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Population Boom: Denver’s Affordable Housing Crisis


I have lived in Colorado my whole life. As more people continue to move to Colorado, rent and housing prices continue to grow. In January of 2015, the average 1 bedroom apartment in Colorado Springs was ~$750 a month but, as of March of 2018, the average Colorado Springs in 1 bedroom apartment is ~$1000 a month.[1] Denver rent trend is very similar. This has contributed to the rising homelessness population. In 2017 Colorado’s homeless population grew 4% compared to 1% nationally.[2] People who have not signed long-term leases are being priced out of their homes. As more people keep moving to the state this problem will only get worse.

 

Here is a great video from one of our local news channels explaining the issue:

 

I have recently connected with local nonprofits that strive to aid those who can not find affordable housing. They all agree that the best solution for the homeless is government regulation such as government subsidized housing. A few of them also think that some standard of rent rates would help people who are on the edge of being priced out. They also acknowledge that their view is one-sided, and the renters should also have a say in the matter. 

Here is a graph of income compared to rent:

After talking to local community members such as politicians, renters, homeless and students we came up with four major options for the homeless:

  1. Financial help (A loan most likely from a government program)
  2. Governmental regulation (Housing subsidies or rate increase limitations)
  3. Leave Denver/ Colorado Springs altogether (This is surprisingly common according to local nonprofit Cafe360)
  4. Stay at a shelter or with friends

And two options for the renters assuming that rent continues to grow:

  1. Increase rent
  2. Keep rent the same

We can model this into a grid like this:

Homeless
Renter A B C D
A (10, 100) (100, 0) (0, 10) (60, 30)
B (20, 90) (100, 0) (0, 10) (80, 20)

The first number is the payoff to the homeless and the second is the payoff to the renter. In this case, they are between 0 and 100 and higher is better.

Here is how I assigned each number:

AA:
Homeless: You to get a loan and find a way to repay it but you have housing.
Renter: You are collecting rent at the best price for you
AB:
Homeless: You to get a loan and find a way to repay it but you have housing.
Renter: You are collecting rent at a good price for you
BA and BB:
Homeless: You to get housing for free or at a greatly reduced rate
Renter: You have no tenant and will need to find a new one and much of your market is now gone
CA and CB:
Homeless: You still need to find housing and you need to adjust to a new city
Renter: You have no tenant and will need to find a new one which is slightly easier than BA/BB because only one person is gone.
DA:
Homeless: You have housing but when you are stable to rent again the rent is not as reasonable
Renter: You have no tenant and will need to find a new one but there is demand and you get it at the higher price.
DB:
Homeless: You have housing and when you are stable to rent again the rent is reasonable
Renter: You have no tenant and will need to find a new one but there is demand.

 

 

Nash Equilibrium: BA

Pareto:  AA or BA  

The Nash equilibrium is the point or points at which either party has no incentive to change what they do. In this case, this is the renters keeping the rent the same and the homeless getting financial help. Pareto optimality is the best outcome for all parties. In this case is the homeless getting financial help and the renters either keeping the rent the same or raising it. Because of this, I would call the best solution to the ‘game’ or problem renters keeping the rent the same and the homeless getting financial help. This, however, may be more unfeasible than the 2nd best outcome of getting the government to regulate housing.

This will greatly benefit the renters and will also help the homeless get back on their feet. While it is not optimal for the homeless to borrow money there are government programs that will sponsor hardworking people who have fallen on tough times. Universal basic income is being tested in other countries and could boost the US economy.[4] While this is radical the Coloradoan government is considering more subsidized housing and better, cheaper healthcare.

 

To see the average rent in your zip code use this link, then post the average 1-bedroom price and your zip code here (you will be able to see others responces after you submit):

 

As a student staying as informed is very important. It is also key to realize that these people have fallen upon tough times and they should be treated as humans. As we have an election coming up, it is important to support the people you believe will make a difference. Personality, I am actively campaigning for the candidate who plans to directly address this issue across the state.

 

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COMMENTS: 2
  1. April 27, 2018 by lucas

    I love your approach to affordable housing. It seems like this issue is popping up across the country, not just in larger cities. I live in a small city in the South and it’s a challenge for a good portion of our residents to find housing. This makes it incredibly challenging not only for these families but also a series of businesses who are looking to fill service industry jobs.

  2. April 27, 2018 by susan

    What moved me the most is your commitment to this issue, which, as the commenter above notes, is widespread. Doing your form led me to realize that the average one-bedroom rental in my area is $1800/month. I hadn’t sought this info before and was SURPRISED to find that it is so high. It might be interested for you to look at the history of this struggle and dig even further into why and how things may be becoming worse than they ever have been. I am thinking that you are someone who could work for change effectively and so hoping you will continue to do so, especially as you learn even more and gain even more education that will set you up to be an esp effective advocate.

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