Foreclosure Filings Continue to Fall
WESTERN SAN JUANS – They’re not growing by leaps and bounds, but the Western San Juans region’s real estate markets steadily improved and stabilized, despite higher interest rates, in the first seven months of this year.
Perhaps the most noteworthy trend of the first half of 2013 – and a strong sign of market stabilization, as well – is the continued decline in foreclosures filed in San Miguel, Montrose and Ouray counties.
In San Miguel County, 27 foreclosures were filed between Jan. 1 and July 31, marking a 56 percent decrease, compared to 62 filings in that same time period in 2012. Montrose County, with 116 filings so far, has seen a decline of 34 percent from the 176 filings the previous year, while Ouray County has seen 13 filings through July, and is on its way to having less than the 35 foreclosures it saw in all of 2012.
While sales in the Town of Telluride continue to be strong, weaker sales of single-family homes in Mountain Village during the first half of the year brought down both the number of sales and dollar volume of sales in San Miguel County as whole. Despite the lower sales numbers compared to the first half of 2012, brokers say the third quarter is already off to an impressive start, and could strengthen this year’s totals in a short time. The biggest challenge for the Telluride/Mountain Village market, brokers say, is better air service to the region.
In Montrose and Ouray counties, moderate sales growth continues, despite the impact of higher mortgage rates on prospective homebuyers. With the number of foreclosures declining, brokers report home prices continue to stabilize, and are no longer dropping.
For the most part, brokers say the region remains a buyers’ market, but that there are signs that could be shifting.
After Lackluster First Half, Third Quarter Off to Positive Start
Before the housing market crash of 2008, winter was the busy selling season for real estate brokers in Telluride and Mountain Village. As the market steadily climbs out of the Great Recession, some real-estate brokers report their busy season has shifted from winter to summer and fall.
With August at its end, Telluride Sotheby’s International Realty broker Sally Puff Courtney said the third quarter is off to an impressive start, and should make up some of the ground the market lost in the first-half of the year.
“Last winter was a little bit challenging, for sure,” said Courtney, “but this third quarter is turning out to be very positive.” At her firm, she said, “We have done several contracts in the past two weeks, and there is momentum here.”
According to real estate data provided by Telluride Consulting’s Judi Kiernan, the overall number of sales and dollar volume of sales in the first half of 2013 have been lackluster in comparison to the first half of 2012. A total of 207 sales through July 31 of this year, at a dollar volume of $144.5 million, marks a 13 percent decline in the number of sales and a 10 percent decline in dollar volume from the same time frame in 2012.
As Kiernan explained last week, while the numbers suggest an overall decline in San Miguel County, the sales of single-family homes and condos in Telluride are very strong. Sales of homes in Mountain Village were less strong, but in a market where two or three sales of single-family homes have a big impact on the overall numbers, this year’s shortfalls could easily be made up in the second half of the year.
“I think the main culprit in the market overall is that there were only four Mountain Village homes sold,” Kiernan said. “Those are big-ticket items,” she said, of Mountain Village homes, “and those are the sales that can push a small market from mediocre to good.”
Kiernan pointed to January and July this year as being particularly slow, but went on to echo Courtney’s contention that August numbers already look promising.
“Two weeks into August, and we are at $16.5 million,” Kiernan said last week. “We were at $30 million for all of August last year, so I am encouraged.”
“I think our busy season will go through mid-October,” Courtney said. “People will be here for the fall colors, and for [the Telluride] Brews and Blues [Festival]. I think it will be a strong season. Our winters used to be busier, but now our summer and fall is busier.”
Telluride Real Estate Corporation Broker Associate Mike Zuendel said he was encouraged that 2013 sales tax revenues in Mountain Village were up 24 percent from the previous year, and also encouraged by news that Allegiant Air’s service to Montrose Regional Airport from Los Angeles will open up a new market of visitors who could power an upswing to the second-home market in Telluride.
“The sales tax revenue is a huge positive,” Zuendel said. “That indicates that we have bodies coming into town and that is a big plus. This market has a lot of positive aspects to it right now. This is still a great buyers’ market, and there are a lot of really good values. Our challenge remains to be transportation. Airfares need to come down and service needs to increase, but I see a big positive with Allegiant coming in from Los Angeles. L.A. could be a great market for us.”
Another positive impact, most especially on the Mountain Village real estate market, is, of course, a good snow year.
“Let’s face it, a good snow year is very helpful, especially in the Mountain Village core,” Zuendel said. In recent years, he said, “We have had a couple of average to below-average snow years.”
