When Greer Hanes took a recruiter position with UCHealth in Colorado Springs last fall to be closer to her family, she had no idea how difficult finding a place to live that she could afford would be.

She had been paying $650 a month for a one-bedroom, one-bathroom apartment in Grand Junction while working in the residential life office of Colorado Mesa University and initially lived with her parents while looking for housing in the Springs.

“There was nothing (apartments) available in my price range that I could afford. It blew me out of the water with the prices, especially compared to Grand Junction," Hanes said. "I was lucky to have the opportunity to move in with my parents. I finally found an apartment for $1,500 a month in Rockrimmon, and I was lucky to find that. I was shell-shocked. I recently checked and found that apartments like mine in the same complex are now renting for nearly $200 a month more.”

Greer had to spend nearly half of her pay on rent;  in order to still afford utilities, her cellphone bill, car insurance and a membership at a local cycling studio, she had to adjust her monthly budget and rarely eats out. Her budget got a little less tight when she was promoted and got a raise in May.

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Greer Hanes, a recruiter for UCHealth, poses for a portrait in her apartment in Colorado Springs on Wednesday, Sept. 7, 2022. Hanes spends nearly an entire two-week paycheck each month on her housing expenses. (The Gazette, Parker Seibold)

Greer said her experience resonates with the nursing students she is trying to recruit to UCHealth who find the cost of housing in Colorado Springs and the rest of the Front Range “overwhelming.”

Tatiana Bailey, director of the University of Colorado Colorado Springs Economic Forum, said Colorado Springs has benefitted in the last five years from young workers flocking to the city as a less costly alternative to the Denver area. But she said that advantage has deteriorated sharply in the past 1 ½ years because the area’s cost of living is now significantly above the national average, while wages are about 12% below the national average.

“That makes it difficult to attract young people to the region — they need to be able to afford to live here. We need those younger workers to replace the older workers that have been or will be leaving the workforce," Bailey said. “We don’t have enough workers, and that is closely tied to housing affordability. A lot of people who have left the region moved to lower-cost areas in the South and Midwest. The rising cost of housing is a huge threat to our economy.”

Housing prices soar

Average housing prices in the Colorado Springs area have surged nearly 50%, or $177,000, in the past three years; the average apartment rent has jumped more than $300 a month to $1,571 during the same period. To afford the average rent, workers would need to make nearly $30 an hour, or more than $10 an hour more than the average wage a Colorado Springs renter earns, according to data from the National Low Income Housing Coalition.

As a result of rising home prices, the National Association of Home Builders/Wells Fargo Housing Opportunity Index has declined from 71.4 in the third quarter of 2019 to 22.7 in the second quarter of this year. The index measures the share of homes sold in that area that would have been affordable to a family earning the local median income. The Colorado Springs index ranked 202 among the 240 metro areas in the ranking, ahead of mostly cities in California and the West Coast.

Data from the 2020 Census shows more than half of renters and 27% of homeowners in the Colorado Springs area spend more than the recommended 30% of their income on rent or mortgage payment, respectively, percentages that likely have increased significantly during the past two years.

“The cost of housing is pushing workers who earn less than $22 an hour out of our market. It is difficult for anyone earning less than that to sustain themselves economically in either rental or purchased housing,” said Reanna Werner, chief problem solver for HR Branches, a Colorado Springs-based human resources consulting firm that mostly works with small businesses. “Rent increases have made housing not affordable or attainable for a large portion of the workforce.”

That, in turn, has made what is already a tight local labor market even more difficult for employers to navigate.

Brandon Kirk, owner of Planet Duct, a Colorado Springs duct-cleaning business, said his company has lost three of its 15 employees in the last six months due to the rising cost of living in the Colorado Springs area. Those departures came even though Kirk raised the company’s starting wage from $16 to $18 an hour and doubled commission payments — his top staff members are now making $20 to $21 an hour. As a result, Kirk raised his prices in April and may have to hike them again by year’s end.

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The local housing market sizzled over the summer, with the median sale price hitting a record $495,000 in June before retreating a bit. Bill Radford, The Gazette

“Some employees moved to Florida or Arizona and others are considering moving somewhere else because they can no longer afford to live here, Kirk said. He had to raise wages "way higher" than he expected, he said, in his effort to retain workers.

“Trying to replace the people we have lost has gotten harder and harder and taken longer and longer. Most of my employees are in their 20s and are renters, and apartment rents have gone up a lot.”

