Sunday, December 28, 2014

Why Families Can't Get Ahead In Denver

In the new MSNBC documentary series 'The Pot Barons of Colorado'  we get an inside look at the booming retail marijuana industry in Colorado and the 12 or 14 who control most aspects of - including edibles, as well as pot for smoking and cannabis oil. These people, make no mistake, are rolling in money, but they are also sticking their necks way out for that reward - including (as a recent episode showed) always facing the sharp knives of the regulators who tend to overly side with caution, But the 'barons'  admit that's the nature of their business and they're willing to lose all to gain their rewards. (Let's also bear in mind they have no banking system to rely on to deposit cash and all their tax payments have to be made in cash and taken in person to the Colorado Dept. of Revenue).

But this isn't so much about the Pot Barons as their hundreds of workers who toil in the shadows to turn out a high quality product. These people, and thousands of others who have come to Colorado to find work (including for the oil and natural gas fracking),  often also find themselves behind the 'eight ball' on account of an insufficient housing stock. Because it is insufficient, the demand outpaces it, and prices - whether for homes or rents - have soared. This leaves many either outside the market or in an unstable predicament.

As a point of fact, according to a Denver Post (Dec. 14) report, "Colorado ranks among the top five states when it comes to creating jobs and attracting new residents. But construction, for a variety of reasons, hasn't kept pace. Home prices and rents are rising sharply while the incomes to pay them are stagnant."

Quoting the President of Oread Capital and Development, Jeff Handlin, it cited the fact the currently single family permits are running at only two -thirds their historical average, This despite a record tight inventory of homes available for sale and the higher prices accompanying that situation. Apart from that, while multi-family accommodations have surged  to levels unseen since 2002, this has not prevented some of the steepest rend increases in the nation.

The Post report cites rents being up 9.2 percent in metro Denver and Boulder, 8.8 percent in Fort Collins and 13. 5 percent in Greeley - ground zero for fracking operations. By comparison, the 18 year state average is closer to 3.7 percent.

To fix ideas even more, a study released by Zillow 2 weeks ago showed a renter now needs to earn at least $35 an hour to afford even a median priced rental in metro Denver - or almost 4 1/2 times Denver's minimum wage.  Another nasty trend, and I am sure I can call it that (though the Post doesn't) is the low vacancy rates spurring investors to buy up older (low rent) complexes, condos - rehabilitate them, then boost rents to gentrified levels.

The result? Three bedroom rents for the city's newest apartments now run $1, 675  a month which would demand an annual salary of $67,500 to be considered affordable. (Remember the rubric here: your rent -housing costs should come to no more than one third of your total income.)

The perverse situation, which again is a total product of greed and the Neoliberal business model, is that "developers want to build at the highest end of affordability while the demand is all at the low end".

Again, this is what I define as manifesting insanity, because the housing construction is then detached from economic reality. The demand side is being ignored to put up a weak, vastly overpriced supply component. Any objective rational observer- say from another world - would believe those doing it had lost their marbles. They were ignoring basic laws of supply and demand and worse, were contributing to economic upheaval and stress when there is no need for it.

What would a Socialist do? Well, given the Neoliberal capitalists, builders are evidently incapable of acting in their or the communities best interests it would be to allow their selective elitist construction to go ahead but only after paying construction fees equal to at least 20 percent of the costs of their units, homes etc. It would be a corrective to their greed and also discourage building only for the rich when the demand is for the moderate income person - coming here to work in fracking operations, or in the Pot retail business, or in the booming aerospace industry.

To understand why such a corrective is rational, one need only see how many existing homeowners are pouring into food kitchens for support or to 'Almost Home'  (an advocacy group) to beg for affordable units - given many are spending up to 70 percent of their income on rent and are desperate. And as rents, home prices shoot ever higher, middle income households are being squeezed ever more - with the specter of food inadequacy now also beginning to rear its head.

The Post observes in passing that of the single family homes starts this year in metro Denver, only 17 percent were priced below $300,000, compared with 40 percent in 2012.

No matter which side of the political spectrum you fall on, this is inexcusable, and undermines any chance for real economic growth  - because this isn't happening only in Denver but other cities too, such as San Francisco.

If the Neoliberals  and their lackeys can't or won't provide sound, rational solutions to this housing problem then Socialists and others with the commonweal in mind, must do it for them.

No comments: