Eagle County Shrinking job numbers, increasing numbers of rental units and depressed housing prices paint a glum picture for the local housing market, states a report from the county’s economic council.
The good news is that it’s cheaper to rent.
The local rental vacancy rate for June was about 28 percent, higher than any historical vacancy rate for that month, states the latest economic report from the Economic Council of Eagle County, headed by Don Cohen.
Also, rental rates are down and renters are being offered incentives — things like two months free to sign a 12-month lease. Those incentives were nonexistent in the rental market in late 2008, according to the report.
Renters have options, but they won’t last long, says Julian Torres, long-term rental manager with Bold Real Estate Solutions.
“Compared to this time last year, we are the same,” Torres said. “ I don’t see a huge increase in the availability.”
Recovery rolling slowly
Eagle County has hemorrhaged 6,000 jobs, mostly in the real estate development and construction industries. Faith in a rapid recovery in the local housing market is misplaced, the report states.
“With a 50-year track record of astonishing growth receding in the rear view mirror, it’s easy to understand why optimism about real estate re-emerges so quickly,” the report stated. “The expectation of realtors and homeowners that better days are soon ahead is disconnected from the true damage that the loss of over 6,000 jobs has done to the Eagle County economy.”
Even if the market caught fire and returned to the growth pace of the mid-2000s, it would take 10 years to replace those jobs, Cohen’s report states.
“It’s difficult to find any scenario upon which that kind of robust economic growth could springboard from,” the report stated.
It could be worse
According to Polar Star Development’s Gerry Flynn, Eagle County’s “for sale” market will have to recover before the rental market begins to shrink. As that happens, rental homes will be owner-occupied, or they’ll become second homes instead of rentals.
Under current economic conditions, that won’t be coming soon, Cohen’s report states.
Locals saw the real estate market peak in 2007. January through June of that year saw 879 transactions generating $927 million in sales. But January through June 2011 saw 407 transactions, generating
$401 million in sales.
That’s a 43 percent drop in transactions and 46 percent in dollar volume, the report states.
Still, it could be worse — the January through June 2011 numbers are about double the low point of 2009, the depths of the recession.
All about jobs
It’s all about jobs and the lack thereof, Flynn says.
Rental markets in major metropolitan areas are robust because workers don’t generally leave when they lose jobs. They look for work in their area, the report states.
When locals lose jobs and can’t find another, they leave, in many cases leaving their unsold real estate behind, Flynn says.
That, along with an increasing number of foreclosures (a record 618 in 2010 with 2011 on pace match that number) and second homeowners deciding to rent, is expanding the local rental market.
Tough all over
It’s the same story all over, says Standard & Poor’s.
Nationwide, home prices have increased for the past four months, but don’t expect it to last, states a report released this week. The year-over-year trend is for continued falling prices.
“While we have now seen four consecutive months of generally increasing prices, we do know that we are still far from a sustained recovery,” said David M. Blitzer, chairman of the Index Committee at S&P Indices.
Compared to July 2010, home prices across the nation are down an average of 4.1 percent, according to Standard & Poor’s.