The local housing market has cooled a bit in the past two months as mortgage rates have climbed; the median home price has dipped from a record high of $495,000 in June. But monthly payments have jumped by hundreds of dollars because of higher rates, said Eddie Hurt, an agent with the Kissing Camels Group of ERA Shields. While mortgage rates have drifted lower in recent weeks, rates are still more than 2 full percentage points higher than they were late last year.

A problem for many

Housing costs aren’t just an issue for entry-level workers and renters, according to a poll of likely voters in Colorado Springs and El Paso County commissioned in December by the Colorado Springs Chamber of Commerce & EDC. The poll found 89% of those surveyed making an annual income of $50,000 or less said surging housing costs created a “big problem” in finding affordable housing, and 71% of residents earning between $50,000 and $100,000 agreed housing costs were a problem.

“This is a fast-growing community, and these are growing pains,” said Johnna Reeder Kleymeyer, the chamber’s CEO. “It is unconscionable that people making between $50,000 and $100,000 a year would struggle to afford housing. That is supposed to be a livable income.”

The telephone poll, which included both landlines and cellphones, of 409 randomly selected likely voters was conducted by WPA Intelligence, a Washington, D.C.-based market research and polling firm the chamber has used regularly for polling. The poll’s margin of error was 4.9%.

Rising housing costs have made recruiting entry-level employees more difficult for UCHealth in Colorado Springs and has even resulted in some candidates for management-level jobs — such as a director of oncology candidate from Michigan — to turn down offers when they found buying a home locally much more costly and difficult than expected, said Jeff Johnson, vice president of human resources for UCHealth.

“We just increased our minimum pay to $18 an hour but a single-room apartment costs $1,500 to $1,600 a month, and that is a big chunk of coin unless you have a roommate,” Johnson said. “For nurses, we aren’t seeing as many applicants from other states as we did before COVID. So we are hiring more new graduates from nursing school than we typically would take. We are seeing the problem of high housing costs creep into the middle class.”

Hiring challenges have come as UCHealth is working to rapidly grow its staff, adding 1,500 employees in the past year; one-third of the new hires were made in the Colorado Springs area, where the nonprofit employs about 6,500 people. To help fill openings, UCHealth launched its Ascend Career Program, which offers entry-level staff a path to get promoted, often with free training, including bachelor’s and master’s degrees in many health care fields.

“We still find that candidates see Colorado Springs as attractive place, especially with all of the changes in the downtown area and the outdoor recreation opportunities,” Johnson said. “There is still momentum because of our location.”

Colorado state demographer Elizabeth Garner said surging housing prices along the Front Range result from a housing shortage that developed during and after the Great Recession. Housing construction in Colorado averaged about 50,000 units a year before the downturn and dropped to about 10,000 units a year during and afterwards, she said.

“The problem is we stopped building after the Great Recession and supply has been greatly diminished. and if you want job growth, you cannot have it without housing growth,” Garner said.

The UCCS Economic Forum has estimated that the Colorado Springs area needs an additional 12,125 housing units to meet current demand, while the state needs another 225,000 units, and that doesn’t even include housing for newly arriving residents.

The Affordable Housing Collaborative — which includes the Housing and Building Association of Colorado Springs, the Colorado Springs Chamber and EDC, the Pikes Peak Association of Realtors, the Apartment Association of Southern Colorado and the Downtown Partnership — formed in 2018 to come up with ideas and plans to encourage and fund construction of more housing targeted at entry-level and middle-income workers.

The group has asked the Colorado Springs City Council and the El Paso County Board of Commissioners to help reduce regulatory and financial burdens to building affordable housing. Among the proposals are imposing impact fees to help pay various development fees for such projects and allocating taxes paid on short-term rentals such as AirBnB or VRBO from the city’s tax on hotel rooms and rental cars for affordable housing.

The collaborative also is seeking a sales tax exemption on building materials used in affordable housing projects, quicker regulatory reviews of such projects and encouraging higher housing density in the current rewrite of the city’s zoning code.

“The people most likely to relocate to a new area are 18 to 32 years old and those are people are moving to start a career and family,” said Kleymeyer, the chamber’s CEO. “If there isn’t enough (housing) availability and they can’t afford to live here, then employers will not have the labor to fill jobs. This is not just an issue for low-income residents but is an issue for all of Colorado Springs and El Paso County. We all need to be concerned if we want to find employees in the future.”

Editor's note: Earlier versions of this story misidentified Colorado Mesa University.

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