When looking at the Aspen-Pitkin County Housing Authority ownership inventory we recently shared, it can be surprising to see what’s known as affordable housing valued at $1 million or more. Surprising, perhaps, anywhere but Aspen.
But for owners of a growing segment of the highest-priced properties in the APCHA ownership inventory, homes worth more than $1 million are still a bargain compared with the free market. In Pitkin County, the median sales price of a single-family home in both 2020 and 2021 was more than $5 million.
But along with more than 100 properties worth seven figures as of March 24, 2022, the “resident occupied” (RO) category in APCHA’s ownership inventory also includes many homes with much lower values. Comprising 510 units total — making it the second-largest category in APCHA’s 1,652-unit ownership inventory, behind Category 4 — RO has APCHA’s broadest range of home values. These span from a $155,000 trailer in Lazy Glen to a single-family home worth more than $3.3 million in an exclusive Castle Creek Valley neighborhood.
Although buyers in APCHA’s five numbered categories are subject to income caps, that’s not the case with RO. And owners’ asset limits are either the highest allowed in the APCHA guidelines — currently $2.445 million — or nonexistent. Like the categories, RO owners can’t hold any other residential property in the ownership-exclusion zone (the Roaring Fork River drainage and from No Name to Rifle in the Colorado River Valley). There are also work-history and residency requirements, although some RO deed restrictions are looser than the standard APCHA eligibility guidelines.
For a significant chunk of the RO inventory — 333 units or 65% of them, spread among what used to be privately owned mobile-home developments of Smuggler Park, Aspen Village and Lazy Glen — there is no appreciation cap, meaning the homes can sell for whatever the market among qualified buyers will bear. In the rest of the RO inventory, most units are subject to a 3% or 4% annual appreciation cap. In cases where the homeowner acts as the developer, initial valuations are typically tied to what the buyer paid for the land plus construction costs.
The specifics of the RO regulations vary from neighborhood to neighborhood. APCHA in 2018 published a breakdown of many of the details in each of the 15 subdivisions containing RO units. Each subdivision has its own story of how it came to be, and several neighborhoods, including the former trailer parks, were originally free-market properties, absorbed into the system to preserve housing affordability.
But the concept of RO — housing locals who don’t otherwise fit into the numbered categories and accommodating properties that also couldn’t easily be categorized — is an important one in one of the country’s most robust affordable-housing programs.
So, is it working? Does Aspen need a growing inventory of $1 million-plus properties to house its professional class, or is there enough variety in RO units to satisfy a wide range of upper middle-income households? Perhaps more important — as the gap between the free market and affordable housing continues to grow — will it be enough in the future?
“RO units, while aimed at higher-income families and individuals, play a vital role in maintaining the vitality of the community, by ensuring that professionals — teachers, dentists, lawyers, etc. — can still afford to live in Pitkin County,” said APCHA Executive Director Matthew Gillen. It’s worth noting here that the income limit for a three-person household under the Category 4 guidelines is $203,900 a year. “While a family earning around $200,000 per year is certainly doing well, the brutal economics of the Aspen housing market restrict free-market housing options.”
By the numbers
On the upper end of the APCHA market, 103 of the 510 RO units (about 20%, and 6% of the total ownership inventory) are valued at more $1 million as of March. Of those, 50 had most recent sales prices more than $1 million — nearly double the 26 units that had a most recent sales price above that threshold in 2014, according to a database Aspen Journalism published at that time. So far, the highest sale in APCHA history was $1.95 million for a North Forty home in December 2021. And when the Pitkin County Assessor’s Office releases its latest property valuations this spring (an exercise done every two years and based on two years of comparable sales), expect more RO homes to break the $1 million threshold.
Meanwhile, the median market value for RO units in March was $560,000, compared with $233,000 for the numbered categories. The average value of RO units, $680,000, was well above the median, unlike the average for the numbered categories ($251,000) — meaning that the RO values are more spread out across the spectrum.
Data also shows that recent higher-end sales have driven up the average sale price — which is more sensitive to extreme values than the median. The average price of an APCHA home or condo reached approximately $422,000 in 2020 (up from about $390,000 in 2019) before dropping to $314,000 in 2021. Most of that 2020 increase came from the RO sales, for which the average sale price was around $848,000 in 2020, while units in categories 1 to 5 were sold for an average $278,000 that same year. In the past 10 years, category units have sold on average for between $200,000 and $300,000, while the average sale price of ROs has hovered between $500,000 and more than $900,000 since 2011.
