Balancing affordable housing with rising costs for market-rate homes, construction in Colorado Springs

COLORADO SPRINGS, Colo. (KRDO) -- Rising costs for construction materials and higher home prices make providing more much-needed affordable housing more of a challenge.

That's especially true when many neighbors express strong opposition to affordable housing projects -- which often are apartment complexes.

"I don't see construction costs going up more in 2024," Bobbi Price, of Platinum Group Realtors, said Wednesday. "I think they will be pretty stable. That is good. But now, if they would come down, it would be better but I don't see that happening.

Price, a real estate agent for 40 years in Colorado Springs, said that she has never seen a housing market like this one, and that construction spending is much higher than the 0.4% November increase in nearly a fourth of nationwide markets.

"If you want a newly-built house, it will cost you around $700,000," she said. "And that's not for custom builds, either. That's for track housing and adding maybe a few upgrades. People are paying $3,000 a month or more to rent a home, and some of the new apartment complexes have monthly rents of between $2,000 and $3,000. It's crazy."

Price said that there are no common trends to explain why the city's housing market has remained hot for nearly a decade.

"We're still in the boom period," she said. "We haven't reached the peak and I'm not sure we will anytime soon. People who are buying these houses come from in-state and out-of-state. They have a variety of professions."

However, Price said that homebuilding has slowed slightly because of high interest rates that have made potential buyers reluctant.

"Interest rates were as high as 8%," she explained. "Now, they're down to between 6% and 6.5%. I think that's low enough to stimulate more buying. But the lower the interest rates are, the higher the price of homes."

In an attempt to overcome challenges in the market-rate housing market, city officials offer incentives for builders to take on affordable housing projects which often meet opposition from nearby homeowners and businesses.

"Developers of affordable housing can apply to basically get a rebate on some of the fees that the city has to charge," said Barb Van Hoy, the city's housing policy analyst. "The second one that came on-line last year, is a tax rebate for city taxes on materials for construction of affordable housing."

However, Van Hoy mentioned that the city's research shows no truth to the concerns expressed about such housing -- that it decreases surrounding property values, increases traffic congestion and causes crowded classrooms in schools.