Ouray County and five neighboring counties need more than 2,200 workforce housing units just to catch up to existing needs, and another 4,300 more to keep up with projected growth in the next decade, according to a recent study.
The Region 10 League for Economic Assistance and Planning, which serves Ouray, Montrose, Delta, Hinsdale, Gunnison and San Miguel counties, worked with a team of consultants on the study in 2022, which found major gaps between supply and demand for workforce housing.
Findings were presented to Region 10’s Board of Directors in December, and the full report, titled “Mind the Gap,” is now available. In addition to state and federal data, consultants conducted 20 interviews with “housing development stakeholders,” including Lily Oswald, Ouray’s community development director, Ridgway Town Manager Preston Neill, Home Trust of Ouray County founder Andrea Sokolowski and former Telluride Foundation CEO Paul Major, who is leading the Rural Homes projects in Ridgway and Ouray.
Based on an estimated job vacancy rate in Colorado of 7%, and using data from the State Demography Office, U.S. Census and the U.S. Bureau of Labor Statistics, the study found that another 2,287 housing units would be needed to fill current job vacancies in Region 10.
But to keep up with anticipated growth in the labor force, based on projections from the Colorado State Demography Office, there would need to be 4,300 additional new units for workers by 2032, putting the total at more than 6,000 new units.
Those numbers are conservative, though, because they refer only to local workforce housing, not overall housing needs in the region. That doesn’t account for factors including migration of retirees to the area, the growth of the remote workforce, and an aging population, which requires more senior housing and assisted living, as well as replacement workers for seniors leaving the workforce.
From 2010 to 2020, the percentage of households in the region with at least one senior 65 or older increased from 25.7% to 36.5%, and in Ouray County, the jump was even steeper, from 25.1% to 40.1%, according to the report.
The calculations for “catch-up and keep-up” housing also don’t account for what it would take “to create a more functional and balanced housing market,” the report said.
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Throughout the region, there is a lack of starter homes, long-term rentals and housing for what’s referred to as the “missing middle,” or residents earning 60% to 140% of the area median income. For Ouray County, AMI was about $62,000 for an individual and about $88,000 for a household of four in 2022; those amounts are calculated annually by the U.S. Department of Housing and Urban Development.
The report cited a lack of interest in developing homes for those buyers, and a lack of funding assistance, which is often capped at or below 60% AMI. High construction costs and high infrastructure costs add to that problem.
In interviews with stakeholders, some cited a lack of long-range, strategic planning and regional coordination as a challenge.
The report found that to be the case in Ouray County: Some interviewees referred to the 2018 Housing Advisory Committee 5-Year Strategic Plan, which “does not get much attention or use.” That volunteer committee disbanded in 2020.
And the consultants found that in some parts of the region, “persistent negative community perceptions toward new housing development, especially at higher densities,” have been barriers to low-income and workforce housing.
Those perceptions are changing, some interviewees told the consultants, due to increasing recognition of the need to house people including teachers, nurses and firefighters.
Other specific challenges cited in Ouray County were a lack of developable land, little flexibility due to topographical constraints and limited infrastructure capability, and rules around development. Ouray and Ridgway “are seen as having onerous regulatory requirements, beyond what is necessary to protect community safety and welfare,” the report said.
There is a need for more staff and technical resources in the county, as well as data required to get grant funding, and partnerships to meet cost-sharing requirements for some funding.
The county’s strengths include “a willingness for intergovernmental collaboration among its communities,” and a county-wide push for new regulatory strategies, including short-term rental efforts, the report said.
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One result of the lack of workforce housing is an increase in commuting, which the study found happened in all counties in Region 10 except Montrose.
From 2010 to 2022, the percentage of jobs in Ouray County held by residents dropped by 11.4%, behind only San Miguel County. According to census data, less than half of jobs in Ouray County are held by residents, the lowest percentage in the region.
The large drops in residents holding jobs in their own counties in Ouray and San Miguel counties suggest “commuting is increasing to these areas as more workers are excluded from the housing market,” the report said.
In all six of the studied counties, the increase in home prices is far outpacing what residents can afford. In Ouray County, average annual pay increased 24% from 2019 to 2021, but the single family median price increased by 59% in that time, according to the presentation to Region 10’s board.
Housing is considered “affordable” when residents spend less than 30% of their gross income on housing expenses; households spending more than that are considered housing cost-burdened.
The median single family home price in Ouray County last October was $845,750; for that to be “affordable” by the 30% standard, owners would need to earn 275% of the area median income. That’s the second highest in the region.
New construction isn’t feasible either, the study found. “Even with subsidized interest rates and down payment assistance, the cost to build a typical 1,400-square-foot single family home still exceeds what local households can afford,” it said.
To meet the need for workforce housing, a higher proportion of rental, modular and multi-family homes are needed, the report said. Of the 6,600 new units needed, they projected a mix of more than 3,000 single-family homes, 2,300 multi-family units and almost 1,000 manufactured homes.
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But building enough “catch up” and “keep up” units won’t come cheaply. The total cost estimated to build the 6,600 units is $2.4 billion, or $240 million per year over a decade – and that doesn’t include the cost of land, which would drive the cost up to an estimated $3.8 billion.
More construction employees will be needed, too: they estimate another 2,457 jobs, or more than double the current residential construction employment in the region, would be necessary to meet the workforce housing demand.
“Sourcing the labor required to build the units needed may be more difficult than finding the funding,” the report said – and that’s further complicated by needing to house that labor force, if it can be found.
“Innovative and creative solutions” will be necessary, including more multi-family and modular buildings that require less labor to build, as well as smaller unit sizes.
The study points to some potential solutions to bottlenecks in the development process, including an increase in available capital, such as state funding sources, for affordable housing projects and potential partnerships including public-private efforts.
While prefabricated housing manufacturing is currently “a tiny but growing segment of the construction business,” it can save time and money. “A strategy that would address housing supply, construction cost, job creation, and even the jobs-housing mismatch, would be to locate modular housing factories directly in Region 10,” the report said.
Strengthening the talent pipeline into the construction industry by “re-skilling” roles for off-site construction, embracing new technology and reaching into “the untapped pool” of people who haven’t considered careers in construction is needed to solve the labor bottleneck to build the homes the region needs.
The study lists several roles that Region 10 can play, including serving as an information hub for data and development assistance, educating elected officials and decision-makers and providing financial education, including housing and homebuyer education.
Facilitating collaboration across jurisdictions is another “major role” the organization can play, including making connections, working to minimize competition for resources and “helping local and regional entities problem-solve together.”
Executive Director Michelle Haynes said the organization’s role is up to its board, which is made up of officials from the six counties and municipalities within them.
“We presented the report to the board,” she said, and it’s up to them to decide “if they feel like there’s a role Region 10 could or should play in the discussion.”
Liz Teitz is a journalist with Report for America, a national service program which places reporters in underserved areas. You can support her work with a tax-deductible donation by clicking here.
