Scarcity of building lots driving up home prices

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— Residential lots on the low end of Steamboat's real estate market are becoming increasingly scarce in Steamboat. With few possibilities for new subdivisions on the radar, the lack of entry-level lots will continue driving up land prices and home values in and near the city, brokers say.

The Steamboat Springs Board of Realtors Multiple Listing Service lists about 110 residential lots within the Steamboat city limits. Of those, about 11 lots, or 10 percent, are priced between $100,000 and $200,000, said David Baldinger Jr. of Steamboat Village Brokers.

Thirty-eight percent of the lots listed are in the $500,000 to $1 million range, the largest percentage of lots. Only one lot is listed for less than $100,000.

"That was very amazing to me," Baldinger said. "I knew there were not very many lots for sale but that number really surprised me."

Home, land prices rise

In addition to pushing up land prices, the increasing scarcity of buildable lots is largely responsible for home prices' dramatic rise in the past five to 10 years.

Baldinger used the example of Heritage Park, west of the Steamboat city limits. When the subdivision first started, many expected it would provide a more affordable pathway into the market.

But fewer city lots pushed up land values in Heritage Park and buyers, borrowing against the land, ended up building larger and more expensive homes, he explained.

Land, as a rule of thumb in real estate, should make up about 20 percent to 35 percent of a home's value, but in some resorts, land is approaching half the value of the home, Baldinger said.

Steamboat isn't there yet, but with few options for subdivision sites big enough to fill the lot shortage in the city, there is little to keep the Steamboat market from heading in that direction.

"I think that is driving prices to record levels and because there isn't any significant new inventory coming into the market, this trend will continue," he said.

Sales set bar

At the end of Whistler Road, a 0.32-acre lot recently sold for $187,000, a new record for that neighborhood, said Ray Wright, another broker with Steamboat Village Brokers, who lives in the Whistler Road area.

Several other vacant lots in the neighborhood are not for sale, but if they were, they would likely sell at that price or higher, he said.

Wright and other brokers agree the popularity of Heritage Park and the nearby Silver Spur subdivision, which are sold out, have contributed to the undersupply of more affordable lots.

"Since those projects have sold out, any lots that come on the market for under $200,000 move pretty quickly," Wright said.

A 0.2-acre lot in the Hilltop mobile home park near Steamboat Springs High School was one of the few Steamboat lots available for less than $100,000. A mobile home was cleared from the property, and the lot recently sold for $90,000, Scott Eggleston of Remax Steamboat said.

Several challenges face buyers seeking entry-level lots in Steamboat.

Even if they find a lot, there is usually a costly reason it hasn't been developed, he said. Geography may make construction difficult or the site may require wetlands mitigation, for example.

Where to go

Often, buyers intent on staying in Steamboat consider a condominium or townhome. Those willing to drive farther into town look to Hayden, Oak Creek or Stagecoach, brokers said.

"We have seen more development and growth in Stagecoach in the last two years than in the last 15," said Eggleston, who specializes in land sales in Stagecoach and other areas.

Half-acre lots with utilities in Stagecoach typically cost between $75,000 to $95,000, he said.

Nearby in Oak Creek, 0.15- to 0.35-acre lots in the Sierra View subdivision will cost buyers between $40,000 and $60,000. Most of the 53 total lots in the development will be for single-family homes.

Since June, buyers have reserved 35 of the 36 lots in the first two phases of the project, listing broker Ron Wendler of Colorado Group Reality said. There already is a list of people waiting to reserve lots in the third phase of the project, he said.

Buyers looking for more affordable alternatives to Steamboat make up about 35 percent of sales in Hayden, Jack Giessinger of Bear River Realty said.

Average residential building lots in subdivisions such as Yampa View Estates and Sagewood have hovered in the $40,000 to $50,000 range for about a year and a half,

He estimated there are between 40 and 45 such lots, which range between a quarter-acre and almost a half-acre. Residential lot prices probably won't increase significantly until 75 percent of the inventory is sold, Giessinger said.

Possibilities close to town

There is still hope for more entry-level lots closer to Steamboat, said brokers, who look to city boundaries for possible annexation properties.

The west end of town holds particular promise for higher density subdivisions that would help keep lots affordable -- though the city of Steamboat Springs, Routt County and other agencies would have to work together to make those kinds of projects economical for developers, Baldinger said.

"There is definitely a lot of demand from young families for smaller affordable lots close to downtown," he said. "To date, no developer, in my opinion, has developed land with small enough lots."

But Overlook Park, a 154-lot development proposed for land west of West End Village and West Acres mobile home park, may be a good start.

The majority of lots in the project, which entered the city planning process early last summer, would be between 0.11 and 0.16 acres.

Since the West of Steamboat Plan requires 30 percent of new homes be in an entry-level category, others including the Yampa Valley Housing Authority also see possibilities in the area.

The YVHA, which has completed a hands on housing project in West End Village, may consider a variety of options including buying lots at a reduced rate and selling them to qualified residents, or buying the land and building entry-level homes, executive director Jayne Garcia said.

"That's what's exciting about it -- the opportunity to do things that haven't really been done before and really collaborating with companies and agencies to figure out how to go about it," she said.

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