Telluride Real Estate Corp. broker Dan Henschel echoed Zuendel’s concerns. “We can’t have a third ho-hum ski season in a row,” he said. “We need Mother Nature to turn on the moisture spigot in late October and early November so the news gets out across the country that the West, and more importantly, Telluride, has great snow.”
Like his peers, Henschel is encouraged by the momentum that the market has already gained in August, as autumn draws near.
“As has been the case, and continues, the Town of Telluride high-end single-family and condo markets, along with vacant land, continue to be exceptionally strong,” Henschel said. “Additionally, the Mountain Village market is showing traction, with four homes recently going under contract. Plus condo and land-sales activity have picked up, across the board.”
And if sales in fact do show signs of improvement throughout the rest of the year, the buyers’ market could begin to shift.”
Courtney summed up the mood of cautious optimism regarding Telluride/Mountain Village real estate, saying: “I think a lot of people realize that if they don’t buy now, they will miss the deals we currently have,” she said.
Consistent Growth in Montrose
In Montrose County, sales continue to steadily move in a positive direction, despite the impact of increasing mortgage rates.
Sales of single-family homes in Montrose County during the second quarter, according to statistics compiled by Lynn Vogel of Comparable Sales Research, were up approximately 4 percent, from 177 sales in 2012 to 184 sales in this year. The dollar volume of those sales were up 8.3 percent from $33.4 million to $36.1 million.
Sales within the City of Montrose during the second quarter came in at 10, one sale less than sales over the same time period in 2012. The dollar volume of those sales, however, increased by 1.4 percent, from $15.7 million in 2012 to $18.3 million in 2013.
Calling it “exciting,” Vogel said the median price of homes within the City of Montrose rose 16.6 percent over the last year, from $146,445 to $179,050, meaning that the declining number of foreclosures is finally having an impact on values in the area.
“It was about 18 months ago when we really started noticing an upward trend in this market,” Vogel said. “These numbers show how consistent it is. This is what we need to see – a slow, moderate upward trend – and we have been seeing it for the past 18 months. If there is anything to take away from these numbers, it is how consistent it is.
“Ouray County is also seeing some nice growth rates as well,” Vogel added.
In the second quarter of 2013, Ouray County has seen 21 single-family home sales, a 40 percent increase from 15 sales the previous year. The dollar volume of those sales is up 103 percent, as the volume more than doubles, from $6.4 million in 2012 to $15 million in 2013.
“The market seems to be recovering, but a lot of that was interest-rate driven,” Renfrow Realty broker John Renfrow said. “Once those interests rates rose, sales began to stall again. We had really strong sales for March and May,” he said, but then, “once those interest-rate hikes hit, some of those sales really dropped off significantly.”
The drop-off notwithstanding, he said, “The market is still strong, however, and is on the upward trend.”
Mortgage loan officer Gloria Powell, of Guild Mortgage Co. in Montrose, said interest rates remained remarkably low until the end of the first quarter this year, when percentage rates jumped from the mid threes to low fours.
“Some rates are now in the high 4 percent range,” Powell said. “Since inventory in our area is becoming limited, especially with lower-priced homes, these rates are sort of giving some homebuyers a little harder of a time for qualification.” The combination of dwindling inventory, rising home prices and mounting interest rates, she said, “has kind of bumped some first-time homebuyers out of the market.”
While Powell said the rising interest rates have moved some people out of the home market, the current percentage rates are still good.
“Fours and fives are still an excellent rate,” Powell said. “We’ve seen it as high as sevens and eights. Years ago, rates were as high as 12s and 16s.”
Renfrow, a member of the Rocky Mountain Commercial Broker alliance, said he’s encouraged by the positive trends he’s seeing in other Western Slope markets. While Montrose’s recovery has been somewhat “soft,” he said, he expects a full rebound in the near future.
“Communities on the I-70 corridor have been strong, Grand Junction has been rebounding, Durango is up, Alamosa is up,” Renfrow said. “Delta, Montrose and Ouray have been more soft. The general trend for a majority of locations is a positive trend. In San Miguel County, they have some good starts, and as Telluride goes, Montrose is going to go right behind it. It will be delayed because we are the service community, but the ripple effect will probably come in a year or two.”
Valerie Meyers, associate broker at Coldwell Banker Bailey and Co., likes the trend she’s seeing in the Montrose market.
“Properties are moving faster right now,” Meyers said. “Days on the market are a lot lower. Prices have definitely leveled out, and they aren’t declining any more. I think we will see that prices will probably start to increase, and that is what we are hopeful for. There are a lot of multiple-offer situations, and there are still good lending options for people.”
She summed it up, saying: “I am encouraged by what I am seeing.”