And yet, even with a growing number of $1 million-plus sales, the gap between free-market and APCHA home prices has grown considerably of late. While APCHA’s median sale price for all units increased 7% between 2014 and 2021 — from around $235,000 to $252,500 (adjusted for inflation) — RO prices went up 18% in that time period, from around $434,000 to $515,000. Meanwhile, the inflation-adjusted free-market median sale price (of single-family homes, duplexes, and condos) rose 65% between 2014 and 2021, based on an analysis of Pitkin County Assessor’s Office sales records. On average in the past decade, a free-market unit was six times more expensive than an APCHA one; in 2020, the difference was a factor of seven and in 2021, it was eight.
RO sales have also outpaced those of the numbered categories in recent years. From 2002 to 2013, RO sales represented less than 15% of APCHA sales overall. In 2013, 30% of APCHA sales were of RO units, and since then, RO sales have roughly ranged between 20% and 30% of all sales.
James Benvenuto, a real estate agent with Aspen Snowmass Sotheby’s and a North Forty resident, said the RO market is “just like any other market. People are looking for value.”
Just as on the free market, higher-priced homes must be well maintained, improved over time, and worth the asking price in the eyes of potential buyers, said Benvenuto, who has represented buyers or sellers in a handful of sales in the North Forty. And with a limited pool of buyers — who have to meet at least some criteria in terms of asset limits and local work history — that means some RO homes don’t fetch the maximum-allowed sales price, nor what it might on the free market if it doesn’t have an appreciation cap.
The growing number of $1 million-plus homes doesn’t surprise Benvenuto. For example, North Forty homes, most of which popped up in the early 2000s, were built for free-market construction costs on a subsidized lot, then allowed 4% compounded annual appreciation. With an estimated average value of around $650,000 from the get-go, according to Benvenuto, “it should have been clear that they’d appreciate over a million.”
And as free-market prices continue to accelerate exponentially compared with the APCHA market, Benvenuto is certain that demand will increase for RO homes.
“When the North Forty was built, you could buy a home in Snowmass for under $1 million, perhaps in Mountain Valley as well,” he said. But with free-market homes having appreciated significantly more than the 18% median-price increase RO units saw over the past eight years, “in a way they’ve done a good job of not letting RO homes go through the roof,” he said.
“In our neighborhood, we have doctors, realtors, lawyers and business owners who maybe make a little more money than others, but we need a place to live too,” said Benvenuto. “Doctors at AVH can’t afford $2,000 a square foot. I don’t think all employee housing should be limited to people who make under a certain amount of money. It’s housing that’s fulfilling a need.”
North Forty: A purpose-built RO neighborhood
Holding more than one-third of APCHA homes worth more than $1 million is the North Forty, built in the early 2000s. Local developer John McBride, who created the Aspen Business Center, proposed the project in the late 1990s on land he owned on its north side. His intention: to create a year-round livable community for a shrinking professional middle class that was increasingly moving downvalley or out of the valley.
Initial buyers of the 59 single-family home lots (13 townhomes were added later) were all locals to whom McBride sold the plots of land averaging around 5,000 square feet at below-market rates to build their own homes. (Owners needed to be full-time residents with three years’ work history in Pitkin County, but they weren’t subject to income or asset maximums.) And although many traded services or put in their own sweat equity, in most cases the homes — which are allowed 2,200 square feet plus 800 square feet for a basement and 500 square feet for a garage — cost several hundred thousand dollars to build. Construction costs were used to set the homes’ initial values, and 4% annual appreciation was allowed based on that.
Michelle Fox was one of those first North Forty residents.
She had been living in Hunter Longhouse, an APCHA rental complex in Aspen, when her husband, Preston, returned to the city after graduating from law school in Boulder. He began working as a lawyer and accountant, and the couple started looking for something to buy.
But even with his income, “there was nothing affordable in Aspen for us,” Fox said. “So we considered moving out, and then we heard about someone who was backing out of their lot in the North Forty.”
In 2000, after a conversation with McBride, they purchased a lot for $125,000 and built their home — a now-2,900-square-foot house worth $1.6 million, according to APCHA’s March 2022 inventory.
