This summer, Real Estate Weekly is presenting a monthly series on the issues and barriers to attainable housing here in the Grand Valley. Last month, we addressed affordable rental housing. This month, we’re taking a look at the market-rate rental market. For clarity’s sake, affordable rental housing refers to any type of government-assisted rental housing, whereas market-rate rental is simply rental properties priced at what the market will bear.
As anyone who has been reading Real Estate Weekly or paying attention to the local market, the Grand Valley has a severe housing shortage, and it’s not restricted to homes that are available for sale. There’s also a shortage of homes, including apartments, townhomes, condos and single family homes, that are available for rent.
“We currently have six properties currently available,” said Cindy Hoppe, the manager for Bray Property Management. “I expect them to be gone by the middle of next week.”
Typically, summer is the time when people are moving, and in a normal year, Bray might have 20 or more available rental units.
Catholic Outreach, which maintains the Almost Home listing of available rental units representing dozens of property management firms and individuals across the Grand Valley, typically has 20 or more pages of available rental properties. Right now, that list is just six pages.
Some rental owners, especially those who have owned single-family properties for years, are taking advantage of the current seller’s market and are choosing to sell their rental properties, recognizing that this is the best market for sellers they’ve ever seen. New owners may be keeping the rental property, but they may increase the rent to make up for the price they had to pay in order to buy the property.
Across the board, rent is increasing, which is both a reflection of supply and demand realities, as well as the costs associated with owning rental properties.
“Tenants have to understand that it’s not going into a landlord’s pockets,” Hoppe said. “Taxes and insurance are going up, and owners need to do upkeep and maintenance. Those costs are increasing.”
There are several large apartment buildings in various stages of construction and planning right now in Grand Junction, but even if all of them could be completed by next week (and some have yet to have a ground breaking), there would still be a shortage of available rental properties.
“HUD requires a market study,” said Bruce Milyard, who recently completed the financing portion of his project, The Lofts, on the east and west corners of 10th and Grand through the Department of Housing and Urban Development (HUD). “The market study (which was completed a year ago) shows that we needed 3,600 units.”
Since the study was complete, the Railyard at Rimrock has begun adding apartment buildings to the local market, and currently has no vacancies in any of its completed buildings. Construction is still ongoing for the final buildings, but the next apartments won’t be available until November. At 200 apartments, the Railyard is currently the largest apartment project under construction.
The Lofts will add another 78 units to the market, but construction hasn’t started yet on those. Milyard is hoping to start asbestos remediation in the building currently sitting at 950 Grand Ave. within 30 days so he can demolish it and build the apartments. While the asbestos remediation is taking place, Milyard will start construction of apartment buildings on the east side of 10th St.
“The first 30 units will be online in about eight or nine months,” said Milyard, who expects the entire project, which will be 78 units in seven different buildings, to be complete sometime in the spring of 2023.
Construction has also started on the Eddy of Grand Junction, a 96-unit apartment project on the east side of Las Colonias Park. The spokesperson for the project could not be reached for comment on the construction timetable.
A Front Range developer has purchased 178 acres near Community Hospital, and has plans to build both affordable housing and workforce housing (i.e., market rate rentals), among other uses, but that project is still in the design stages.
Although new apartment projects currently in planning will help reduce some of the need for rental units in the Grand Valley, they won’t solve the issue of affordability. The cost to build a new apartment building means that the new units will be higher than existing apartments. According to the preliminary report requested by the city of Grand Junction from Root Policy Research, 53% of renters are already cost-burdened here in the Grand Valley, which means they are paying more than 30% of their income for housing.
A greater supply of new apartments and rental units could eventually reduce demand, and keep rent costs from continuing to rise, but finding land on which to build a large apartment complex is a challenge, especially if a developer wants to do an in-fill project. The same study by Root Policy Research also showed that while most residents agree that more multifamily housing is needed, very few people wanted to see it happen in their neighborhood.
Next month, Real Estate Weekly will continue its series on attainable housing issues, taking a look at self-help housing, first-time buyer programs and issues for builders who are trying to build at a lower price range.