Construction values decline

Despite 13 percent drop from 2000, analysts say industry remains healthy

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— For the first time in about a decade, the construction valuation in Routt County is expected to be lower than the previous year, but analysts say the construction industry remains healthy in the area.

As of September, $91 million worth of construction has occurred in the county. At this point last year, the number was at $105 million.

"I don't see a major recession coming," said Mark Marchus, chief building official for the Routt County Regional Building Department. "But I do see a cutback."

Since the early 1990s, construction valuation has increased each year with the boom occurring in the last five years.

"In 1992, construction valuation was at about $30 million," Marchus said.

Five years later that number had risen to $69.4 million and soared in 1998 to $123 million. Momentum continued in 1999, $141 million, and last year, $155 million.

At the start of the year, the value of construction in Routt County was ahead of last years' pace, but a two-month let-up occurred in July and August. All year long Marchus had been telling colleagues there would be a decrease and it finally came in July.

In July, construction valuation ended at $8.3 million, compared with $18.6 million in 2000, $13.3 million in 1999, $20.4 million in 1998 and $9.6 million in 1997.

"I thought we would see a drop," he said. "I anticipated it. I have been giving myself a pat on the back."

Although, Marchus has been projecting a decrease, he was caught off guard with how far it dropped. "July was a shock," he said.

The trend continued in August, which ended at $10.9 million, which is much lower than the year before, $14.5 million.

Surprisingly, construction activity picked back up in September, which finished at $14.7 million, which is comparable to $16.2 million of activity the year before.

"Because of the events of Sept. 11, it could have dropped to zero," Marchus said referring to the terrorist attacks a month ago. "But it seems like the country has taken President Bush's advice to keep on going with business as usual."

The drop in construction value can be attributed to a decrease in commercial building and multi-million dollar homes.

"We still have large projects, but we are not seeing as many," he said.

Marchus blames the lull in multimillion-dollar home construction on the stock market.

"Since the end of 2000, the stock market has been on a roller coaster," he said. "To build the larger homes, available cash is needed. When the stock market is down, the available cash dwindles and people are less likely to buy."

There have been numerous instances this year where developers of large homes have pulled building permits but are holding off on construction.

"Many people have decided not to build this year," he said. "We have had numerous builders finish construction drawings and tell us they want to build the house, but not this year."

Marchus is also weary of comparing this year to recent years because of major projects that have been built.

"In recent years, the Steamboat Grand and Yampa Valley Medical Center were built," he said. "Those are tremendous projects that skew the numbers. This year is more of a normal year."

Although commercial and multimillion-dollar homes have decreased in recent months, the development of manufactured and modular homes in the county continues to stay strong, Marchus said.

"We are continuing to see the lower income housing being built," he said. "But no way is it inexpensive housing."

Marchus is keeping a close eye on development because fees fund his office.

At the end of September, the department had collected about $582,000 in fees, which is lower than the $735,000 collected at this point last year.

"We are a fee-supported department," he said.

"I expect for construction valuation to continue to decrease. How far it will decrease? I don't know."

To reach Gary Salazar call 871-4205

or e-mail gsalazar@steamboatpilot.com

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