The Villager Guest Commentary
The Villager; April 5, 2017 By Buz Koelbel
We are on the precipice of a great bipartisan achievement for low-income and entry-level homebuyers in Colorado. For several years now, the state legislature has tried and failed to produce a bipartisan construction-defects reform bill. All that stands in the way of increasing the drastically needed supply of affordable housing is a vote for reform. With SB 156, there has never been a more broad and diverse coalition of support for a comprehensive reform bill. And it is disgraceful that one individual could thwart the entire process.
The status quo of surging prices and a distorted entry-level home market is simply unacceptable. Nothing should be more bipartisan than affordable workforce housing, better utilization of transit stops and associated cost savings for nearby residents, a far better mix and balance of residential units that nurture a more stable community, and jobs in the economy.
Along with my many of my colleagues, I join the countless community leaders and elected officials from both sides of the aisle in calling on legislators to pass this critical legislation.
As a leading developer of over 400 low-income housing units in Colorado since 2010, we at Koelbel & Co. have seen the demand for affordable housing firsthand and the lack of supply to accommodate Colorado’s surging population growth. While Koelbel has several affordable-housing builds under development, there are many potential projects we have had to alter or reject because of the onerous litigation risk that accompanies the construction of lower-priced multi-unit condominium complexes.
But don’t take our word for it.
A new analysis by the Common Sense Policy Roundtable provides clear evidence of demand for affordable housing in Denver. The study also demonstrates the consequences of our well-intentioned, but misguided, construction-defect laws for homebuyers.
Entry-level home prices in Denver have skyrocketed over 100 percent since 2010, more than doubling rents over the same period. Additionally, according to the CSPR, Denver rents over the last few years have remained flat while entry-level housing prices have continued their climb. For those who argue that developers are eschewing affordable-condominium builds because of low demand, this data should raise a serious red flag.
Even worse, the surging of entry-level home prices risks depriving households of future wealth and equity by prolonging renting. As the CSPR study notes, nearly two thirds of the median U.S. household net worth is tied to a home. If our misguided construction-defect laws continue to price young homebuyers out of ownership, Colorado could see a far less financially stable middle class, particularly in diverse metropolitan areas like Denver.
This in turn could have a disastrous impact on our urban economy, as businesses will face diminishing incentives to relocate to Denver due to a weakening middle class and increased urban sprawl as development gets pushed to the suburbs.
At Koelbel, we take pride in our affordable-housing projects and hope to continue to help fill this much-needed gap in Colorado’s housing market. Construction-defects legislation would enable us and other developers to confidently pursue more affordable multi-unit condominium builds, while preserving the right of homeowners to hold developers accountable for legitimate construction defects.
I hope you will join me in contacting your legislator to thank them for their work on this vital issue and encourage them to vote for a reform measure to provide more affordable housing for middle-class Coloradans.
Walter “Buz” Koelbel Jr. is president of Koelbel & Co., one of the longest continually operating real estate companies in Colorado. He is a member of the Common Sense Policy Roundtable board of directors.