Connecting state and local government leaders
It’s not just higher home prices.
City Councilor Kim Baxter understands why people want to move to Durango, Colorado. The city of about 19,000 residents, located near the rugged San Juan National Forest in the southwest corner of the state, has an abundance of outdoor recreation opportunities, thriving local businesses and fabulous weather. For many, it’s an attractive place to call home.
But, like other communities across the country, there hasn’t been enough housing in the city to keep up with demand for the last several years, she said. And the pandemic-era trend of people moving away from large metro areas and working remotely from smaller towns has only made the shortage worse. The result is that it has become more difficult for workers like teachers, police officers, or those with service sector jobs to afford places to live.
“We probably wouldn't have been where we are for another 20 years,” Baxter said. “But now we're here all of a sudden in three years.”
The city is not alone. Economic Innovation Group, a research organization, noted in a report earlier this year that vacation towns in nonurban areas saw significant growth during 2021. Many people who could work remotely left large cities to find more affordable housing, among other reasons, the report said.
Now, over two years after the pandemic began, a clearer picture is starting to emerge of what the lasting effects of these changes could be for places like Durango.
Local officials in smaller communities that have seen an influx of residents are dealing not just with squeezed housing markets, but also added pressure on infrastructure like water systems, crowded backcountry destinations, and increased traffic congestion.
On the upside for government budgets, as hot housing markets push up home values it can boost property tax collections—a key source of local government revenue. And new residents can also help to strengthen small town economies as they spend at area businesses and bring in dollars that aren’t necessarily tied to the ups and downs of local industry.
Colorado is a notable place to look at these trends. Denver was booming before the pandemic, and the state has an abundance of mountain towns, including popular ski destinations.
A report issued last year by the Northwest Colorado Council of Governments—which used data from nearly 5,000 residents across six counties—attributed the rise in residents in mountain resort communities to part-time residents spending more time in Colorado; newcomers buying and renting homes; year-round residents leaving the area less frequently; and residents and visitors staying for longer periods of time, rather than just for weekends and holidays.
One of the report’s other findings was that residents of these communities were far more likely to perceive the changes taking place as negative rather than positive.
It may be unclear whether the newcomers in these places will stick around or if remote work will be lasting. But as the report notes: “These communities have been discovered, and will continue to attract new residents. Learning from this experience and working to address the negative impacts can only better prepare these communities for what is on the horizon.”
‘We're Pricing Them Out’
For localities that experienced a surge in residents or long-term renters during the past couple of years, housing shortages and skyrocketing home prices are often leading concerns.
Housing prices in Durango have climbed roughly 10% to 20% annually since the pandemic began in March 2020, Baxter said. While prices have been high, they’re often more affordable than in big cities, especially as the pandemic gave some people the opportunity to save money.
“People all over the nation could afford to come to a small town like us and feel like they could buy a home,” Baxter said.
But, she explained, increased property values are making it tough for the local workforce.
“Even the people that we used to think of as [people who] can easily buy a home in our community, we're pricing them out,” she added, noting that an average teacher’s salary in the area is $49,000, and police officers typically make $70,000 to $80,000.
Part of Durango’s housing affordability issue has to do with rentals. During the pandemic, medium-term rentals of three or four months became popular and lucrative in the city, according to Baxter. Property owners realized that these rentals could be more profitable than a standard lease arrangement involving, say, a year-long lease.
The city is taking steps to address the housing crisis, Baxter said.
Those include a large development near the city’s southern limits, which is set to include affordable housing, along with commercial and light industrial space. Durango is putting some of its federal aid from the American Rescue Plan Act toward that project. The local urban renewal authority is focusing on workforce housing by incorporating it into economic development plans.
The city also has a new housing division, established earlier this year, that is working on initiatives like incentives for accessory dwelling units and for developers to get additional homes on the market that are affordable for more local buyers and renters.
For example, the city is working with a developer to create 10 units with deed restrictions. Four of those must be sold to people earning 80% to 120% of the area’s median income, while the other six would go to people who can prove they’ve worked in the area for at least five years. Complete parameters for who would qualify as an eligible “workforce” buyer under the program are still being defined, but could also include retirees who have worked in the area.
Baxter noted that she doesn’t want regulations like deed restrictions to be a permanent fixture of local real estate.
“My vision would be, eventually, we do a good enough job that things return to free market, and we don't have to have those controls,” she said. “But right now, if we don't have those controls, we will lose our middle class.”
‘Makes it Really Difficult’
Summit County is about a 75-mile drive west of Denver. With five world-class ski resorts, tourism is its primary industry.
The county has about 30,000 year-round residents, according to County Commissioner Tamara Pogue. That number seems to have grown over the pandemic, though it’s difficult to nail down just how many people have moved in, she said.
“We certainly know some have,” she said.
“The other thing we've seen is we have a high number of second homeowners, and so we've seen a lot of those second homeowners become primary residents,” Pogue added.
With new families moving in, the county has had a lot of “churn” in its schools, as new students enroll and others move away. As property values have increased, some families who can’t afford the higher prices are being pushed out, Pogue said.
“We've seen a massive increase in property values—we anticipate that our residential property tax values are going to increase about 70% in the next year, which is pretty significant,” Pogue said.
Meanwhile, water and sewer usage is higher than it’s ever been, Pogue said. Early last week, a water main break in Breckenridge shut the town down for the better part of an afternoon.
“You begin to see lots of those things happening,” she said.
And if newcomers and part-time residents do choose to stay put in Summit County, it could mean the local landfill reaching capacity sooner than expected, Pogue added.
Like other places across the country, Summit County is experiencing a workforce shortage, including in county government, Pogue said. The county has about 500 employees, but consistently throughout the pandemic, roughly 70 to 80 positions have been vacant, she said.
“So that makes it really difficult to meet some of the expectations of the community given the increased utilization of a lot of these municipal services,” she said.
In San Miguel County, Colorado, Commissioner Hilary Cooper has also noticed an increase of new residents, and she said she is worried about what the shifting population means for volunteerism and public engagement.
“The most concerning thing to me is really an erosion of community,” Cooper said.
People who worked and lived in the area were the ones that were most likely to volunteer for local festivals and nonprofit events. As new people move in and others are pushed out and commute in for work, it’s difficult to find people to volunteer for local initiatives, she said.
But Cooper noted that new residents bring benefits too, whether it’s visiting local businesses or paying taxes. As the county moves ahead with planning for affordable housing and on other issues, she wants them to get involved.
“We need to do a much better job reaching out and communicating with them and letting them know how they can be part of the solution, as opposed to saying that they're part of the problem,” she said.
Molly Bolan is an assistant editor for Route Fifty.