Steamboat Springs When Steamboat’s real estate market finally regains its equilibrium, the demand for affordable housing may see increased emphasis on rentals versus home ownership.
Catherine Carson, of Yampa Valley Housing Authority, told a Steamboat Springs Chamber Resort Association gathering this week that even with prices for entry-level housing at their lowest in almost a decade, finding affordable housing still can be a challenge, particularly in the rental market.
The difficulty of obtaining financing, uncertainty about the ability of growing families to trade up to bigger homes, the challenge of saving for a down payment and the cost of commuting from bedroom communities remain impediments to buying a home in the Yampa Valley, she said.
Carson was speaking Thursday during the second in a series of economic forums at Steamboat Smokehouse. The forums were conceived by Chamber CEO Tom Kern as a precursor to the Economic Summit to be held in September. He hopes the summit will be the beginning of articulating a new path for the Yampa Valley’s future.
Carson said a measure of affordable housing is whether households are able to spend less than 30 percent of their income on rent or mortgage payments. Nationally, households average 28 percent of their monthly income spent on housing costs. In Routt County, 54 percent of renter households spend more than 30 percent of their income on housing. The share of owner-occupied households that spend more than 30 percent of income on housing is 38 percent, according to the U.S. Census Bureau.
“If you’re spending that much on housing, you’re not spending it on other important things,” Carson said. “And a very important aspect of that is that you’re not saving as much.”
For renters who spend more than 30 percent of their income on housing, that means they are less likely to be able to save for a down payment, she added.
The percentage of homeowners who spend too great a share of their income on housing is skewed toward adults ages 25 to 34 (77 percent) at phase of life when they might be inclined to begin a family. That number drops to 32 percent among homeowners ages 35 to 64, a time when people are more established in their careers.
Among renters, 61 percent of households where the primary householder is younger than 25 are spending more than 30 percent of their income on housing. The number drops to 41 percent among renter households in the 25 to 34 age group but bumps back up to 50 percent among 35- to 64-year-olds.
The typical cost to rent in Steamboat is $600 per bedroom, Carson said. And while many families in the local workforce can afford a two-bedroom condo or apartment, a growing family ultimately will need more room. A family with two young children could get by with two bedrooms. However, a family with a boy and a girl will need three bedrooms as those children reach adolescence, she said.
Stan Urban, of Land Title Guarantee Co., said there is growing evidence that the real estate market is reaching a better balance between inventory and absorption rates.
“We are at the bottom, and things seems to be improving,” Urban said. “If you think it’s going to go down further, it’s not.”
Urban said that inventory is at its lowest level since 2008 and that sales figures in 2011 reflect modest growth, which would lead to a stable market if projected into the future.
“Some (real estate) offices are seeing the highest number of showings they’ve seen in several years,” he added. “And there are more instances of competing offers.”
Among sales of distressed properties, short sales are growing while the number of new foreclosure filings in the first quarter of 2012 dropped to 65 from 104 in the same period of 2011.
Urban sees a cause and effect relationship.
Short sales are becoming a bigger part of the local market and the increasing willingness of creditors to go that route is a reason why foreclosures are down, he said.
Urban reported at the end of 2011 that the number of residential units that sold for less than $300,000 during the year was 286, and of those, the number of homes sold for less than $200,000 was 172.
Carson said it is likely that a share of those sales were representative of workforce households that had attained affordable homes. What isn’t known, she confirmed, is the actual number.
A short sale is one in which the holder of the note on the home agrees to sell the property for less than the outstanding principle on the mortgage.
A great unknown in the area of short sales going forward, Urban said, is to what degree financial institutions will pursue the original owners to recover the gap between the unpaid principle and the sales price.
Household spending on housing in Routt County
To reach Tom Ross, call 970-871-4205 or email tross@SteamboatToday.com