Routt County building pipeline flows at a trickle
March sees some uptick with 23 applications for permits
March 27, 2011
Steamboat Springs — The dollar value of building permits issued in Steamboat Springs and Routt County during the first two months of 2011 were down sharply, but early returns from March offer a little room for optimism.
Routt County Regional Building Department Official Carl Dunham said that with a week to go in March, his department has seen 23 applications for permits with an aggregate value of $5.8 million.
That's still well below the March average of $8.8 million, but in a first quarter when the amount of new building activity in the pipeline looked even grimmer, it was seen as good news.
Routt County's combined permit valuation for January and February, including Steamboat Springs, was $1.48 million compared with $4 million in 2010 and $11.4 million in 2009.
"The March average of our three lowest years (of the past decade) — in 2002, 2009 and 2010 — was $5.08 million," Dunham said. "I can't say we've been busy this month, but in the first 23 days, we did better than that."
Bob Kuusinen, Steamboat market president for Vectra Bank Colorado, said his bank is working on one construction loan with a couple more in the pipeline.
"Hopefully there are more to come this summer," Kuusinen said. "Things are looking a whole lot better this spring than last spring."
Commercial construction projects include a new Walgreens store and a new $25 million building on the Colorado Mountain College campus in downtown Steamboat. The CMC building won't generate fees for the local building department, but Kuusinen said local building contractors are in on the project.
Gap between new, used
Permit valuations received a big boost this month from an application for a $3 million exterior renovation of The Phoenix condominium complex on Après Ski Way, Dunham said.
January and February typically are quiet months for building permits in Routt County, so they aren't always indicative of a trend. But the combined numbers for the first two months of the year were down steeply from the previous two years. Neither 2009 nor 2010 turned out to be a healthy construction season.
Looking specifically at the city of Steamboat Springs, January and February valuations totaled just $635,000 this year compared with $1.7 million in 2010 and $6.8 million in 2009.
Among the building activity in the March pipeline is a permit application for a single-family home valued at just more than $1 million. But that may prove to be a rarity in 2011 unless there are a significant number of people building with cash this season.
The Associated Press reported this week that the widening gap between the price of existing homes and new homes is discouraging new home starts across the nation.
Nationally, the median price of a new home grew almost 6 percent to $230,600 in the past year at the same time the median sales price of existing homes fell by three percent to $156,100. The price gap of almost $75,000 is the greatest in a decade or more and three times the gap seen in a healthy housing market. In more robust markets, the gap is on the magnitude of 15 percent.
The downward pressure on existing housing stock in Routt County is apparent in Thursday's closing of the sale of a foreclosed home in the Red Hawk Village neighborhood of Stagecoach. A three-bedroom home on Sagebrush Circle there sold for $212,500, or $121 per square foot.
Kuusinen said low prices for existing homes definitely discourage new construction, but market conditions vary significantly with the type of product and the neighborhood.
"There isn't anything more certain to slow down construction than when the market value has gone below the cost to build," he said. "If you can purchase for less than the cost to build, people opt in that direction."
However, Kuusinen said the same trend can have a stabilizing influence on the market.
"I've talked recently to several appraisers who are starting to believe prices are stabilizing because they have gone below replacement cost," he said.
— To reach Tom Ross, call 970-871-4205 or email tross@SteamboatToday.com