Are Boulder’s post-Marshall Fire rent hikes a price hike, or are things business as usual?


Mike Linksayer via Flickr Creative Commons

Saturday, April 16, 2022

Estelle Smith has lived in Martin Acres since January 2021, being the first tenant of a newly purchased home. His rent was increased exactly once: six months later, when a roommate joined him, he went from $2,100 to $2,465, which he said was “fair”.

So when Smith and his roommate ran out of rent, he was surprised that the landlord offered a higher rate for this year: another $535 per month – a 22% increase.

This was particularly shocking because Smith’s landlord recently sent an email to the Martin Acres listing, warning of price fluctuations in the aftermath of the Marshall Fire that displaced thousands.

“It feels like he’s taking advantage of the situation,” Smith said.

Smith isn’t alone in wondering if recent rent increases for Boulder’s ultra-price course are on par – double-digit increases nothing new, after all – or something more sinister. As elected officials have repeatedly warned, price gouging for basic necessities after a natural disaster is illegal, but there doesn’t seem to be any real weight behind his words.

Property owners say they haven’t received any guidance from the state on what is an acceptable amount to raise rents, and state officials have declined to answer questions about specific laws or actions against alleged violators.

“It’s basically saying ‘Please don’t,'” said Caleb Dickinson, owner of Louisville-based Fox Property Management and an alderman there.

market rules

After the December 30 Marshall Fire, every Boulder city council meeting began the same way: The mayor residents reminded “Colorado law prohibits charging excessive prices for certain essential products, goods, or services during a disaster period.” Boulderites who believe they may be victims of price gouging were encouraged to call the Colorado Attorney General or visit the website set up to report such practices:

At the top of this site is a message about Marshall Fever.[d] fertile ground for scammers.” A link invites users to learn more, including: the only pager in post-fire price gouging. There is no mention of housing.

Published guidelines are simply “building materials, consumer foodstuffs, emergency supplies, fuel, medical supplies, or other needs”(emphasis added) “Excessive prices” that cannot be defined without violating the law cannot be demanded, passed during the pandemic.

Housing is is As Colorado Attorney General Phil Weiser made clear in his speech, it’s covered by state law against “deceptive trade practices.” sent letters to online rental companies “Some homeowners raised their prices exorbitantly” in January.

A press release by AG’s office did not contain any specific definitions or even examples. No government-supplied published material describes price gouging as it relates to rent during a disaster; in non-crisis times, Colorado prohibits most forms of rent control.

“There are no clear rules,” Dickinson said. “I can’t find anything solid.”

Neither could BARHA, the Boulder Area Rental Housing Association. President Todd Ulrich said BARHA’s attorney laughed when he asked about the state’s law about carving rental prices.

“There is no legal definition,” Ulrich said. “At least not state status.”

A spokesperson for the Attorney General’s office canceled an interview that had been offered. rock kick and refused to answer specific questions about practice, definitions, or guidance for owners and tenants.

“Given the point at which we are in our review process, it would be inappropriate to discuss this matter at this time,” Emily Wenger wrote via email.

Wenger provided a link to the one-page advisory that shows there are no limits for rent increases.

Price gouging has not occurred if “sellers” (in this case, homeowners) “can demonstrate that the price increases are attributable directly to additional costs incurred by the seller’s suppliers. or other market conditions beyond the seller’s control.”

‘Whatever they want’

As 1,000 homes were destroyed in the fire, many more people suddenly began looking at the same small pool of housing – perfect market conditions for rising prices.

Rents in Boulder County have doubled from the same period last year, up 4.4% so far in 2022. Rob Warnock, senior research fellow at Apartment List, said seasonal increases—where rents typically drop in the winter and rise again in the spring—start earlier in Boulder and Broomfield.

“Boulder and Broomfield counties have seen seasonal rent increases begin about a month ago, and prices have increased in those counties relative to others,” Warnock said.

It’s impossible to tell from this limited data that the Marshall Fire directly caused this increase, but “theory makes sense,” Warnock cautioned.

“The fires affected both supply and demand: creating more demand by displacing households and reducing the supply of available housing by destroying them,” Warnock said. “Assuming that people want to relocate within the same community, the theory argues that competitiveness should increase. Price changes are also appropriate.”

Costs have increased with inflation, so some increase is justified. It will make it much more difficult to prove price gouging, which is all responsibility on the tenant.

“People can definitely argue, ‘My spending has gone up and I’m raising my price,'” Dickinson said. “You have to prove otherwise. No one stands a chance of winning one of these cases. They’re not going to hire a lawyer, and they’re not going to take a job for something really complicated legally.

“People will be freed from doing what they want.”

Maximizing revenue

Ulrich, who also runs a property management company, said supply is increasing as homes damaged by smoke and water are made habitable again. Second home owners also offered vacant houses to the victims. Some property owners have had to lower rents after first trying to raise them, he said.

Dickinson wrote a letter that he shared with his clients. rock kickwarned them not to charge much higher rents and suggested increases of 0-5% for renovating tenants and up to 8% for reclaimed properties.

“If we try to maximize your income this summer,” he wrote, “we could potentially increase rents on all properties by 15-30%, which would definitely put both of us in legal danger as we would displace hundreds of families and were unable to rationalize this increase. 12.5%. may be enough to file a complaint, and we don’t want to be near that border.”

Dickinson said these figures are based on independent research into pitting the prices of other items, such as water, in past disasters. He and Ulrich were unaware of any guidance from the government to landlords or property managers on what constitutes price gouging.

Ulrich has his own definition: famous saying about obscenity: “You’ll understand when you see it.”

True examples of price gouging are extremely rare, Ulrich said. Many of Dickinson’s clients “responded affirmatively” when he suggested they “do their part, ONLY by increasing our rents by a fair and reasonable amount”.

Smith also found kindness from his neighbors and friends with whom he shared the saga. She was able to negotiate a smaller raise of $285 or 11% per month with the landlord. But the experience still angered Boulder.

“I knew it would be expensive, but I thought people would get better,” he said. “I feel like people place a lot more emphasis on maximizing their investment than impacting their lives.”

While her stay at her house may have worked, Smith knows that next year, the expected rent is $3,000 a month. And it will return to the same place: looking for an alternative in a market where prices are always rising.

“There’s a lot of energy and support for people who lost their homes in the fire,” Dickinson said. “There won’t be the same emotional or monetary support for people priced out of the market a year from now.”

— Shay Castle, @shayshinecastle

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