City’s affordable rental hole
While new report finds accessible housing more attainable in New Mexico than much of nation, lack of available, low-cost apartments plagues S.F.
Santa Fe is not alone in the struggle to provide median- or lower-income residents with rental apartments.
Nearly every region in the country, according to a national report, is unaffordable to those at lower-income levels — and even for people earning $20 an hour or more.
As the city grapples with ways to help create rental inventory — seen by many as the ultimate, though difficult-to-attain answer — a national report provides some surprising news: New Mexico is actually better off than much of the nation.
According to the annual Out of Reach report by the National Lower Income Housing Council, a nonprofit advocacy group dedicated to affordable housing for lower-income citizens, the state
ranks No. 36 in the income needed to rent a two-bedroom apartment.
That means 35 states require higher incomes. The housing council determined $16.34 per hour averaged across New Mexico is adequate to rent a two-bedroom apartment, although the average renter’s wage in New Mexico is $13.41 per hour.
The title of the report refers to more than half of the population not being able to afford a two-bedroom apartment, defined by the U.S. Department of Housing and Urban Development as not paying more than 30 percent of gross income for rent.
Santa Fe, of course, has a higher “housing wage,” as the housing council refers to the salary needed to afford a home — but not that much higher: $20.56 per hour. That’s actually lower than the national average of $22.96 per hour, according to the report.
In 2018, it was estimated that about 37,300 people, or 60.7 percent of all workers in Santa Fe, earned less than $20.56 an hour. The median hourly wage for all workers in Santa Fe in 2018 was $17.64 an hour, according to statistics from the New Mexico Department of Workforce Solutions, the state’s labor department.
For Santa Fe, an even more daunting number is this: The city’s rental market had an apartment occupancy rate of 97.69 percent in January, according to a survey produced by the Albuquerque office of the national commercial real estate firm CBRE.
“I think the argument is that Santa Fe is one of the tightest rental markets in the country, no matter big or small,” said Erik Olson, first vice president at CBRE in Albuquerque. “In general, when you get to 97 to 98 percent, that’s basically the highest occupancy achievable. So that 97 to 98 percent threshold is similar to having waiting lists of people wanting to move in with very little turnaround times in getting units ready.”
The lack of units at all levels, experts say, has a trickle-down effect for those struggling to make ends meet.
The Santa Fe Civic Housing Authority oversees 900 Section 8 low-income housing vouchers and manages 500 units of affordable housing.
But Executive Director Ed Romero said income qualifications for his stock don’t stop at the $10,000 or $20,000 level, or even the Santa Fe area median income for one person of $51,250.
“We believe our market should go up to about $60,000,” Romero said. “If you make $60,000 and work for the state, you take home $36,000 to pay the rent. So what if you make $60,000 in Santa Fe or $100,000 in San Francisco? We’re both on the verge of homelessness.”
The new 87-unit Soleras Station affordable housing for those earning 60 percent or less of the area median income was filled in phases from May to September. It is the third affordable housing apartments for the Housing Trust, which also built the Stagecoach Apartments and Village Sage, both with 60 units each.
“We might have a 5-to-1 application rate for each apartment and we haven’t even advertised.” said Justin Robison, executive director at The Housing Trust. “We have a more bigger-city problem. Once we get rented out, it gets stagnant. People don’t want to move out.”
Overall, Santa Fe has a shortage of some 3,000 rental units, said Daniel Werwath, chief operating officer at New Mexico InterFaith Housing, a Santa Fe affordable housing developer and property manager.
Looking specifically at apartments with monthly rents at or below $625 for people earning 30 percent or less of the area median income, the shortage is 2,600 rental units, said Alexandra Ladd, director of city Office of Affordable Housing.
The problem, of course, isn’t merely statistical. The human quotient in Santa Fe’s apartment crunch is real.
A woman named Jovana, who did not want to give a last name, lives in subsidized Section 8 housing with three children and pays “very little rent” as she works at Four Seasons Resort Rancho Encantado and Hilton Santa Fe Buffalo Thunder. She moved to Santa Fe when family members relocated here.
“I’m very grateful [for Section 8 housing],” Jovana said. “I would maybe live with my mom and her cats [without the subsidized housing].”
There had been no apartment construction for 10 years until 2016, when the city added an in-lieu cash payment option to fulfill the city’s requirement for 15 percent of new apartments to fall under affordable housing. That resulted in more than 1,000 apartments either built, under construction or planned, Ladd said.
But that has not made up for a decade of lost time. “What we have neglected is [building] rental housing,” Werwath said.
Ladd is shepherding three new options to the city’s 21-year-old inclusionary zoning regulations that are designed to bring affordable housing into housing development. These are designed “to inspire and incentivize the market to produce the part of the solution that is market driven.”
She said adding rental housing during a housing shortage encourages some betteroff people in existing older apartments to move into new units — creating openings for lesser-income people, ultimately leading to a rental reduction for older units as the vacancy rate increases.
“In a perfect world, there would be more choice in the marketplace,” Ladd said. “Rents would stabilize, there would be a little more vacancy. Old stuff is charging top rents because no new units are online.”
The first option for the inclusionary zoning amendment would continue to allow developers to pay a fee in lieu of setting aside 15 percent of units as affordable housing — but the fee would increase 20 percent every year for five years to double the fee.
The second option would set fair market rents — $1,021 for one bedroom, $1,176 for two bedrooms — and income of renters can’t exceed 120 percent of area median income. The city would reduce development fees by 15 percent.
The third option would have a developer partner with an affordable housing subsidy/ services provider set aside 15 percent of units for households earning no more than 80 percent of the area median income — but the developer gets a 30 percent decrease in development fees.
Ladd said she is still tinkering with the options before presenting them Dec. 11 for a City Council public hearing.
Short-term rentals?
Fingers get pointed at the appearance of some 1,600 to 2,000 short-term rentals in Santa Fe, with that number increasing about 50 percent each year since 2014. But affordable housing advocates point out there are other factors at work.
“There are two views out there,” Justin Robison, executive director at the Housing Trust, said in an email. “One: Short-term rentals deprive permanent/long term renters of housing stock. Two: Short-term rentals offer viable alternatives to hotels/motels and increase tourism dollars coming into Santa Fe. I happen to think both views are correct.”
Werwath at New Mexico Inter-Faith Housing noted that the short-term rentals in Santa Fe make up about half of the acknowledged rental shortage.
“Compare that to the 3,000-plus rental units we need, you can see that while exacerbating the problem, it’s not the core of the problem,” Werwath said. “I tend to think of [short-term rentals] as overrated as the cause of our affordable housing issues.
“Put another way,” he added, “it’s the icing on the cake of the problem, with the meat of the cake being the supply demand imbalance from lack of development.”
Homewise and the Thornburg Foundation issued a report in June that stated short-term rentals make up an estimated 20 percent of the increase in housing costs since 2014, but likely play a lesser role in housing supply, as many would be otherwise vacant.
“The immediate impact of STRs [shortterm rentals] is concentrated in the areas of town most popular with tourists,” the report said.
I think the argument is that Santa Fe is one of the tightest rental markets in the country, no matter big or small.” Erik Olson, first vice president at CBRE in Albuquerque