When home prices in Denver’s most popular neighborhoods feel completely out of reach, it’s not unusual for some to blame gentrification. That word, after all, has its negative connotations, but it shouldn’t be a catch-all for any problem that arises in a big city.
At Denver High-Rise Living, we’re focused on educating the public about issues like gentrification so that we can do our part in growing Denver’s skyline responsibly. It’s certainly not easy because gentrification is so easily politicized and divisive.
A recent Facebook post we shared about a developer’s possible plans for the Greyhound bus station site garnered dozens of comments. One reader pleaded for the developer to not build more apartments. Another suggested a park be installed on the parcel that takes up an entire city block. In reality, though, parks and green space aid gentrification.
So, we want to address a few topics that we hope puts this hot-button issue into perspective.
What is gentrification?
In terms of housing, economist Daniel Hartley says you can tell a neighborhood is gentrifying “if it’s located in the central city of a metropolitan area and it goes from being in the bottom half of the distribution of home prices to the top half.” That has certainly happened in some of Denver’s hottest neighborhoods and it’s in the process of doing that north of downtown in neighborhoods like Globeville and Elyria-Swansea. If nothing is done, the free market and influx of people who still want to call Denver home will undoubtedly contribute to higher real estate prices and push lower income individuals out of their neighborhood.
That’s what Denver High-Rise Living founder Lori Greenly says absolutely cannot happen. She argues we need to redefine what gentrification looks like and make it easier for developers to pursue more middle-income housing projects, like row homes, duplexes, triplexes and low-rises first.
“It kind of goes against our name, ‘Denver High-Rise Living,’ but it’s the missing middle we need someone to take a look at,” she said.
That’s not to say that there isn’t demand for luxury high-rises, Greenly added. There’s also a huge need for true affordable housing.
“It’s the fine balance that will help redefine gentrification and make it work for everyone,” she said. “I believe Denver can build its way out of its housing crunch and, as a result, protect all people.”
Today, Denver is behind current demand for condos — a property type often identified as an entry to homeownership — by 18,000 units. According to our research, Denver needs either a combination of 3,250 apartments and condos, or 2,250 condos only each year to hit demand. We are currently building 1,000 condo units per year on average.
A big part of the problem is Colorado’s current and proposed construction defect laws that put an immense amount of risk and added cost on developers. Thankfully, a recent effort to impose a 1% growth cap on all new development in 11 counties along the Front Range, including Denver, was unable to make it on the ballot, but there is other proposed legislation that could impact the future of housing in Denver.
A newly proposed law that’s currently on hold during the COVID-19 pandemic would extend the statue of repose for developers, ultimately giving residents of a condo building more than a decade to find possible defects with their building and then sue the developer. If approved, wrap insurance policies that protect developers against possible litigation would likely more than double, according to industry experts.
A few things can happen as a result. One, the developer pursues the project anyways and passes those additional costs down to the buyers, making the goal of offering attainably priced units next-to-impossible. Two, instead of for-sale condos, they instead pursue a less-risky rental apartment project to take advantage of Denver’s rising rents. Or three, they simply decide to pursue their developments elsewhere and Denver’s housing stock becomes even tighter.
And what about affordable housing projects? Top lawyers across metro Denver agree that if this legislation passes, it would effectively eliminate it.
“If we are going to grow by 50% over the next 18 years as anticipated, we already don’t have enough housing,” Greenly said. “We need to work together to support our residents, businesses, developers and our city as a whole for the benefit of everyone.”
That anticipated growth, of course, could be impacted by the COVID-19 pandemic.
Easier said than done
According to Denver High-Rise Living research, less than 1% of the total condos on the market in Denver are available to purchase. With little supply, those existing condos are going to keep their high price tags.
Now, arguing that the government should ease restrictions and let developers just build is much easier said than done. That’s why more conversations with stakeholders and lawmakers need to happen.
We need to review things like inclusionary zoning where a portion of a new high-rise is required to have affordable housing instead of the developer simply writing a check to an affordable housing fund. In a city with a struggling public transportation system, minimum parking requirements for buildings should definitely be looked at. After all, 17% of an average rent cost is because of parking.
And maybe as part of incentive packages to lure companies to Denver, some of that money should go toward workforce housing efforts so those new workers have something attainable to buy and call home.
Denver High-Rise Living recently hosted a virtual focus group that addressed issues like gentrification, building design and parking. Our participants were blunt and honest: They love everything going on in Denver, but acknowledge some of it has been at the expense of disadvantaged communities.
“Gentrification is only good if all needs are being addressed,” Greenly said.
To learn more about future Denver High-Rise Living focus groups and town halls, register for our Condo Club here.