It's an ugly equation.

A tiny rental vacancy rate (3 percent) plus a stagnant stock of rental properties equals an increase in rental prices that outpaces wage growth and a serious squeeze for newcomers and young people just entering the workforce.

The latest numbers compiled by the city bear out what many in Santa Fe have been feeling for years. While the city has a robust system to move financially qualified people into homeownership, it has major issues when it comes to multi-family housing.

"Our vacancy rate is way too low for our market to be considered healthy," says Alexandra Ladd, the city's affordable housing director. "Unless you happen to be the landlord of a multi-family complex."

There's little in the way of new multi-family projects both at the low-income level and at what's known as the market rate—what a renter who gets no public assistance pays for a lease. That means there's less incentive for landlords to improve their property. There's also less downward pressure on rental prices because no one has to compete with the shiny new building.

"The city's never going to use resources to support market-rate renters because they don't have adequate inventory to choose from," Ladd tells SFR, "[but] they're competing with lower-income renters for the same units, driving the rents up and excluding the more moderate-income renters from having any choices."

Ladd will present the city's latest numbers on the rental market, fair housing and community development block grant spending to the City Council on Wednesday night.

The lack of inventory is not just driving rent up, but it's chipping away at a link between attracting new residents—or keeping younger ones—and getting them to buy homes.

"Homeownership is an incredible value to a community because it changes the dynamic," Donna Reynolds, governmental affairs director for the Santa Fe Association of Realtors, tells SFR. "People are more committed to the community, to the schools, when they own a home. It's well-documented nationally."

Homeowners vote, they make policymakers feel good and they have an entry—maybe the best chance of their lives—into a primary form of building wealth.

"There's pent-up demand that we're not meeting," says Reynolds. "Having a good solid entry rental market is really helpful [for people entering the housing market]. … There are not really places for people to come and experiment, to take a good job, make friends and develop a social network."

The Realtors are hot to trot on the Midtown LINC project in Santa Fe. "LINC" is short for a local innovation corridor overlay district, making it little wonder those in favor of the project rushed to find a ready acronym. The point of the thing is to adjust the normal way of doing business enough that developers can't help but give the area a second look.

The LINC stretches along St. Michael's Drive from Cerrillos Road to St. Francis Drive. Within the boundaries of the district, the city wants to streamline the approval process for multi-family developments. Buildings can be four stories tall—even higher in some spots—and the city promises not to get picky about things on top of the buildings like elevator overruns or solar and wind-based energy equipment. Buildings can be closer to the road, which will ultimately include on-street parking. And many fees will be waived; potentially $475,000 on a 60-unit development.

The day after Ladd presents her findings to the City Council, the Realtors are putting on a day-long conference on multi-family housing, in part to generate interest among developers but also to potentially foster conversations about how to bring the kind of investment money to Santa Fe that can ease the housing shortage.

Daniel Werwath, a Santa Fe-based community development consultant, says the Midtown LINC is a good first step, but the fact that all of the land along the corridor—except the city-owned campus of the Santa Fe University of Art and Design—is in private hands makes it harder to attract developers who have an eye on affordable housing.

For 15 years, Werwath says, the city has failed to keep up with demand in the rental sector. His latest studies show half the city's workforce commutes into town. He's currently leading the development of an affordable live-work complex called Siler Yard Arts and Creativity Center. It's one of a few multi-family projects around town, but with a deficit of more than 2,400 units, they amount to a drop in the bucket.

For Reynolds, though, it's an encouraging drop. "I definitely think there's some momentum," she says, "people who are trying to work collaboratively and saying, 'What can we do?'"

Werwath says one of the things the city would do well to do is to seek out conversations and listen; the affordable rental constituency isn't vocal about the problem. In the past decade, he says, Santa Fe has lost 6,000 residents under age 50. And it can happen before planners realize what's going on.

"They don't say anything," he says. "They just move to Rio Rancho."

City Council hearings on fair housing and community block grants
7 pm Wednesday Sept. 27. Free.
City Hall,
102 Lincoln Ave.,

SFAR Multi-Family Housing Conference
9 am-2 pm Thursday Sept. 28. $30.
Santa Fe Community Convention Center,
201 W Marcy St.,