For several Colorado resort communities including Vail Aspen and Telluride, there’s hope on the horizon that the worst is over in terms of declining real estate sales and values. But the outlook isn’t as positive in Montrose and Ouray counties as the realities of the recession continue to exert a stranglehold on those real estate markets.
In Montrose County, the overall number real estate sales peaked in 2005 at approximately 1,700 sales, but as the recession has taken hold, the numbers have been declining ever since. So far, for the first half of 2011, according to statistics compiled by Montrose’s Comparable Sales Research owner Lynn Vogel, both the number of sales and the value of those sales continue to be decline.
The slightly better news? Vogel believes the real estate market has stabilized a bit.
Within the city of Montrose, the total number of single-family home sales continues to decline. In the first half of 2011, single-family home sales have dropped to 120 sales in comparison to the 137 sales that occurred in the first half of 2010, representing a 12 percent decline. (First half sales from 2009 to 2010 declined by 7 percent.)
The values of those single-family home sales continue to drop as well. From 2009 to 2010, values dropped five percent and from 2010 to 2011, while the total value in sales dropped from just over $28 million to just over $20 million, a 29 percent decline.
For single-family home sales in the unincorporated areas of Montrose County the first half of 2010 saw an increase in sales from 48 the previous year to 56, representing an increase in sales of 17 percent. That uptick seems to have fizzled out a bit during the first half of 2011 with sales dropping to 55 this year, representing a two percent change.
The value of property sold in unincorporated Montrose County for the first half of 2010 was down six percent from the previous year, and so far in 2011, those values have continued to decline by another seven percent.
For all of Montrose County, the total number of sales is up from 303 sales in the first half of 2010 to 321 the first half of this year, a six percent increase.
“It is interesting to note that numbers in Montrose overall are up for 2011, but the number of single family home sales are down the same percentage two years in a row for the time period, and, of course, values have really dropped off across the board,” Vogel said. “I think the fact that the unemployment rate is very high in Montrose County and we have most likely lost population throughout this downturn certainly hasn’t helped the real estate market at all.”
Vogel believes Montrose was hit especially hard in the recession due to its dependence on the surrounding resort communities for work. Service workers who have lost jobs have not yet been able to find new jobs or have left the Western Slope altogether.
“People sometimes forget that Montrose houses the service sector,” Vogel said. “When they got laid off, Montrose was impacted and the unemployment rate really went up. That is going to take a while to recover from. A lot of those people are gone and the high rate of foreclosures reflect that.”
Broker-owner Scott Scarborough of Montrose Real Estate agrees that the flood of foreclosures and unemployment are not only holding back the real estate market, they are fueling its continued decline.
“It’s a mixed bag,” Scarborough said. “Foreclosures continue to impact the market as well as unemployment. There are no jobs and people aren’t moving here. All of these factors are adding up and what you get is a market that I feel is still on a downward spiral.”
Scarborough said he recently spoke with a couple living on the Front Range who just visited Montrose and were “totally blown away” by the lifestyle and the location of Montrose. He said they really wanted to move here but without any job prospects, there was no way the two could make the move.
“If there is any bright spot on the horizon, we really do have a great place, but these people need a job before they can move,” he said.
In Ouray County, Signs of Life
The market in Ouray County is faring a little better in the first half of 2011 compared to last year, with the overall number of sales up 19 percent. But the rate of improvement has dropped dramatically compared to the improvement from the first half of 2009 to the first half of 2010, when sales were up 59 percent.
There were a total of 34 sales in Ouray County during the first half of 2009, which then climbed to 54 in 2010. So far this year there have been 64 sales.
Single-family homes jumped from 11 sales in the first half of 2009 to 23 in 2010, marking a 109 percent increase. This year, there have been 28 single-family sales, an increase of 22 percent. While the dollar value of those sales jumped 83 percent from 2009-2010, this year’s dollar value remained stagnant at zero percent.
“Ouray County is really coming back, but when the market crashed it really fell off,” Vogel said. “It got really nasty. They hit their high in 2005 and started a steep decline in 2008, when they went from about 100 sales to about 58, basically cutting the market in half. They got hit hard but they are coming back really well.”
Within the city of Ouray, single-family sales have remained stagnant since 2009. There were two sales in the first half of 2009 and in the first half of 2010 and 2011 there was one single-family sale posted each year.
Single-family home sales in Ridgway are slightly better. There was one sale in the first half of 2009. That number rose to six sales in the first half of 2010, which is exactly the same number of single-family sales posted so far in 2011.
“Things have been busier and more people seem to be actively looking but we aren’t really seeing folks willing to put contracts out there,” Ouray Realty and Investments managing broker Bill Chipley said. “I have been showing more properties than I did last summer. Whether or not it will result in actual sales, we will have to see.”
Like Montrose County, Chipley said there is a high supply of real estate available and buyers know they can make low offers and look for the best deals
“I think the trend is good but I think people are still genuinely nervous to invest in real estate because when you look at the national news, there is still a question on whether or not things are still going to get worse,” Chipley said.
Given the national economy, Vogel said that if the markets are going to improve she hopes it will be in the form of steady, gradual growth rather than a boom.
“We need a sustainable, moderate growth rate,” Vogel said. “I think three-to-five percent growth a year is good. We need sustainability rather than a boom because, as we have seen, it is really hard to recover whenthe boom) crashes.”
Scarborough agrees that as the nation’s real estate economy goes, so goes the Montrose real estate economy and that what the nation needs now is economic confidence.
“People are still concerned in what the overall U.S. economy is going to do,” Scarborough said. “They are not going to take the chance to spend the money for a new home until the see the light at the end of the tunnel.”