken.
- Apartment complexes around the perimeter of Edgewater have historically been affordable, but through sales and new ownership, rents in these complexes have been rising over the last ten years. And with the slowing of the pandemic, the prices are still increasing. What is the role of the City of Edgewater in ensuring that apartment complexes in town are affordable? Can community partnerships be formed with philanthropic organizations so that some of these complexes can be purchased and rents maintained?
Since people began building homes just west of Sheridan Boulevard in the late 1800s, Edgewater has been the place to start down the pathway to the American Dream. Edgewater has always been the home to immigrants, families working hard to make ends meet and those just starting out in their careers. Community members were able to get married, start a family and retire in the same Edgewater home.
That reality is so far from the reality of today. Though signs around town proclaim that Edgewater is the “City of Choice,” that choice to live in Edgewater is only available to a select few with the financial means to buy or rent in our community.
What can be done to create an Edgewater community where anyone can choose to live here?
Joel has been a resident of Edgewater, Colorado with his family since 2012. He is the Executive Director of local education nonprofit Edgewater Collective and Editor of the Edgewater Echo.
According to Investopedia, a rule of thumb is that you can afford a mortgage when your monthly income is 2.0 to 2.5 times the payment. The example you cited would then require an income less than $60000. Certainly not a single-earner income for a recent immigrant with no skills, but absolutely affordable on a middle class income, especially with two earners in the house. For example, according to jeffcopublicschools.org, two married teachers at entry level would make a combined income of 86,000. That’s not enough for that mortgage if you’re following the old fashioned 28% rule, but it’s close. If one of them works in a slightly more lucrative middle class job like IT, they’d definitely have enough income. Or, the two teachers can afford it if they’re willing to stretch, since FHA will cover loans up to 43% of income. In any case, your argument that this basic home is inaccessible to middle class earners is not accurate.
What is the purpose of home ownership? In other words, why is it a good thing both for the individual and the society? If you can’t answer this question for yourself, see the 2016 article “Why Homeownership Matters” in Forbes by Lawrence Yun, then Chief Economist for the National Association of Realtors.
Government controlled low income housing removes both the societal and individual benefits when it tries to control the price of the housing. (Also, price controls do not work from an economic perspective – Henry Hazlitt’s Economics in One Lesson is a great short read on this topic.) If the government instead attempts to help with down payments, for example like through the many down payment grant programs (CHFA, etc.) it simply causes demand for homes to increase. Basic economics says when demand rises and supply does not, we end up with higher prices – so the affordability problem is further exacerbated. Government could keep interests rates artificially low – low interest rates mean people can afford to spend more because interest becomes a smaller part of their monthly payment. Of course, artificially low interest rates cause inflation. Low rates also cause more demand in the market as everyone’s buying power increases (until the inflation kicks in), resulting, again, in a price increase.
A while back, you wrote an article suggesting Edgewater simply densify. That was despite Edgewater being the densest city in the entire metro. Zoning could change affordability – just double the number of units available to purchase, and you could drive down prices. Of course, those units would be less desirable because many homeowners want certain amenities with their homes that will disappear as density increases (like yards for kids and dogs). This could further drive down prices. But at some point the high density and appurtenant lack of amenities will simply result in the homes being bought by investors who will rent them to people who aren’t able to buy (or don’t want to).
There aren’t any easy answers to the home affordability problem. Ultimately this problem has a confluence of causes: macroeconomic challenges (like monetary policy), DRCOG and the counterproductive “Urban Growth Boundary”, the shift in the job market in Denver, the desirability of living in Colorado, and consumer preferences.
The city could easily pick a few lucky winners by forcing developers to set aside/subsidize low income housing, or (God forbid) directly create some government housing projects. Of course, this isn’t going to solve the problem of metro-wide supply/demand imbalance. At best, it simply picks a few winners from the many deserving, and gives politicians and busybodies something to pat themselves on the back about. At worst, it creates a ton of potential for fraud and abuses, and potentially traps people in a cycle of government dependence at near-poverty from which they cannot escape.
