This is the third story as part of a series on housing in Butte County.
CHICO — With a higher supply of apartments currently being built, it is uncertain if these homes can begin to narrow the housing gap that faces Butte County.
The latest countywide Peloton housing report not only demonstrates the difficulty, it calls into question whether the jump in development of market rate homes can really address the severe availability crisis facing fire survivors and workers.
The report notes over 600, mostly luxury, multi-family units were in various stages of construction at the time of the Camp Fire and as more units enter the market since the end of 2019, rent rates began to level-off, but remain at record high levels. Chico rents currently range $950 to $1,650 for 1-bedroom to 3-bedroom apartments in newer apartment complexes. And over 500 new units are in construction around Chico as of November, for completion sometime in 2021.
Considering the lack of housing availability alongside obstacles to affordability, will these higher-priced units be a draw for all members of the city’s population, including college students and fire survivors?
Chico State’s Director of Off Campus University Housing Dan Herbert said there really is little or no overlap between the college real estate market and the rest of the city’s market. More than ever, rental housing geared towards students is designed to be separate from that of, and even unappealing to, local families and workers.
“I don’t see as much renting out of non-traditional student housing,” he said.
He added after the Camp Fire, his department didn’t really see a demand on college rental housing from fire survivors. He believes this was because student housing is “so incompatible” with the needs of a family or other type of non-student renter. That means fire survivors are more likely to pay more and move into market-rate “luxury” apartments, or else move away, rather than wait for more affordable housing which could take years to arrive.
Thus, the demand for more affordable housing in Chico is pretty clearly divided between locals and students with little overlap, he thinks.
“There’s so much inventory in the student purposed housing market,” he said. “Chico State is such a bargain compared to other campus communities.” He added he has not heard concerns about North Complex survivors looking for units within the college rental community.
Herbert agreed with such a low inventory of lower end complexes and so many being marketed as “luxury,” it will be interesting to see if they fill up. He believes the demand is high enough that when supply shifts, people will move in despite the prices.
And, he has the theory that so many higher-priced new units may actually drive down the rents on the city’s older housing.
“It will be hard to believe we can handle the capacity for all these units,” Herbert said. “Supply and demand will kick in. Those older properties will have to lower rents to attract or maintain their current tenants.”
And that will help workers find housing they can afford, too. In the past, after all, apartment complexes would fill up despite the cost. The market has changed since then, and the need for housing has continued to grow even more urgent, as demonstrated by the report.
“It makes me think there’s a lot of ‘doubling up’ that goes on of families, and when something opens up the pressure is relieved and they go on to their own apartment. Before the fire we were talking about 1% vacancy in Chico in the non-student oriented market rate properties.”
Now with a pandemic’s impact and after the North Complex fires as well, ”It’s like a different city, it’s a different market entirely,” he added. ”All these different dynamics might play out differently.”
But the report focuses on expanded manufactured housing, infill and other alternative methods of housing as opposed to creating more market properties. And Leyden disagreed with the idea that new apartments will relieve pressure for lower-priced housing.
“People cannot pay these rent prices per month,” she said. “They will likely not fill those complexes.” She also disagreed that building higher density housing will take care of other problems like housing large numbers of people quickly due to high housing costs.
“Our problem is the cost to build is too high. For apartments … higher density is more expensive to build because you need different engineering and materials.”
“If we were any other place and we hadn’t lost so many houses that were our affordable housing, you could probably look at history and say, if things follow what used to happen and these fill up and more are built, then prices will do down,” she said.
Carl Henker of Coldwell Banker had a different opinion, that demand will be high enough that many fire survivors will shell out the funds for a higher priced apartment, and landlords will be more likely to accept them to fill their units.
“I don’t think there will be a problem filling them up,” he said. “What we’re seeing is people are paying 40 to 50 percent of their income because there isn’t anything available.
That means some landlords are probably being more lenient, he said. If they don’t, high prices will force some to move away, or become “semi-homeless.”
Indeed, the report focuses on other alternatives besides adding more market rate housing to the area. Accessory dwelling units, manufactured homes, tiny homes and community land trusts were identified as more ways Butte County can address its issues.
Despite these recommendations, the report acknowledges continuing issues with affordable housing opportunities have pushed permits to a higher percentage of building permits issued over the last decade. Whether new housing gets filled or not, the crisis in availability is not likely to abate as the pandemic continues and a shortage of opportunities to build more affordably also persists.
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November 22, 2020 at 07:05PM
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Between college students and fire survivors, will new housing fill up as prices rise? - Chico Enterprise-Record
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