Our View: The long, slow recovery
March 27, 2011
Two events during the past week underscore just how far the local real estate market and construction industry are from recovering, let alone stabilizing. First was a group of local subcontractors seeking legal recourse to collect on what they say are several months of unpaid work from the owner of Kyteler's Irish Pub in Wildhorse Marketplace. The workers claim to be owed as much as $150,000 for work dating back to December.
While the Kyteler's situation remains fluid, it makes clear what many already know to be the case: Limited construction work in Routt County has decimated an industry that previously served as a barometer for the strength of our economy. The combined building permit valuation for Routt County, including the city of Steamboat Springs, for January and February was just $1.5 million. That's down from $4 million in 2010 and $11.4 million in 2009.
Routt County Building Department official Carl Dunham said March already has seen 23 permit applications with a combined valuation of $5.8 million, but one of those permits — an exterior renovation at The Phoenix condominium complex — accounts for $3 million of the total.
And it's unlikely the building industry will recover so long as the price gap between existing and new construction remains so wide. Nationwide, the gap between the price of existing homes and new homes reached 15 percent.
The second telling event last week was Routt County Assessor Gary Peterson's report to the Board of County Commissioners that declining property values and a record number of foreclosures are continuing to put downward pressure on the county's tax base. Peterson expects local property values to be down an average of 20 to 30 percent in the latest round of valuations, and that's on top of the 20 to 25 percent decrease of the past year.
The foreclosure rate continues to hover at a record level, with Peterson expecting more than 300 foreclosure filings in Routt County this year. And while local Realtors say the demand for those distressed properties is beginning to catch up with the supply, stabilization in the real estate market won't happen until those distressed properties are gone.
If there's a bright side, it's that some local families now are able to achieve the dream of home ownership at prices never thought possible in Routt County just two years ago. But their good fortune is someone else's misfortune, and there's still simply too much of that to signal an end to our struggles.