No Fooling

Last week, the National Association of Home Builders (NAHB) announced that Boulder, Colorado was the most affordable community in the Western United States.

The overall tone of local media coverage fell somewhere between nervous giggle and guffaw. The Denver Post assumed that if you make enough money in filthy rich Boulder, anything is affordable. Even the Chamber of Commerce sounded nervous, wondering how it would answer requests for $60,000 houses by people relocating from Wisconsin.

Was this the NAHB's idea of an early April Fool? Or maybe some warped effort to embarrass Boulder, the builders' arch villain of growth control?

Nope. The NAHB report is straight news, it's current (for the fourth quarter of 1994), and based on first rate methodology. It contains a lesson or two for those who believe that Boulder is in dire need of more affordable housing.

The NAHB study is prepared by a housing economist, and he shows no sign of political bias. He does display a splendid sense of humor, and is aware of the chuckling about Boulder-as-affordable. He plugs hard data into a formula, and out come the answers. Those worried about a bias against diversity among capitalist running dog housing analysts should be reassured by the economist's name: Gopal Ahluwalia.

His method is straightforward. Look up the median income in the area of study (census data). Convert the income into maximum mortgage purchasing power (using lenders' standard debt-to-income ratios, prevailing interest rates, and local tax and insurance costs), and add a 10% down payment. The sum is equal to the highest price of a home which could be bought by a household earning the median income.

Armed with a price, the study then goes to the housing market. The study defines "the market" as those homes which actually sold within the quarter under study (public records, not just sales going through an MLS). Stretch out all the sales prices from cheapest to most expensive, and figure out what percentage fall under the maximum sales price affordable to the median income.

Voila. In Boulder, it was 71.5%. Denver was a close second at 69.1%, while Colorado Springs lagged badly at 50.5%, Greeley at 61.1%, and Pueblo at 63.2%. (For reference: Portland 43.8%, Seattle 58.3%, Albuquerque 43.6%, Phoenix 62.9%, Salt Lake City 57.4%, San Francisco 18%.)

How can this be! Pueblo less affordable than Boulder?

Income is part of the answer. Median incomes (000s): Boulder 53.8, Pueblo 30.4, Denver 48.6 (Dear Denver Post: watch who you're callin' "rich"), Colorado Springs 40.2, Greeley 36.8. However, wherever the incomes were lower, the corresponding home prices were relatively higher than in Boulder.

Impossible.

Not. Part of the answer is that the study considers "Boulder" to be the whole County, and housing is cheaper outside the City of Boulder than in it. However, the main answer, the shell hiding the affordable pea, is that survey "housing" includes condos and townhouses as well as single family detached homes. Boulder may own the national record for semi-rural county with the most attached housing.

Lessons. Several people in the housing business have maintained that Boulder already is affordable, and will stay that way because of available types of housing. The NAHB confirms. The most affordable housing here is compact, and likely attached, but it's affordable.

There are a couple of discussions which might be helpful to City Council. First, what do you have in mind by affordable "housing?" There is no definition by Council at this time, and I hope we are not on the way to an entitlement for affordable single family detached housing. (In my favorite whipping city, New York, nobody can afford a free-standing house on a nice lot. The mayor gets to use the only one on Manhattan Island.)

Second, the City might get more support for new affordable projects if it were more specific about the people who need help. There is no clear guide at the Housing Office as to priorities for "special populations," the euphemism for single parents, the disabled, and the elderly. There is a difference between intervening in an already affordable market on a general entitlement basis, and reaching out to help those of us in greatest need.