“The community is absolutely incredible,” Fox said. “It is like a family and especially during COVID because you couldn’t go anywhere, but people would sit in front of their houses, in their chairs and talk to each other. So you never really felt alone.”
Most homes are now about 20 years old, and some have changed hands multiple times. With allowed capital improvements and the 4% annual appreciation cap, this has resulted in the county’s most dense crop of highly valued deed-restricted housing — 39 of the 72 units are now worth more than $1 million — and many of the nicest homes in the APCHA inventory.
But it’s important to note that homes in the North Forty — or any other RO neighborhood with appreciation caps — are not guaranteed to sell for the maximum-allowed sales price. And it’s not uncommon for some of these homes to spend some time on the market before selling for less than the resale cap.
And that’s what makes the RO market more like the free market than APCHA’s numbered categories — the perception of value that Benvenuto talked about. “If a property is not priced correctly, the seller will take reductions until they find the sweet spot,” he said.
Benvenuto, who with his wife, Jenny, purchased the aforementioned $1.95 million home at full asking price, said it was “really good value.” Having owned free market in Snowmass Village and Basalt, as well as a W/J Ranch home, they are thrilled to be back in Aspen where they and their two children are fully ensconced in school, work and lifestyle.
“At the end of the day, I want to be really clear: Jenny and I are extremely grateful,” he said. The RO program “is an extremely valuable asset to the community.”
Smuggler: Aspen’s million-dollar trailer park
On the northeast side of Aspen, below the silver mine for which it was named, the Smuggler Park subdivision holds APCHA’s second-highest concentration of pricey homes — and has received plenty of media attention because of it. All 87 Smuggler units are worth at least $600,000, and 37 of them are valued at more than $1 million, according to the Pitkin County Assessor’s Office valuations that were last recalculated based on 2018-20 sales. The highest-valued property in Smuggler, worth $2.6 million according to the Pitkin County Assessor’s Office, also has the second-highest valuation in the APCHA system.
Smuggler, a privately owned rental trailer park dating to the 1970s, became one of the local affordable-housing system’s first RO neighborhoods in the mid-1980s. (Smuggler Run, with 17 Category 4 units, is a separate subdivision adjacent to it on Ajax Avenue.) Setting the example of privately owned mobile home parks that offered renters the possibility to buy their homesites, it was eventually followed by Aspen Village and Lazy Glen.
Because it was incorporated under 1980s affordable-housing guidelines, Smuggler has one of the loosest sets of restrictions. Owners aren’t subject to income or asset maximums, and there’s no appreciation limit on the properties. Residents must use the home as their primary residence, which in Smuggler’s case is defined as six months a year. (It’s nine months for most APCHA units.) Priority for buyers is given to those who work in Aspen, then Pitkin County, but Smuggler is unique in that it allows Colorado residents with no local work history to buy a unit if it has sat on the market for longer than four months.
“The simplicity of the deed restrictions are what make it work so well, and the enforcers are everybody who lives there because we don’t want people coming in, [such as] developers [who] grab one of these sites, build a different kind of home and then turn around and just turn it over,” said Smuggler resident and former Aspen Mayor Bill Stirling.
Stirling owns the subdivision’s second-highest-valued home, at $2.37 million. When he bought it with his partner in 2013 for about $1.3 million, he said it was the same price as a two-bedroom condo in Aspen. “I didn’t want to live in a condo, but not everybody wants to live in a trailer park,” he said.
Without an appreciation cap and with looser qualification rules for buyers, Smuggler homes are more sensitive to variations in the real estate market than other RO neighborhoods, with prices set at whatever the market will bear among qualified buyers.
As for Stirling, who works as a real estate broker, he is staying put. Their home has amazing views of Aspen Mountain and is close to the city’s downtown — qualities that, for him, justified the price. “And the house is so brilliantly conceived,” he said. “I’ve now fallen in love with all the light, all the glass, just the feeling of openness in the house. Victorians have smaller rooms.”
Before buying in Smuggler, Stirling and his late wife owned a Victorian home in the West End for more than 30 years.
“If you had asked me 10 years ago if I’d want to live up here, I would have said, ‘What are you, crazy?’” Stirling said. “But my partner was so open to it, and she had found [the house]. We’re having a really quite wonderful life.”
