Lakewood Strategic Housing Plan Update

A Lakewood City Council Study Session of February 6, 2023, included a presentation on the Strategic Housing Plan that Lakewood might utilize in determining plans for affordable housing. Lakewood received a grant from the Colorado Department of Local Affairs (DOLA) for funds to conduct a housing study and hired Gruen Gruen + Associates to conduct the study.

Initial results can be found at LakewoodSpeaks. By analyzing where there are available units for sale or rent, the conclusion seems to be that Lakewood needs units where they are not available. For example, there are no rental units available under $875/month or homes for sale under $275,000. That also agrees with the fact that largest group of renters, 33%, cannot afford over $875/month rent. Therefore, what Lakewood needs to be truly affordable is rental units under $875/month and residential home sale prices to be less than $275,000. No data was offered as to whether new units could be provided at the recommended costs.

Gruen Gruen + Associates also reported that in the past 20 years, 67% of new housing built in Lakewood were multi-family units. From 2014-2020 there was a drastic increase in the number of units being built. In 2014, the number of units doubled from 2013. In 2021 and 2022, the number of units being built dropped back to pre-2014 levels, although that number is disputed, per public comment.

During this time of intensive growth, prices also increased dramatically. Prices for attached units more than doubled, growing 14% faster than detached units. Prices for new units were 70% higher than for older units due to rising building costs. This scenario implies that building more units may not result in decreased prices.

Vacancy rates for Lakewood renters have decreased from 5% to 3.4%.   In comparison, on a state level,  Federal Reserve statistics indicate that rental vacancy rates vary from 3.4% to 13.5% since 1990.

Surplus of units in the middle ranges…

According to the data shown at the Council meeting, Lakewood needs more units for low-income renters, mainly those that can afford up to $875/month. However, there is a surplus of units in the middle ranges, those that can afford $1,250 -$1,800/month.  Also, there is another lack of units needed for very high-income renters. The data also shows a home affordability point at $275,000; there is a surplus of ownership units available over $275,000, which seems to be used as evidence that those units are unaffordable.

“Jobs to housing balance is not unusually high.”

In fact, Gruen Gruen + Associates say that “Housing value is not unusually high” in Lakewood. The city has a 1:1.2 ratio of jobs to housing, indicating that for every 10 jobs in Lakewood, there are 12 housing units available for workers.  This suggests that it is not the local job market that is driving housing prices higher in Lakewood, as is the case in areas such as Denver and Boulder, which have higher jobs-to-housing ratios. In fact, the study points out that populations in those areas may be looking for housing in low-growth areas, like Lakewood. This phenomenon is what is commonly called a “bedroom community”, which is someplace where people live but do not work.

Forecasting future needs, Gruen Gruen + Associates indicate that one goal for Lakewood may be to maintain its place as the most populous city in Jefferson County. If so, then Lakewood should plan to grow.  They estimate that 75% of population growth will be in workers and 25% in non-workers, such as retirees. They follow up with the fact that most low-income people in Lakewood already have housing so that is not driving growth.

One Council Member summarized the findings by saying they showed a need for affordable housing in both the low-income and middle ranges. Gruen Gruen + Associates concurred that the Council Member was reading the study the way they intended it to be read.

The study will continue with a community survey.