Colorado’s Affordable Housing Crisis.

Colorado’s housing and homelessness crises continue to worsen, and data demonstrates that people at the lowest income levels are facing the greatest burden. The cost of housing has roughly doubled over the last decade, households are spending increasing portions of their income on housing, and first-time homelessness is skyrocketing. Elected officials have an opportunity to dramatically change Colorado’s housing landscape.

Over the last four decades, federal housing funding has decreased substantially, requiring state and local governments to step up. Before 2019, Colorado did not have a sustainable source of affordable housing funding. Today, the state has multiple funding sources, including $300M per year from Proposition 123 and $650M in one-time American Rescue Plan Act funds for affordable housing and homelessness resolution and prevention.

While these are substantial investments, because of the lack of investment to date, they are not sufficient to fully meet the housing needs of Colorado households, making their strategic distribution critical. Public investments and policy solutions for affordable housing must be proportional to communities’ needs, with a specific focus on those with the greatest historical barriers to housing, the lowest incomes, and the greatest risk of homelessness.

In recent years, there has been a trend toward using public funds to develop high-cost or market-rate housing, based on the assumption that it will eventually make homes available to people at all rungs of the housing ladder, benefiting even the lowest-income individuals and families. This concept of “trickle-down housing,” or “filtering,” suggests that over time homes depreciate, their previous occupants move into the newer, higher-priced homes, and they become available at lower price points to households lower on the income spectrum. This concept shares the underpinnings of the failed trickle-down economic model, which holds that policies benefiting the wealthy and corporations, like tax cuts, deregulation, and reduced protections for workers, lead to prosperity for all.

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. The approach does not account for nor is it proportional to data that identifies communities’ affordable housing needs. Some studies 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.

Housing that does become more affordable through trickle-down housing is typically offset by the permanent loss of affordable housing due to disrepair or demolition. Alternatively, the strategic development of new rental housing available to the lowest-income households is two times more impactful in terms of increasing the affordability and availability of housing and mitigating displacement.

The bottom line is that trickle-down housing is not a solution for Colorado’s acute housing and homelessness crises. While it may benefit middle-income households eventually, people with the greatest, most immediate housing needs are left out. Using very limited public funds to increase the overall housing supply without intentionally targeting resources for low-income households and people experiencing homelessness will fail to comprehensively address the housing crisis that Colorado is facing. The Colorado Coalition for the Homeless (the Coalition) and its partners call on our elected officials to take decisive action to rectify the damage caused by ongoing and historical inequities, the commodification of housing, and the growing tragedy of homelessness.

Colorado is at a crossroads in its housing crisis. People experiencing homelessness, low-income renters, and aspiring homeowners are all significantly impacted by the pressure. Housing supply is low, costs are prohibitive, rent is increasing at alarming rates, and households are being pushed out of the neighborhoods that they have called home for generations. Elected officials at all levels of government face key decisions about how to manage this crisis.