The cream of the APCHA crop
But neither the North Forty nor Smuggler Park has the highest-valued home in the APCHA system. That distinction belongs to the sole RO property in Castle Creek Valley Ranch, a luxury residential development in rural Pitkin County of 15 free-market homes that also contains three Category 4 units. The three-bedroom, 4,800-square-foot RO home, owned by Joseph and Carrie Wells, is valued at $3.34 million.
The 3-acre lot was not originally intended to be part of Castle Creek Valley Ranch, which Pitkin County commissioners approved in two phases, in 1989 and 1990. With Joseph Wells as their land planner, the developers added it as a resident-occupied lot to the subdivision’s 1990 application for the county’s growth-management quota system, a highly competitive process which at that time awarded just seven building allotments in the county annually. When the Wellses purchased the RO lot in 1996 for $100,000, free-market lots in the subdivision were selling for about $1 million. In 1994, APCHA had held a lottery for the Category 4 lots, in which 145 people vied for the opportunity to buy the three lots at $20,000 each.
With the RO property governed by the 1990 affordable-housing guidelines, the Wellses are required to live and work full time in Pitkin County but are not subject to income or asset caps. And the property has no sales price or appreciation limits. As for its value, Pitkin County Assessor’s Office officials said they account for the impact of the deed restriction, but they noted the property’s unique circumstances.
APCHA’s third-highest-valued property is in W/J Ranch, a neighborhood in unincorporated Pitkin County off McLain Flats Road that includes 29 Category 4 and 36 RO homes. In this neighborhood, the median value of the RO units hovers at about $550,000, while the median value for the Category 4 units is close to $300,000. Ten of the RO properties are worth $1 million or more.
Bisque Jackson, a local veterinarian, owns the 3,600-square-foot home on a one-third-acre lot that’s valued at $2.4 million — one of eight RO properties worth more than $2 million as of March 2022.
Jackson’s ex-husband, a builder, found the lot, got it approved by APCHA and built the home in 2014. The couple sold their free-market home in Mountain Valley to afford it, and shortly after the new home was complete, they divorced. Jackson, who had been reluctant to move out of town in the first place, retained the house in the divorce settlement. And although she has warmed to the neighborhood and the roomy yard — and she and her two children like the community — the house is “far more than what I need as a single mom with a couple of kids,” she said.
But she hasn’t considered selling it, because “I’m totally stuck — there’s no place for me to go,” she said. Jackson said she still owes on the house, so she wouldn’t be able to make enough on its sale to afford anything in the valley, except possibly Glenwood — and she’s too busy with her own demanding business (her clients are almost all upvalley) and as a single mother to move that far.
W/J Ranch was subdivided and incorporated into the APCHA system in the mid-1990s, when residents of rental properties were given the chance to purchase their homes. The RO homes, many of which were built along the way, have different qualification criteria, but appreciation is limited to either 3% or the consumer price index (CPI) on resales. Owners don’t have income limits — some are subject to maximum assets — and buyers need to prove three or four years of consecutive work history in Pitkin County.
Jackson, who appreciates having an RO category for higher-income locals, especially now that she is priced out of the upper valley free market, is more concerned about affordable housing for working locals in general. Veterinary businesses can’t find or adequately pay employees, and cost of living has skyrocketed, she said — in part due to the pandemic real estate boom. “The free market is killing the working residents of Aspen,” said Jackson. “No one can afford to live here. So, what is Aspen doing to build more affordable housing, faster, to help the working class live and work here?”
Aspen Village and Lazy Glen: ROs for the working class?
Fortunately for working locals, there also exists plenty of RO units that are on the more affordable end of the scale. In fact, about half the RO inventory can be found in two former rental mobile home parks that were incorporated into APCHA after successfully fending off threats of free-market development.
The 147 RO units in Aspen Village, just upvalley of Snowmass Canyon, had a median market value of around $330,000 as of March 2022, while the median market value of the 100 RO units in Lazy Glen — on the canyon’s downvalley end — was about $225,000 ($8,000 lower than the median market value of the units in the numbered categories). Those values are also squarely within the range of maximum sales prices for Category 3 and Category 4 two-bedroom units. And Lazy Glen is home to the lowest-valued RO property, which at $154,800 is worth just below the maximum sales price for a Category 2 two-bedroom.
“If you compare Aspen Village to [free-market] properties, there’s nothing that’s available in that price range unless you go way downvalley,” said Janet Mitchell, a local broker working with RO units, adding that the neighborhood is one of the few places in the valley that locals with average salaries can still afford.
