Lakewood’s 10-Year Housing Surplus!

Lakewood’s own 2024 Strategic Housing Plan shows there is no need for Belmar Park West luxury rental housing.

Quoting from Lakewood’s own 2024 Strategic Housing Plan:

“Projects currently under construction, approved, planned, or tentatively proposed represent about a 15-year housing supply.” p.113

“A large surplus of (over 9,000) rental units priced between $1,250 and $2,500 per month is estimated to exist in relation to household incomes.” p.93

You may be asking, how can there be a rental housing shortage if there are thousands of surplus units in the Lakewood housing pipeline?

The answer – almost all of those units are market priced units. They are not considered ‘affordable’ or ‘low income’ units.

The units proposed at Belmar Park West (BPW) are also market priced units and would add to the surplus of luxury rental units in Lakewood.

Belmar Park West is the proposed 411-unit apartment complex at 777 S Yarrow Street in Lakewood, Colorado.

This analysis is based on Lakewood’s 2024 Strategic Housing Plan that was formally adopted by City Council in February 2024.

The 10-year planning horizon used by Lakewood is 2023-2033 from Table C-6.

The Figure 10 chart below shows the 10-year rental housing needed in Lakewood.  However, it neglects to show how much of that needed housing is already in the pipeline!

The chart indicates:

Only 481 total rental units are needed

at income levels affordable above 120% of AMI which is the likely rent level for BPW (20.3% of 2,371).  And Lakewood does not tell us the critical information of how many of those 481 units are already under construction or shovel-ready!

Belmar Park West proposes to build 291 smaller studio and 1-bedroom rental units, 109 2-bedroom and 11 3-bedroom units for a total of 411 units. (Not 412 as reported by mainstream media and others.)  These units are affordable above 120% of AMI based on $5/sqft and 750 sqft for a studio apartment as demonstrated previously.  Affordable rent at 80% of AMI is $1,537.  BPW will have no units at the 80% AMI level.  (p.140 D10)

Tables C4-C5 show only a total of 397 smaller rental units are needed for 1-2 person households with income at 120% of AMI or more over the next 10 years!

Table C-6 shows Lakewood actually has a 10-year surplus of over 3,000 housing units of all types!   (6,445 – 3,419 = 3,026 surplus)

But page 113 of the housing study states that amount is actually

a 15-Year housing supply!

Lakewood neglects to tell us precisely how many smaller rental units are already approved or under construction for households at or above 120% of AMI.

But we can make an educated guess since Lakewood has no inclusionary zoning requirement.

That means most or all rental units are priced above 120% of AMI because market priced luxury units are almost all that gets built in Lakewood in the rental category.

Since C-6 shows 2,370 units are already under construction or approved, we can reasonably assume at least 397 of them are smaller, market priced rental units plus 120 2 and 3-bedroom rental units.  The reason Lakewood is withholding the detailed drill down numbers is possibly because that data would further support our case that there is no need whatsoever to keep building any more luxury rental units for the next 10-15 years!

In other words, if we stop approving any additional rental housing in Lakewood, there would be no shortage of smaller luxury units for 10 years because the units under construction or approved are enough.

But in any scenario, there would still be a shortage of low-income units since they aren’t getting built.

But if we keep building more luxury rental housing, doesn’t that eventually create downward price pressure on rental housing resulting in affordable housing below the 120% of AMI level?

This concept is sometimes referred to as “trickle-down housing,” or “filtering” because it is presumed any market excess of new housing will ‘filter’ down to lower income households.

While filtering can be a strategy for increasing the housing supply, it is not a strategy that will ensure affordable housing particularly for those households with the greatest housing instability and barriers to accessing housing.

Some studies do indicate that in the long term (between 10-50 years), the benefits of high-end rental development may trickle down to middle-income households. However, there is no evidence to support the idea that filtering ever benefits the lowest-income renters, and in the short term they are likely to be harmed by increased housing costs and displacement.

The ‘trickle down’ housing premise is also negated by the fact that over time, as the market waits for luxury rental housing to ‘trickle down’ as it supposedly becomes more affordable, there is a permanent loss of even older but more affordable housing due to disrepair or demolition.  This loss of older, affordable housing offsets any gain from the trickle down theory.

Lakewood claims the housing pipeline surplus is not a reliable number since many projects are never approved or are canceled.

Lakewood is concerned about the reliability of the housing pipeline with respect to projects that have not yet been approved which includes site plans that have not yet been approved and projects that are still in the pre-planning phase.

But Lakewood also agrees (as shown on C-6) that only 53% of these planned homes need to come to fruition to meet all housing needs for the next 10 years.

Further, Table C-6 separates these projects from projects that are shovel-ready or already under construction.

Lakewood does not challenge the data for units under construction or approved for construction.

Using this extremely reliable criteria that Lakewood has not questioned, the need for small luxury rental units is fully satisfied for the next 10 and possibly 15 years!

Bottom line – Based on Lakewood’s Strategic Housing Plan, there is no need for Belmar Park West housing.

https://www.jchs.harvard.edu/blog/estimating-national-housing-shortfall

https://nlihc.org/gap/state/co