As housing prices climb, access to affordable homes for average salaried workers becomes more of a problem in small communities in Southwest Colorado.
The issue is a challenge for Dolores and needs to be addressed, said Town Manager Ken Charles. The town has budgeted $10,000 to study the matter, and is seeking a grant to match the amount.
Last month, the Town Board heard a tutorial from the Telluride Foundation about its model to create affordable housing in smaller towns.
“We are focused on housing in small rural communities, not resort housing or thousands of units in Denver,” said Telluride Foundation President Paul Major.
He explained how the organization’s housing projects in Nucla, Norwood, Ridgway and Ouray, which target average-income career workers, have worked.
“Teachers, sheriff deputies, town planners – people at the core of the community making good salaries – are faced with a housing market that is 2 to 3 times their salary level,” Major said.
Using the standard of housing costs not exceeding 30% of household income, Major explained how local towns are faring.
For example, an affordable home for a teacher in Dolores, who makes an average salary of $39,566 a year, would be about $217,000. But the median home sales price in Dolores in 2021 was $385,000.
In Norwood, the average teacher salary is $47,115 allowing for a maximum home purchase price of $245,000, but the average local home price is $487,000.
In Ridgway, the average teacher salary is $47,017, which allows for purchase of a home up to $245,000, but the average local home price is $750,000.
And in Ouray, the average teacher salary is $49,211, which allows for a maximum home purchase of $256,000, but the average local home price is $550,000
Major said the key components for affordable housing projects that fit smaller towns are: donated land suitable for construction, factory-built homes to reduce construction costs, low-cost loan programs, and deed restrictions that include preventing resale at market value.
The foundation has modest, single-family homes built in a factory, which are delivered to the towns and set on foundations.
The two-story, lumber-framed homes are 1,200 to 1,500 square feet, with three bedrooms, three baths and a garage. One such manufactured home factory is Fading West in Buena Vista.
Homes built in a factory are critical for keeping the price down, Major said.
“Right now the problem is when you build on site, it is the most inefficient way to build a home,” he said. “You have to bring all the product to the site, get subcontractors to the site, and deal with the weather. The old way of get a lot and build is too expensive.”
Factory manufactured homes keep labor and material costs down and build modern homes faster, he said, cranking out multiple homes per week.
“The factory approach, we can get a house all-in that is priced for a teacher, a nurse or a town planner. Always have your eye on the ball of selling homes to the core of the community that have good salaries, but there is nothing in the market for them.”
Land donation also is a key component of affordable housing. For the Telluride Foundation project in Nucla, the plan is for the school district to donate land. In Norwood, San Miguel County would donate land, and an individual has offered land in Ridgway.
Deed restrictions keep the homes from being sold and priced out of the affordability market.
The Telluride Foundation project has deed restrictions that cap resale at 3% over the purchase price. Other deed restrictions are that homeowner must live in the home and work in the community.
“You can’t buy the home and rent it out, or not work and collect a trust fund check,” he said.
Each town has to work out who would be eligible for affordable homes, Major said.
The Telluride Foundation uses a lottery system that prioritizes jobs that are hard to fill in a community such as teachers, nurses, emergency responders and government workers.
Home prices are based on salaries. Qualified buyers would purchase the home from the Telluride Foundation through a traditional mortgage, and could tap into down-payment assistant programs.
The Telluride Foundation partners with private foundations concerned about affordable housing and the Department of Local Affairs to raise funding for its housing projects.
“We have learned a lot along the way,” Major said. “Housing is a limiting factor because the market for building is for a much higher price point than most people in our communities can afford. How many jobs go unfilled because there is no affordable housing?”
Dolores has a small budget to fund an affordable housing study, said Town Manager Ken Charles. The town owns several properties that have the potential for affordable housing projects.