The agency’s recently released housing report, the latest installment in the 2015 Southwest Colorado Index, indicates that average rental rates in Southwestern Colorado (with the exception of Dolores, Dove Creek, and Bayfield) are 45 percent higher than fair market rents determined by the Department of Housing and Urban Development, the agency says.
According to Region 9’s data, Montezuma County renters pay roughly 40 percent more for their rentals than what HUD deems as Fair Market Value.
“We found that in almost every community, actual rental costs were substantially higher than FMR estimates. In some communities, such as Ignacio and Silverton, rental rates are not readily available so we did use FMR estimates, though actual rates may be higher,” the report reads.
Renters shell out an average of $759 a month for a one-bedroom in Montezuma County.
Broken down further: Cortez renters pay an average of $683; Dolores renters pay $475; and Mancos renters an area-leading $700 per month.
That compares with fair market rates of $542 in all three towns for a one-bedroom property, an average that is determined by HUD.
A general rule of thumb many economists and housing experts agree on is that a household should not spend more than one-third of their total income on housing costs.
That means that local households typically need to bring in a lot more in order to afford what’s on the market.
“When rent expenses are linked to livable wages, most families need to earn above the basic wages per hour, or get a second job, to obtain the income needed for affordable rental housing,” the Region 9 report says.
The average price for a three-bedroom unit in Cortez is $1,493, Region 9 says, meaning the household would need to bring in roughly $59,720 in order to not exceed the one-third rule.
Furthermore, a two-bedroom in Cortez rents for an average of $1,172, requiring the renter to bring in $46,880 annually; and a one-bedroom in Cortez rents for an average of $683, which necessitates an annual income of $27,320.
Katherine Chaffin, broker/owner of Xtrov in Cortez, questions the reliability of the data sets, but has observed that properties within the lower end of the spectrum tend to get snapped up faster.
“We have a handful of those, that rent like hotcakes,” Chaffin said.
Homeownership is also out of reach for many in Montezuma County, the agency says.
“Interest rates have gone down (from 6.5 percent to 4.5 percent) since our last report in 2008, but median home prices have surpassed prerecession levels in many areas,” Region 9 said.
Looking at the median prices of homes sold in Montezuma County in 2014, based on information from the Colorado Association of Realtors, Region 9 then took those prices to Wells Fargo Bank and asked them to calculate what the annual household income would need to be to qualify for a home loan using the median price as an assumed sale price.
A median priced home in Montezuma County, according to Region 9 calculations, is $171,000, indicating that a buyer would need to make $42,350 to qualify for a mortgage with a 30-year loan term with 4.5 percent interest, and 10 percent down. The agency says that 39 percent of families in Montezuma County don’t meet those minimum requirements.
“There are many obstacles to providing affordable housing in Southwest Colorado, including lack of developable land; infrastructure or funds to provide infrastructure; and economic issues such as the rapidly escalating cost of land and construction,” Region 9 said. “At the regional level, multiple efforts are underway to provide housing opportunities through partnerships between local governments and private development. Housing authorities are in place in La Plata and Montezuma Counties.”
The Montezuma County Housing Authority did not respond to emails and phone calls requesting comment on the report’s findings. However, at a February Montezuma County Commission meeting, Housing Authority officials explained that there were 235 families and individuals on the waiting list for one of the affordable units the agency manages, as there are not nearly enough units on the market to accommodate them.
