The numbers reflect what many high country residents already suspected: a lot of second home owners, vacation rentals and investment buyers
By most accounts, the housing market in Colorado mountain communities has never been tighter. People have flocked to mountain towns during coronavirus, even as many resorts shut down. Seasonal workers are being forced to move to different communities because they can’t afford rent, causing labor shortages for local businesses.
And yet, several high country communities are reporting more than half of their homes are vacant, 2020 U.S. Census data shows, as high as 71% in Hinsdale County, where Lake City is a hot destination for hikers and ATV enthusiasts, and 58.7% in Summit County, a popular seasonal destination for skiers.
But the housing units aren’t necessarily empty. Rather, those high numbers are “almost entirely” due to a large number of part-time residents with second homes, vacation rentals and investment buyers, said Elizabeth Garner, state demographer and economist for the Colorado Department of Local Affairs.
In other words, the high vacancy rates confirm there is a big housing problem in Colorado tourist towns.
The Census Bureau considers a unit vacant if no one was living in it on the day of the census, which was April 1 last year, unless the occupants were temporarily absent (on vacation or a business trip), or if they had a usual residence elsewhere.
It’s generally good to have some vacant homes. “It means you can buy and sell. If you had zero, it’d mean there’s nothing on the market you want to buy,” Garner said. The average vacancy rate statewide is about 9%.
But it’s hard to know what a healthy vacancy rate looks like in places like Summit County, where the market is, and has long been, “way out of whack,” said Rachel Tuyn, a resident of Summit County and director of the economic development district for the Northwest Colorado Council of Governments.
In Summit County, “our population is 31,000, but it can surge to over 100,000 on Christmas week,” Tuyn said. It’s “an absolute nightmare” for most workers and full-time residents to find a place to live when they’re competing in a market inflated by vacationers and wealthy people who can afford to buy multimillion-dollar homes, she said.
It’s a trend that Colorado’s resort towns have contended with for decades. This year, several towns have started to limit short-term vacation rentals as they grapple with labor shortages because workers are priced out and forced to leave town, including Crested Butte, where leaders say they can’t handle more tourists amid a housing crisis for locals.
Beach towns and ski resorts across the country recorded high vacancy rates due to seasonal tourism and second homes, according to the Census Bureau. Ocean City, New Jersey, and Breckenridge reported the highest vacancies among urbanized areas tracked by the census, at nearly 59%.
What we don’t know yet is the extent to which people who gravitated to mountain communities during the coronavirus pandemic will stick around. The Northwest Colorado Council of Governments recently conducted a study of migration to Routt, Grand, Eagle, Pitkin, San Miguel and Summit counties and found, on average, about 50% of homes were occupied by full-time residents, with the rest occupied or owned by second homeowners, investment buyers or visitors.
The report also surveyed a number of newcomers, about half who said they were motivated to spend more time in those communities because their jobs allow them to work remotely.
“As long as you have an internet connection, we have this in-migration … of people coming here, buying real estate sight unseen. They can work in the mountains and be five minutes away from where they love to ski,” Tuyn said.
But it will be a few years before the data will reveal the lasting effects of that trend. In addition to putting pressure on the housing market, more full-time residents also means more strain on local government and infrastructure all year.
“Theoretically that would suggest our vacancy rate would go down, if we have more full-time, year-round residents as a result of people making it their permanent home,” Tuyn said. “But that remains to be seen.”
Denver recorded an 8% vacancy rate in 2020, according to the census data.
For the apartment market in the Denver metro, vacancy rates are the lowest they’ve been in two decades, according to the Apartment Association of Metro Denver.
The vacancy rate for apartments dropped from 5.5% in the first quarter of 2021 to 3.7% in the second quarter. A lot of people are moving to the Front Range, and they have very limited options for housing, said Mark Williams, executive vice president for the Apartment Association of Metro Denver.
“Any time the vacancy rate dips below 4%, stuff starts to happen,” said Williams, noting that sharp dip has been accompanied by rents increasing faster than expected. “It’s a super-tight market.”
With more people moving to Colorado from out-of-state, the number of new units planned is well above where it was a decade ago.
“There’s a little over 28,500 units being built right now. Ten years ago, that was probably 10,000 or 12,000,” Williams said. “When you add up the total number of apartment homes under construction and the number being planned, it’s over 82,000. I’ve never seen that number as high.”
The 2020 census data also gives us a sense where overall housing units grew the most statewide. Not surprisingly, housing units grew the most in counties that also saw the biggest population gains over the last decade.
Broomfield County, which saw the biggest percentage increase in population over the past decade at 32.6%, also saw the biggest jump in housing units at 38.2%. Weld County, with the second-highest population increase at 30.1%, increased housing units by 24.6%. And Douglas County, where population increased by 25.4% over the last decade, saw housing units increase by nearly 27%.
How many more units communities need to build to keep pace with population growth is a whole other conversation.
In many parts of the country, developers built more homes than were needed, resulting in sharp increases in the vacancy rate seen in the 2010 census. Vacancy rates then decreased between 2010 and 2020 as markets recovered, said Garner, the state demographer. And the state has yet to find a balance between the rapid growth and affordability.
“We’ve had, really, two decades of unsuccessful balance between housing and households,” Garner said. “One decade when we overbuilt and it led to a meltdown. And another where we underbuilt but it led to skyrocketing housing prices.”
“Both of those end up hurting the little guy the most,” she said.
Get more info on low inventory areas on Colorado Sun.
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