More than $15 billion in property sales in 2020 in the eight main Colorado mountain counties marks a 61% increase over 2019, the largest increase ever (1). This massive increase in deal flow has created a pricing surge and availability crisis with broad reaching consequences that push far “down valley” to the labor sheds near Colorado’s resort towns.
Most believe 2021 will push prices even higher and concerns are rising about how to provide housing for the existing locals, needed workforce, and new people moving to these communities. Providing a place for people to live is the chief concern. With so many people moving to the region, there is also concern about preserving community culture and providing adequate access to outdoor spaces which drew new residents and existing locals alike to the area.
Investors Overlooking Rural Colorado Set the Stage
“We saw the housing price increase happening and coming, but what has unfolded is off the charts,” says Marco Vienna, from Four Points Funding. “People have been moving to the Colorado mountains and rural parts of the state in increased numbers for over a decade, but investors almost solely choose to build housing on the Front Range, and for good reason because cities are easier to invest in.” The pandemic surely has been a Black Swan event, however, populations in the rural parts of the state were growing even faster than Denver and Boulder before the cultural shift of Coronavirus (2). The pandemic has moved infrastructure challenges across Western Colorado in particular from serious to critical.
Investing in smaller communities is generally harder than investing in large population centers. It takes deep local knowledge, creative debt solutions with banks who tend to favor metro-areas, and an approach with enough scale to cause investors to take notice.
As a result of the pandemic, 14-23 million Americans are projected to move, with 41.5% moving over four hours away from their current home (3). The pivot to remote work is the largest and fastest transformation of the labor market since the World War II mobilization, and Colorado is in the eye of the storm.
The Immediate Need for Workforce Housing
A grand majority of Four Points Funding's investment dollars go towards large workforce multifamily housing developments. The developments provide for an immediate need of modern and accessible workforce housing in areas experiencing rapid economic and population growth.
Growth is scary for locals. We understand because our team all lives in and cherishes the same types of communities in which we are investing. Once someone realizes how inevitable the growth is, the mindset shifts to how to ensure these communities benefit from the growth while retaining their workforce and culture. The answer is resoundingly to build more housing and to ensure the housing is accessible to the community's workforce.
Retaining Culture
The first step in our investing is to ensure that existing residents as well as people migrating to Colorado have a place to live. However, most people that currently live here and that are moving here do so to be near outdoor recreation. In addition to investing in under-the-radar housing markets, we invest in “outdoor hospitality” in under-the-radar markets. These outdoor assets are a small portion of our investing, but contain everything from updating or converting an RV park, to a hot spring, to camping and glamping, to tiny homes adjacent to outdoor recreation.
By creating a place for people to stay with immediate proximity to hiking, fishing, mountain and road biking, backcountry skiing, and more, we hope to contribute to the ongoing demand for accessibility to the outdoors. Especially by doing so in locations that are less heard of or are budding outdoor recreation hubs, we see opportunities to spread people out, provide people new experiences, and help with the economic vitality of rural Colorado.
For more details on market dynamics and the ongoing cultural shift, read this Colorado Sun article, Colorado Resort Towns Real Estate Records Pricing Out Locals, and reach out to us to learn more about how and why Four Points Funding is working to build hundreds of housing units and outdoor hospitality across the state.
Sources:
(1) Colorado Sun. Colorado Resort Towns Real Estate Records Pricing Out Locals.
(2) Colorado Division of Local Affairs; State Demography Office, 2017. The Denver Post. What Colorado regions will grow fastest through 2050? The answer is not metro Denver.
(3) Upwork. Economist Report: Workers on the Move.
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