Howard: Solutions to the housing crisis – we all play a part
Our local Habitat for Humanity recently brought together thought leadership from around the valley and state to present the affordable, workforce-housing issue. The day was monumental and compelling.
First, we heard about the problems, and they are many. Then various constituents brought political progress, private-sector plans, and non-profit programs as part and parcel of the housing solutions.
I would suggest another “p” to add to the kaleidoscopic of the habitation conundrum.
We each need to show up “personally.” It is incumbent on every resident – whether owner or renter – to consider new perspectives and think creatively as to their part in causing and solving the issues at hand.
Change, growth, sustainability, stewardship – there are ways to wisely manage current and ongoing tension. How do we navigate, collaborate, and cooperate – laser focused, building on the core values we all hold dear?
We are limited as to land to build on, so how do we do the best we can with what we have?
It is a dichotomy of our own best interests to own homes (primary, second, or third) and expect those who build them, service them, care for, and cater to our daily needs/desires to live with the strife and stress inherent in a long-distance commute to work or paying an inordinate price for shelter. With an economy focused on tourism, the challenges are exacerbated.
We need to set our individualism, independence, and NIMBY-ism aside and ascertain our part in the solution. We can’t abdicate total responsibility to partisan political policy, non-profit programs, and private-developer proposals. It is time to do some soul searching. There is too much at risk.
Renting: How do we use our current bed base? With the number of bedrooms in this valley, could empty rooms be purposed?
Over my 35 years of home ownership in this valley, there have been many opportunities to rent a room out: originally, in my Blue Lake first home, along the way as the kids flew the nest, and currently as a homeowner in Ironbridge. My “why” has evolved over time, and the benefits have always outweighed the cost.
I know many others who rent rooms, ADUs, or homes at below-market rates – Kudos to you! Aspen Skiing Co. introduced the “Tenants for Turns” program a couple years ago to incentivize locals to consider ski-season lease arrangements. More homeowners could consider this option.
With a growing population wanting to “age in place,” single health-care workers or house-handy people could occupy a room at a reasonable rent to provide services or be on hand to provide conversation, care, or peace of mind to homeowners.
Selling: Your primary residence has increased in value above and beyond the $250,000 or $500,000 tax-free capital gain you would receive upon sale. You paid off the mortgage and have philanthropic intentions. You could put your home into an LLC and gift a percentage of the ownership into a Charitable Remainder Trust before you put the home up for sale. This would provide a tax deduction (Please work with your financial professionals to assess). Upon the sale of the property, assets held in the trust would provide you with tax efficient income; upon your passing would provide benefits to a non-profit of your choosing.
This would only work in a seller’s market, as the property needs to be sold promptly. The tax deduction for the contribution is not available until all interests and rights to possession or enjoyment of the property is relinquished.
While complex, these types of trusts can be used creatively. As a homeowner, you may be able to offer the home at a lower price point because of the capital gain taxes you would save.
Have an ADU, or can you add one? You could consider selling the property at lower than market value and maintain a life estate on the ADU.
Whether primary residence or investment properties, talk with your financial professionals (financial advisor, CPA, attorney), and let them know you want to be part of the housing solution as you look at your changing housing needs and before you put your property on the market.
Buying: Title the home as tenants in common. This could be friends or family who decide to buy a home together in equal or unequal undivided ownership. Combining resources may open additional avenues for purchasing a residence.
Aiding adult children is a viable option with many considerations. Do you gift or loan? Are you providing a lifeline or is it an umbilical cord? Again, professional guidance can coach you through this option and financial implications.
There are financially-creative ways to buy/sell property for tax benefits, price mitigation, and to ameliorate changing personal life seasons. These are just a few ideas as to how we can show up.
We would all (renters, owners, buyers, sellers) make some sacrifices. A bit of privacy, maybe some cash in hand. Sacrifice is experienced as giving something up today for the betterment of tomorrow. Is this a way we can “pay it forward,” as we have been blessed with the benefits of living here?
A healthy ecosystem in nature is very complex, diverse, and necessary for our survival. In the same way, we can create healthy communities that thrive. This will in part entail redefining “wealth.” It is not only found in equity that home ownership avails us, but also in individuals and families free from the stress of working three-four jobs to pay for a roof over their head or driving three-four hours a day to earn a living wage.
True wealth is found in the diversity of cultures, socioeconomic strata, traditions, food, music, language, and interactions. True wealth is found in people volunteering in their communities, experiencing the dignity of work, playing together, recreating together, engaging in civic discourse, learning from, and listening to each other.
The Roaring Fork Valley can be a model for other resort communities as we come together in creating healthy communities and solving the affordable work-force housing issues. Political courage, non-profit boldness, private-sector vision, and personal resolve all play a vital role.
Danielle Howard is a CFP and CKA at Wealth By Design in Glenwood Springs. Advisory Services offered through Cambridge Investment Research Advisors Inc., a registered investment adviser. Securities offered through Cambridge Investment Research Inc., a broker/dealer, member FINRA/SIPC. Cambridge and WBD are not affiliated. Cambridge does not offer tax or legal advice. wealthbydesign4u.com.