MONTROSE COUNTY – While numbers are nowhere near what they were prior to the 2008 housing crash, new construction building permits in both the City of Montrose and Montrose County have rebounded this year, offering hope that the region’s economy is on the rebound as well.
In the unincorporated areas of Montrose County there was a total of 141 building permits issued, which is up 42 percent from the 99 during that same time period in 2012. The total valuation of those permits are up 54 percent, according to the Montrose County Planning and Development department, to just over $8 million – almost three $3 million higher than the $5.2 million the county saw in 2012.
As for single-family home starts, there have been a total of 30 permits issued this year, which is up 88 percent from the 16 single-family permits issued during the same time in 2012. Perhaps most notable is the increase in valuation: those single-family permits have increased in one year from $2.2 million in 2012 to $4.2 million this year.
“Generally we are seeing that the trend is up,” County Planning and Development Director Steve White said. “For whatever reason, money is starting to turn loose and people are deciding to build and are finding it reasonable to do so.”
Kerwin Jensen, the community development director for the City of Montrose, said he’s seeing positive construction numbers within the city as well. So far there have been 24 single-family house permits issued through the end of August – a figure that is already a 26 percent increase from the total of 19 single-family permits issued in all of 2012.
“The big thing that I draw from this is that this is the first year we have seen an increase in the number of single-family construction since they started dropping off back in 2006,” Jensen said. “2012 was the first year we’ve seen an increase in new commercial building permits and 2013 is the first year we have seen an increase in single-family permits. Those are two very good things.”
Despite the positive trend of this year’s single-family numbers in Montrose, Jensen said they are nowhere near the number of permits issued in 2005 when single-family permits topped out at 397.
“We are averaging about three new single-family homes per month,” Jensen said. “It’s a far cry from 2005 but we are running about double from what we had last year.”
In Montrose’s building boom years leading up to 2005, Jensen estimated that the Montrose region was one of the 17 fastest growing micropolitan areas (under 50,000 in population) in the country. That immense growth, he said, has left the region with a high number of vacant lots.
The Cobble Creek Golf Community, where a lot of those vacant lots remain, is starting to see an upswing in new building as well this year. Tiff Hayden, developer of the Cobble Creek Golf Community, said that six homes new homes in the area have either been constructed, are under construction with two more in the design phase. The homes are the first construction the golf course community has seen since 2007.
“This is a whole new pulse, if you will,” Hayden said. “I think it is being driven by the Front Range. The stock market is up, people are feeling more wealthy and they are ready to move. The exciting thing is people are starting to be more willing to invest in a new home.”
Cobble Creek has space for 650 units and currently, there are 260 homes built. While the new building “pulse” is a breath of fresh air for Hayden, he said it that challenges remain. First and foremost he said, potential builders or new homeowners can often have trouble getting financing to build a home because appraisals don’t match up with the cost of building the new home.
For example, Hayden said, if you want to build a home for $400,000 and a builder goes to get it appraised, the bank comes back with a lower appraisal, say for $300,000, and the lender will only loan 80 percent of what the appraisal value.
“A builder may only be able to get a loan for $320,000 for what a $400,000 house costs to build. The cards are stacked against a potential homebuilders.”
To help solve this appraisal problem, Cobble Creek offers pre-builds whereby potential home builders can circumvent that appraisal process and leaves it in the hands of the community’s developer. Meanwhile, every new home that is built will eventually bring the area’s appraisals on new homes up.
“It will be a growing process if we can begin to solve the appraisal problem, and I think we are close to solving it,” Hayden said.
For now, White said he’s interested in seeing what the rest of the calendar year holds for new construction in the county as the fall months can be some of the busiest times to build.
“We find that there is a little bit of an upsurge on people trying to get things done by the end of the year,” he said.