Steamboat Springs Developer Ren Martyn said this week that he never could have guessed how things would work out at Red Hawk Village, a subdivision of small footprint single-family homes in Stagecoach in South Routt County. But now that they've begun to sell to young couples, he's pleased - even if many of the sales are the result of existing owners who are under duress.
"If you step back and look at the big picture, now it's come full circle. As a developer and Realtor, none of us could have imagined this," Martyn said. "But at the end of the day, it's a better situation. It's wonderful for the subdivision."
Martyn is a principal in Mountain Valley Communities, the original developer of the 29 single-family lots and 25 homes in the range of 1,600 to 1,800 square feet. Martyn and his colleagues originally conceived the subdivision on the south shore of Stagecoach Reservoir as a place for young families. They intended to keep prices relatively modest and offered eight affordable units in 2006 when the homes first came on the market. But the buying public never responded to the deed-restricted units.
Instead, out-of-town buyers created higher demand and higher prices at Red Hawk, Martyn said. A Front Range consortium even was planning at one time to purchase all of the homes.
All of the speculation drove prices to levels higher than Martyn had planned on. In spring 2007, several homes sold for $430,000, $488,000 and $555,000. Now, he said, it's the out-of-town speculators who are unable to make payments on the homes and who are selling under duress.
Martyn said his development group made enough sales at attractive prices in 2007 to carry on.
"It hasn't been easy for us," he said. "But we've been able to keep our heads above water. There are still four undeveloped lots in the subdivision. We had hoped to build on them this summer, but now it looks like next year. Then we'll go quiet again and wait for prices to rise again."
Martyn's nearby Blacktail Meadows subdivision, with 29 lots and no sales, has been a bigger challenge this year.
The homes at Red Hawk are wrapped around a common area in the middle of the looped interior road, which includes a playground structure, shaded gazebo for watchful parents and a turf area suitable for pee-wee soccer.
Now, Realtor Cindy MacGray confirmed, young couples are beginning to purchase Red Hawk homes at reduced prices.
"Three have sold this year," MacGray said. "One for $315,000, another for $300,000 and one for $280,000. It's definitely set up for families. Families who would be happy with less than 2,000 square feet.
"When you think about it, smaller homes on smaller lots are a natural way to keep prices lower," MacGray said. "And in this case, the distance from Steamboat is a factor."
MacGray has one of the three sales to her credit, and Martyn notched a developer sale with another pending.
MacGray's colleague at Prudential Steamboat, Jim Walters, has made something of a specialty out of Red Hawk. He has sold two, has another closing next week and a fourth due to be consummated in 30 to 45 days.
Making it easier to purchase entry level homes this spring, MacGray said, is the fact that the USDA has increased the maximum household income for its 30-year mortgages to $92,000. That's an income that lets young couples look at homes in the $300,000 range, she said.
USDA loans offer the advantages of offering 100 percent financing and no insurance premiums, MacGray said. The current interest rate is 5.25 percent.
The buyers of the $280,000 home acquired a never-lived-in three-bedroom, 2.5 bath home.
Short sales represent a trend at Red Hawk. Offerings of short sales come about when a property owner alerts his or her lending institution that the owner cannot keep up with the payments, and the bank agrees to sell the property for less than the loan value. The motive is to avoid the expense of a foreclosure. The property owner faces losing his or her equity but also avoids the other negatives of a foreclosure.
Realtor Shelley Stanford, of Colorado Group Realty, recently closed a short sale in Red Hawk. But she said the process requires patient buyers - they must be prepared to wait after their offer is accepted as financial institutions clear a backload of similar sales.
In a number of cases, MacGray said, frustrated sellers have seen willing buyers walk away because they no longer care to wait for a short sale to close.
Walters said the key to making short sales go smoothly is letting the prospective buyers know at the outset that it will take six to eight weeks to finalize their purchase.
"Buyers who are currently renting are ideal," Walters said. "Especially at Red Hawk, where the homes are new, the wait is worth it."
Some of the recent sales, MacGray said, have been bank-owned properties.
It's common for first-time homebuyers who come to her to begin by insisting that they will consider buying only in Steamboat. After they see what $250,000 to $300,000 will buy in Steamboat, they reconsider, she said.
When she shows the single-family homes in Red Hawk, she also shows clients the new units in Sierra View Condominiums in Oak Creek, where a two-bedroom 1,058 square-foot unit can be had for $189,900. She recently closed a Sierra View sale and has two more under contract.
One buyer works in Steamboat but has found a colleague who also lives in Oak Creek, and they plan to car-pool to work.
Tough economic times can bring neighbors closer together, MacGray said.