This home on Stone Lane has a two-car garage, an extra family room and at the list price of $425,000, would be affordable with a no-down-payment, low-interest USDA loan for a household with annual income of a little less than $90,000.

Courtesy photo

This home on Stone Lane has a two-car garage, an extra family room and at the list price of $425,000, would be affordable with a no-down-payment, low-interest USDA loan for a household with annual income of a little less than $90,000.

Supply of homes in Steamboat Springs for less than $425K is tightening

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— Historically low interest rates and depressed housing prices have reopened the opportunity for successful working families with great credit ratings to purchase a home in or very close to the city of Steamboat Springs. But there are signs that the inventory of those single-family homes is dwindling.

Realtor Beth Bishop, of Prudential Steamboat Realty and the Olson Team, researched the Multiple Listing Service this week to determine that of 18 active listings of single-family homes priced at $425,000 and less in Steamboat and just outside its boundaries, seven are tied up by pending sales.

“That opened my eyes,” Bishop said. “That means 40 percent of the homes on the market in that price range are under contract.”

What cannot be known for certain is how many more homes in that price range are parked in the shadow market — that’s the term Realtors use to reference property owners who might want to sell their homes but either won’t or can’t until prices begin to move upward.

Cindy MacGray, Bishop’s colleague at Prudential, said she has a client who is relocating to another city. When showed the comparable sales and realizing they would have to list their home for a price less than $500,000, the client opted to rent their Steamboat home instead and will rent a home for themselves in their new city.

“I think they’re smart,” MacGray said. “They can cover their mortgage with the rent and hold onto it.”

No one really knows how big the shadow market attributable to bank-owned homes will be in the near future, but her sense is that its impact on the local market will fade in the next 24 months.

MacGray and Christine Hands, of Coldwell Banker Distinctive Properties, recently have listed homes in Bishop’s target price range on Pamela Lane. However, MacGray’s listing, on the market for just 20 days, just went under contract on Thursday with a second, competing offer, and two more Realtors who called to say they were bringing offers but put them on hold.

It’s a family neighborhood that offers quick access to the Yampa River Core Trail, Emerald Park and the Yampa River Botanic Park.

Bishop said low inventory already seems to be moving the price per square foot of homes in that sub-$425,000 price range upward. Although it is not based on a large statistical sample, her research shows that when the first five months of 2012 is compared to the same period in 2011, the price per square foot is up by a little more than $24.

“The average sale price per square foot from January through May 2011 was $174.31 for homes sold under $425,000,” Bishop said. “The average price from January through May this year was $197.91.”

She added that the trend suggests the opportunity for some Steamboat families may not last much longer.

“I want people to realize that they could likely be buying one of these homes for less than renting,” Bishop said. “If people are out there looking and serious about making Steamboat their home, there are options they need to look at now.”

And it’s not just local working families that are getting back in the game. She recently helped a couple from the Front Range who were hoping to retire into a nice condo or townhome and were surprised to find they could afford a single-family home in a desirable neighborhood in town.

Bishop’s call to action is based to a degree on the availability of USDA loans, for households that qualify, that can be obtained for little to no money down at interest rates as low as 3.75 percent.

Assuming a prospective buyer can qualify for that loan, she offers a couple of examples of attainable homes.

There is a home on Stone Lane listed for $425,000 that has a two-car garage and is within about a mile of the base of the ski area. Under the USDA program, the monthly payment could be as low as $1,968, Bishop said. Mortgage lender Kathryn Pedersen, of Yampa Valley Bank, confirmed those numbers are accurate, with the caveat that escrowed expenses, home insurance and property taxes, for example, would increase the monthly payment above $1,968.

Pedersen added that income of qualifying families must be less than $93,350.

The rule of thumb at the Yampa Valley Housing Authority is that families should avoid paying more than 30 percent of their available income on housing — paying more takes money away from other expenses like food, clothing and savings.

Measured against that standard, a family could have income of $87,900 and not be paying right at 30 percent on their housing when taxes and interest are added to the mortgage payments. That income level brings households pretty close to the USDA ceiling of $93,500.

Under similar low rates, the two homes on Pamela Lane could be purchased at a price producing monthly mortgage payments of $1,500 to $1,800.

Bishop’s survey of sub-$425,000 homes takes in western neighborhoods like Steamboat II, Heritage Park and Silver Spur. She noted that the lowest inventories are in the Old Town and mountain neighborhoods, each with just two homes in that price range.

To reach Tom Ross, call 970-871-4205 or email tross@SteamboatToday.com

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