Local physical therapist Katie McManus, who grew up in Aspen, was living in Centennial with her husband when she became pregnant. Looking for a larger place, the couple initially thought Aspen Village was too far from town. But with the help of a real estate agent, in 2005 they found a unit there, made an offer and bought it for $230,000 — a similar process as purchasing a free-market house with the exception of APCHA eligibility regulations. Not subject to income or asset limitations, Aspen Village owners must have one year of work history and make 75% of their income in the Roaring Fork Valley.
McManus said they haven’t made any major improvements to their double-wide trailer because it’s too old and not worth the money: “The place would fall down if I try to do something.” They hope one day to replace the trailer.
Still, she considers herself lucky to have been able to buy the unit. “It’s a pretty nice place. We own our house, we have a yard, we have trees, we have carports.”
Echoing Jackson, McManus said, “We’ll never sell because where would we go?”
As of 2020, the assessor valued McManus’ home at $324,000, close to the median in Aspen Village. But according to Mitchell, prices in the neighborhood have been on the rise. Like Smuggler and Lazy Glen, they don’t have caps and they follow what the market can bear. Four units have sold for more than $700,000, all since 2019. And seven Aspen Village homes are currently worth more than $700,000 — one of them approaching $1 million territory at $956,000.
Evolving regulations
Although the RO origin story is complicated, the RO category first appeared in APCHA’s affordable-housing guidelines in 1992. “This category … was created to offer the private sector an incentive to produce affordable housing for the community,” the 1992 guidelines said.
Aspen City Council member Rachel Richards — who has served since the early 1990s in local government roles that have included Pitkin County commissioner, Aspen mayor and APCHA board member — recalls three main reasons for creating RO. Besides being something private developers might want to produce, RO was intended to fill the gap between the numbered categories and the free market, and could help longtime locals and seniors, who might be land rich and cash poor, stay in the community.
But although the addition of RO was deliberate, its rollout over the years has been haphazard.
“There was no master plan in ’80s that said this is how much of [RO] we need,” said Richards. “Over time, it’s been opportunistic … and it all depended on the political will of the community at the time. The whole history of the housing program at some level is a bit Mr. Potato Head: what the board saw at the time, what resources and land were available, and what bargains were made to save a mobile home park, or whatever.”
Critics of RO say the looser regulations, especially the lack of income limits, allow owners to easily hide assets that should preclude them from buying deed-restricted, affordable-housing-system properties in the first place. And perhaps that’s part of the reason the RO category has generally become more restrictive over time. According to Gillen, “any new RO unit now is treated like a category unit,” with a 3% or CPI annual appreciation cap (whichever is less) and the same live-and-work requirements as category-unit owners have. In addition, “APCHA is very cautious when a developer requests any type of new development as RO,” says Gillen, and would probably recommend against it unless all those restrictions were met.
But for most of the people interviewed for this article, there is a need for RO — and it is growing as the free market becomes more out of reach. Under APCHA’s 2022 guidelines, the maximum income allowed for a four-person household is $265,200, which makes them eligible to compete for the 88 units in Category 5 (just 5.3% of the APCHA inventory). In the much-larger Category 4, with 535 units, the maximum income for a four-person household is $226,550.
“RO houses an awful lot of our contributing and working community members,” said Richards, who added that there should be a place for the double-income professional couple who would otherwise be priced out of the community. “It’s not like a luxury that you don’t have to work here.”
“We don’t want all of our doctors to have to live in Glenwood or Rifle, right?” said Skippy Mesirow, an Aspen City Council member who also serves on the APCHA board. “There’s clearly a cohort of people, or a group of people, who work and live and pay taxes in this town who make good incomes but not nearly enough to afford free market.”
Mesirow said that this system that includes ROs and categories allows housing for all income brackets and movement within the system.
“There’s always a fear that the public will say, ‘How can you invest money in such a high-end product for someone who makes a lot of money,’ and so there’s a pressure to not invest in [RO],” said Mesirow. “The result is the ever-growing missing middle, and the truth is that what we used to think of as high end, we now think of as low end, and so over time, that gap continues to widen.”
This story is the second part of a series examining the ownership affordable-housing inventory maintained by APCHA. In the first story, we looked at the overall APCHA ownership market.