Despite Housing Crash Scars, Montrose Market Looking Up
by William Woody
Apr 17, 2013 | 1586 views | 0 0 comments | 7 7 recommendations | email to a friend | print
READY FOR INFILL – The roads were built and the infrastructure
in place before the housing bust of 2006. Today, at long last, real-estate sales
are trending upwards, although well below asking prices from the top of the housing boom.
Comparable Sales Research’s Lynn Vogel reports sales of single- family homes are up significantly,
from recent years, and that vacant city lots are trending upwards, as well. (Photo by William Woody)
READY FOR INFILL – The roads were built and the infrastructure in place before the housing bust of 2006. Today, at long last, real-estate sales are trending upwards, although well below asking prices from the top of the housing boom. Comparable Sales Research’s Lynn Vogel reports sales of single- family homes are up significantly, from recent years, and that vacant city lots are trending upwards, as well. (Photo by William Woody)
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MONTROSE – Newly released data reveals an increase in city building permits issued for both new commercial buildings and single-family residences, which those watching the local market closely say is another sign the real-estate market in Montrose is showing measurable recovery. 

In March, Community Development Director Kerwin Jensen told the Montrose City Council the local market "bottomed out" in 2009, and that since then slight gains in new commercial building permits – eight in 2012 – totaled more than in 2010 and 2011 combined (five) – could see Montrose readying for a construction uptick this year, with 11 new permits already issued.

"There's the glimmer of hope that things are starting to move up," Jensen told councilors.

Montrose was hardly immune from the collapse of the North American housing boom of the 1990s, with developers buying up large tracts of property and speculating that the housing boom would just keep growing.

Before the collapse. developers and investors poured significant amounts of money transforming farmland and grazing pastures into multi-unit subdivisions and new space for both national and local retail stores.

Jensen told council that Montrose saw a lot of over-speculation, with the mounting demand for new commercial and home construction that saw some developers building multiple spec homes with asking prices as high as $600,000.

For a while, “Things were going really good, and people wanted to get on that train,” Jensen said of the relatively short-lived Montrose housing boom. 

The Montrose market peaked in the first nine months of 2006, but by October of that year, the numbers had begun to drop.

"You can point to that one month,” Jensen said of October 2006, “that one quarter when things really started dropping off."

Soon after that, developers and builders began seeing their projects fall into foreclosure, with construction soon at a 25-year low, according to Jensen. In some cases, developers walked away from what had seemed to be surefire moneymaking projects, leaving behind visible developmental scars of a depressed real-estate market.



TUMBLEWEED AND PRAIRIE DOGS

High-water marks from the burst housing bubble (and subsequent recession) can be seen in and around Montrose, where many barren land developments and abandoned streets are now home to tumbleweed, prairie dogs and weather-related erosion.

In 2005, new building permits for single-family residences peaked, at 397. Jensen said 2006 was on track to go even higher, until its last quarter saw a halt in new building permits, which finished that year at 356. Since 2006, the numbers of new family homes continued to decline. In 2007, 226 permits were issued; a year later, that number had dropped by nearly two-thirds, to just 76. 

According to the same data, 2012 was the lowest year, with just 19 – the lowest number since 1989. 

In the first three months of 2013, seven new residential permits were issued.

In Jensen’s report to the city, he noted 920 final-platted vacant lots currently within city limits, and another 2,198 lots remain stalled in preliminary paper designs. 

In 2005, the number of preliminary platted lots was 3,533, with the number of final platted lots at 1,015. Each year since that time, the number of preliminary lots has vastly outnumbered the number of final platted lot, with the number of preliminary lots topping out in 2006 at 3,665 (and just 1,206 final plots approved for construction).

Jensen hopes to see an increase in both preliminary and final plat numbers for a more realistic view of anticipated growth in Montrose in a state with an occupancy average of 2.7 people in single-family homes. If those final platted lots are built on, the city could see an influx of 2,500 new residents, based upon the state average – and, if construction on all of the city’s preliminary plats were finished, an increase of as many as 6,000 new residents. 

These 920 final-platted lots now sit on long miles of empty streets, with infrastructure including ready-to-use sewer, water and electrical lines running beneath streets with names like "Mahogany" and "Summit."

Each night, many of those roads are illuminated by streetlights built as part of the project's infrastructure and powered through the local electrical grid.

Jensen said the city is talking with developers, and meeting with representatives of the local banks who inherited the bulk of the stalled projects, in hopes of finding a way to jumpstart stalled developments, but it’s mostly a “dialogue,” aimed at bringing investors and bankers together. The many spec homes that have remained empty, since their construction, are in disrepair, and in many cases are now home to local wildlife. 

The city has had to perform weed control in the bank-owned Stone Ridge subdivision, located on the southern end of town, to prevent infestation, which has prompted the city to place liens on that property to recover some of its maintenance costs.

The Bridges' subdivision, which slowly took off in the late 1990s, began with 200 preliminary plotted lots, according to Lynn Vogel of Comparable Sales Research in Montrose. At present, just a few-dozen homes have been constructed on the Bridges property (that features a Jack Nicklaus designed golf course). Just off the eighth hole, there’s an unfinished sun-bleached home that’s a historical landmark of exactly when the local market slammed shut, in 2007. Jensen said, the city is beginning the abatement process on this structure that has been deemed a nuisance, sitting abandoned over the years, and now a potential fire hazard – and setting for vandalism – to its neighbors.  "We're lucky that's the only one around," Jensen said, of this house that could, once the city inspection is finished, end up being torn down.

Vogel looks on the bright side. “As demand picks up, we'll see those people coming back in and continuing to build in these newer areas,” she said, adding that specific numbers are hard to come by, because availability must be handled on a “subdivision by subdivision basis.”

According to Vogel said vacant land sales within the affected subdivisions remain low because of the sheer number of lots – and especially the number of lots in foreclosure.  In 2010 and 2011, 34 lots were sold within the city. In 2012, however, that number jumped to 49, said Vogel, adding that a lot in the Raven Crest  subdivision sold for $9,000 recently.  "It indicates that we’re on a little rebound,” she said, and “hopefully that will continue," with lower home prices perhaps leading to a stronger housing market overall. (Lot prices in Raven Crest rose from $45,000, in 2004, to a high of $57,000 in 2007.)

The number of single-family homes has continued to increase, she said recently, up 47 percent in 2011 and 2012, with median prices stabilizing.

In 2010, the median price was approximately $179,900; in 2011, that number had dropped to $144,000. The median price dropped again in 2012, but only slightly (by $500), dropping to $143,500.

 

wwoody@watchnewspapers.com

Twitter.com/williamwoodyCO

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