Steamboat Pilot & Today

Steamboat Springs — For a year, Mike Martin lived off of peanut butter and jelly sandwiches and Ramen noodles. He didn't travel out of Steamboat Springs, and he even turned off the electric breakers so his heater would not turn on.

It wasn't because Martin didn't want to spend money; he didn't have any money to spend. He had just bought a condo -- at 21 years old.

Now more than ever, young adults in Steamboat and across America are buying real estate.

Homeownership among people in their early 20s has jumped nearly 20 percent nationwide in the past two years, according to the National Association of Realtors. In 2003, 343,000 people younger than 25 purchased homes. That figure is almost double the 1995 count, in which 177,000 bought homes.

The number of young people buying in Steamboat has increased in part thanks to the several new affordable housing developments such as West End Village and Silver Spur, said Pam Vanatta, broker/owner of Prudential Steamboat Realty.

"We do get quite a few young people trying to get into entry-level housing, because they realize the importance of building equity," Vanatta said.

Those 20-somethings are buying houses and condominiums, realizing the investment opportunities the Steamboat real estate market provides, while their contemporaries worry about how to fund a ski pass or how much snow falls on Mount Werner in a given week. Steamboat real estate has proven tried and true to be a solid investment, as almost every property value appreciates, according to the Steamboat Springs Board of Realtors Multiple Listing Service.

But young homebuyers have to be careful to avoid getting in over their heads, a pitfall of the area's pricey real-estate market. Important aspects to consider are getting pre-qualified for a loan, doing the math to make sure that loan is affordable and balanced, and finding the right price range, said Stan Urban, a land title insurance agent who regularly deals with mortgages.

"Do not look beyond that price range, or it will break your heart," Urban said. "People start thinking they want a nicer place, and down the road they have to refinance, or they could even lose their home."

Tim Widmer took those steps and then invested in the River Place co-housing project with his girlfriend when he was 26. Knowing he would be living in Steamboat for a while, and looking at the money he was "throwing away by paying someone else's mortgage," Widmer considered buying a home.

Widmer did not buy just for the sake of owning a home. He bought after years of hearing Martin, his friend, and other peers talk about the great investment Steamboat real estate offers.

"(Martin) convinced me it's a matter of getting into the game," Widmer said. "It's way better than the stock market, and that's really what convinced me."

Widmer said affordability was his top priority.

"I don't have real steady year-round income, but a lot of people in this town are in the same boat," Widmer said. "But, looking at our finances over the past two years, we realized we could own a place and gain equity, even though we would probably have to struggle at first."

The key, Widmer said, was getting a loan from his parents by convincing them of the solid investment return they could receive from the purchase.

"If you show them the numbers on how the real estate market has improved over the past few years, the percentage they would get on that return would be better than anything on the stock market," Widmer said.

With money Widmer saved plus his parents' loan, he realized he could put 20 percent down on his new three-bedroom, two-and-a-half-bathroom home. And though he knows buying a house rather than a less expensive condominium will mean struggling more financially, he thinks his investment will appreciate much faster because of its newness and desirability as a family home.

"When we get in, it's going to be far from sexy," Widmer said. "There'll be no granite countertops and all that stuff, but my friend tells me that's not what's going to make you happy. What's going to make you happy is sitting on the couch knowing you can make the payments."

Martin was not so fortunate to have his parents help with the down payment. He had to be creative to fund his purchase of a ski-in/ski-out condo at Christie Base. The ski-shop worker bought with little money on hand, using credit cards for the down payment. The trade-off for a small down payment was a high-interest loan, which made it tough getting started. Looking back on it, Martin, now 28, has no regrets.

"I didn't want to pay rent," Martin said. "I knew I would be in town for a while, and rather than pay someone else's mortgage, I started paying my own."

Buying a higher priced slopeside condo, Martin did not qualify for any federal or local loan programs. But most young buyers say that much of Steamboat's real estate market is priced too high to qualify for first-time homebuyer programs, anyway.

For example, Routt County's Mortgage Credit Certificate Program for first-time homebuyers caps eligibility at purchase prices of $215,000 for existing homes or $343,800 for new homes. In comparison, the 2003 median price for single-family homes in Steamboat was $357,500, or $220,000 for condos or townhouses.

Urban said he has seen only two mortgages supplemented by Federal Housing Administration loans in the past four years he has worked in Steamboat.

"That's the lowest number of FHA loans I've seen in my 19 years in the business," said Urban, who has worked the majority of his career in Denver, where he said many more people qualified for loans. "The pricing here is astronomical, and many just don't qualify because of that."

Even without such loan assistance, Martin built enough equity in his condominium in the past seven years that he has been able to buy and sell additional properties.

Thinking along the same investment lines, 23-year-old Kevin Olsen bought a Steamboat condominium last year.

"I knew I would be in Steamboat at least two years, and in that time, rather than throw $10,000 or $12,000 down the toilet, I realized I could save that," said Olsen, who works at the Pilot & Today.

Olsen chose a two-bedroom unit in Sub-Alpine Condos off Walton Creek Road with the intention of renting the extra bedroom. The extra rent income, Olsen said, was the only way he could afford the purchase on his salary.

Peter Munson also realized the investment benefit of home ownership at 27 years old, when he bought a Whistler Village townhome. And as a mortgage broker, he also had the insight to realize the tax benefits and jump on a super-low interest rate. With the low rate, Munson pays less now than he was paying for rent.

"I told myself a long time ago, I wanted to own a home before I was 30," Munson said.

"I wanted to get myself established financially, and not throw my money away every month to pay someone else's mortgage."

And like Martin and Olsen, Munson said he probably would keep his property even if he moves away, renting it or possibly using it as a vacation property.

Rather than looking for a quick-turn investment, Scott Parker recently bought a home thinking of the long-run. At 29 years old, he and his wife, Shannon, bought a modular home in West End Village, a project by the Regional Affordable Housing Foundation.

Parker said RALF made buying a house in Steamboat possible for him. He does not plan to sell anytime soon.

"Some say we could sell in 10 years and make good money," Parker said. "But this is where we're going to raise our kids. We're looking at this like ... 'we made it; we're here.'"

-- To reach Nick Foster call 871-4204

or e-mail nfoster@steamboatpilot.com