Denver, like many cities, is experiencing homelessness issues as property values and rents rise pricing many out.  To help combat the homelessness issue, Denver Mayor Hancock has asked eight council members to submit locations for spaces of about one quarter acre to accommodate 60 people each site for a homeless encampment. What does this mean for real estate values?  Where will these camps be located?  What is the real solution that politicians are not pursuing?

What is happening with homelessness?

Denver will soon host several designated campsites for people experiencing homelessness, marking a substantial shift in Mayor Michael Hancock’s approach and what advocates say is hopefully a catalyst for even more change.

“This is an emergency step that is necessary because of the ongoing pandemic,” Hancock said during a press conference. “The situation has deteriorated to the point where we must work and move to reduce risk now.”

At the same time, the city will work quickly to break up existing, unsanctioned camps, especially around Capitol Hill, almost certainly displacing more people than the new camps will be able to hold.

Why these 8 council members?

Eight members of the city council have continued to press the mayor for more immediate action on the homeless camps.

Mayor Hancock wrote those eight members Wednesday, asking them to each pick at least one spot in their district with enough room for up to 60 socially distant tents, restrooms, showers and a common area. He estimated that potential sites should have about 10,000 square feet.

“Nobody knows your Council district better than you,” Hancock wrote in the letter.  I will be interested to see how these eight council members perform as I’m sure they will meet considerable resistance regardless of the sites they choose.

 

What better way to solve a problem than increase taxes?

I always find it ironic that many politicians solution to basically every problem is to increase taxes to help fund new initiatives.  As these taxes continue to sky rocket in cities, the cost of living continues to rise displacing even more residents that will now need some form of assistance.  In the case of homelessness in Denver, City Councilwoman Robin Kniech said she’ll introduce her proposal to permanently increase Denver’s sales tax in August. If approved by the council, the measure — which would charge customers an extra 2.5 cents for every $10 spent — would be set on the city’s November ballot.

Although sales tax revenue is currently down because of the pandemic, Kniech said during better years the increase could raise about $40 million a year for housing, 24-hour shelters and more.

 

Impact on real estate

How would you like to have bought a house to find out nearby is a homeless encampment of 60 plus people living nearby or send your kids to a school with a homeless camp next door?  These encampments will no doubt decrease property values in close proximity to their locations.  It is unclear whether this will be a long-term or short-term issue for the affected property owners as it is uncertain as to how long these camps will last.

Not in My Back Yard (NIMBY) will likely squelch the idea

Allot of ideas sound good on paper until it ends up in your back yard.  Like many good ideas people are all for big changes to help people until it actually impacts them.  I suspect the homeless camping idea will quickly wither as property owners, neighborhoods, schools, etc.. work relentlessly to ensure that the encampments do not impact them.

Summary

I always find it fascinating that politicians on both sides of the aisle are quick to point out various social issues and create an “easy solution” by throwing money at the problem as is the case with Denver’s homeless issue.  Unfortunately, politicians rarely get to the root cause of the issue as that would be much more politically difficult.

In the case of Denver’s homelessness, the root cause of the issue is strict zoning which creates little room to build new inventory which in turn is leading to the sky-high prices of real estate in the city.  On top of zoning, Denver’s solution to basically every social issue is to increase taxes, furthering the downward spiral for the most at risk with higher taxes.  The homeless crisis in Denver will not be solved with more money without any fundamental changes to address the root cause of the issue, sky high costs of living due to higher taxes and housing prices.

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