Your suggestion that raising property taxes will somehow apply the correct incentives to the politicians controlling development laws (zoning) and a few large tracts of land, is completely flawed. Edgewater used to have a mill levy of somewhere around 6-8 mils. At the time it was eliminated it was a small fraction of the city’s total revenue. It was eliminated because the city fire department was eliminated and, simultaneously, the fire district raised the mil levy and took over fire service in the city. A mil levy doesn’t get applied equally to all real property because of the assessment rate. Commercial/industrial (non-residential) properties pay 3 times what a residential property pays. So the suggestion that politicians would pay more attention to residential development because it would now be bringing in direct revenue to the city is off base, because the commercial uses competing for the same land would bring in triple the property tax revenue revenue, PLUS the sales tax revenue (for retail uses).
Here’s a real prescription to fix the problem. Unfortunately it won’t be an instant fix, but we didn’t get here overnight either.
1. Convince DRCOG to eliminate the urban growth boundary.
2. Reduce the number of hoops builders and developers have to jump through – Edgewater is awful to work with, for no real reason other than they can be, so they are.
3. Allow for more density, but don’t force it, and ensure single family home neighborhoods retain their character by disallowing spot zoning and ensuring gradual transitions where zones meet. For example, don’t allow a giant 50-unit apartment complex to spring up in the middle of an R-1 neighborhood – instead have density gradually increase (e.g. R-1 borders R-2 borders R-3 borders R-PD).
4. The city should sell its excess land to the highest bidder and let the market figure out what is the best and highest use of the land. If it’s housing, the city should stay out of the way. If it’s not, the city should still stay out of the way because the developer/investor knows better than politicians and bureaucrats what the residents of the city need/want built (like a Whole Foods Market).
5. Vote for federal politicians that will implement policies that will stop inflation.
6. Improve education – this has much more promise to provide upward economic mobility than any attempts at government price controls on housing. No more excuses on this! Union-control of underperforming schools must be eliminated. If the city was going to subsidize anything, they should subsidize the sale of the land to a high-performing K-12 charter school (still tuition free, still publicly funded, still required to admit all applicants regardless of race or income) and apply political pressure to get Jeffco Schools to authorize the charter.
7. Convince the state to fund the water projects needed to support the growing metro area – there’s no free lunch here. We need to capture and use all the water we can before it leaves Colorado. You can’t have more development without more water!
8. Drop building codes that make housing more expensive like the fire sprinkler requirements for new buildings and major remodels. Fire sprinklers in single family homes don’t make sense and the cost to obtain a water tap large enough to provide the required pressure is too high. (This was eliminated a few years ago in Edgewater but it seems to have crept back in to the codes.)
With all the million dollar homes in edgewater now the city does not want affordable housing. Why cause problems for the people in the nice new homes. Look at all the issues off of colfax.
Joel, Please read the previous comments and stop trying to force this issue of affordability down our throats. We are surrounded by the larger cities of Wheat Ridge, Lakewood and Denver which have more area to find places to build affordable housing. We are a small town with limited space and the prices are going up for a reason. People want to live here. Don’t ruin it for the rest of us.
Joel, I really appreciate these articles. Thank you for the work and research you do, it brings me a lot of comfort knowing anyone is standing up on this issue. I think a lot of the people who don’t support affordable housing are the “I got mine” type. There’s plenty to go around, and it’s frankly pathetic walking down Edgewater streets knowing these tiny houses are going for $1 million. I also think more mixed zoning would be great, especially with all the efforts to reduce issues with cars.
Please keep it up – “stop trying to force this issue of affordability down our throats”, I mean does that guy even hear himself?
Please put your money where your mouth is. As someone who recently sold a house in Edgewater, I can tell you definitively that the average home in Edgewater is NOT worth $1 million. But hey, if you want to tell other people how much they should sell their homes for, let’s see you sell your house for half what it is worth. Prove your point. We’ll wait…