In the four Western Slope counties of Delta, Montrose, Ouray, and San Miguel the overall number of real estate transactions in 2011 are trending in a positive direction, but the lingering effects of foreclosures and short sales are still leaving a mark on the overall dollar volume those sales represent. In some cases, notably in Mountain Village, values are still down significantly.
Few real estate professionals interviewed this week were willing to say that a full-on recovery of the region’s real estate market is imminent, but there is a general sense that things are getting better.
“I think there is an indication that we’ve turned the corner,” Comparable Sales Research owner Lynn Vogel said. Since 1991, Vogel has provided reports on housing, land and commercial real estate data in Montrose, Delta and Ouray counties. “I hope we continue to stabilize and continue to move the foreclosures out, and then we can start gaining that equity back. I think it’s a start.”
A Tale of Two Counties
Comparing real estate trends in Delta and Montrose counties, one could conclude that the bigger the bubble, the longer it takes to recover when it bursts. Thanks to a combination of declining new foreclosures, increased single-family home sales and increased dollar values of those sales, Delta County has the most positive trends in the four county region. Single-family home sales have increased from 275 in 2010 to 394 in 2011, marking an increase of 43 percent. The dollar value of those sales increased by 39 percent in 2011. In fact, every town in Delta County saw improvement in both the number single-family sales and the dollar value of those sales.
“When we were in the midst of the boom, Delta didn’t get as hot as Montrose and Ouray did,” Vogel said. “Their prices didn’t go off the charts and they weren’t affected as much by the crash. They didn’t have as many subdivisions go in, either. That’s one of the big things.
“People from Grand Junction are buying property in Delta County and so are people from the Aspen-Snowmass area. In Montrose, I see a lot of people buying a lot of foreclosures and lower-end properties turning into rentals.”
Indeed, the real estate picture in Montrose County compared to Delta County isn’t as pretty, but there are indications that progress is being made, especially in the number of transactions. There were 415 single-family home sales in 2010, marking an eight percent decrease from 2009. In 2011, though, that trend reversed, with a total of 435 single-family home sales, marking nearly a five percent increase.
But while the number of sales is increasing, the value of those sales continues to decline by almost 15 percent from 2011 to 2012.
Jeff Keehfuss, a broker at Montrose-based Alpine View Re/max, said some types of properties in Montrose County are doing better than others, but that ultimately what is driving the market right now is sales of low-priced foreclosures.
“It’s very, very strange right now,” Keehfuss said. “It’s as strange now as I have ever seen it. There are some properties that have bottomed out and have started to increase in value. Farmland is at a minimum price per acre, but it is selling now and seems like it’s starting to rebound. The biggest problem we have is the banks are dumping this stuff so cheap and people are buying them up. Some of these properties are very risky.”
Keehfuss went on to say that Montrose County has a high inventory of vacant lots as well that are also selling at rock-bottom prices.
“We have to move the volume of properties we hit during the boom,” Vogel said. “Montrose may have developed a little too fast and now we are paying for it on the backside with the number of foreclosures that have to sell. They have to be moved out first.”
The good news on new foreclosures in Montrose County is that they have started to decline. New foreclosures have gone from 288 in 2009 to 386 in 2010 and back down to 286 in 2011. The decline is far from the pre-bust number of 84 in 2006, but it is a trend in the right direction. That, combined with increasing number of foreclosure sales, suggests that it’s a matter of time until prices begin to stabilize. The question is, how long will it take?
“I think the total number of sales for 2012 is going to be similar and 2013 will probably be in that same category as well,” Keehfuss said. “Personally, I think 2014 is when things will start to look pretty positive. In Montrose we have a lot to offer here. We will be back, there’s no doubt in my mind. I think we are definitely really close to the bottom and may be on our way up. It’s a matter of how long it will take.”
Mountain Village Playing By Its Own Rules
With the number of foreclosures declining in San Miguel County at the same time there is a growing number of sales, it would seem that the dollar value of those sales, despite being down slightly, is stabilizing somewhat. That is, until you look more closely at Mountain Village.
Real estate figures provided by Telluride Consulting owner Judi Kiernan show that 2011 was up from 2010. Overall transactions across the county jumped from 327 in 2010 to 383 in 2010, marking a 17 percent increase. The number of foreclosures is also trending positively, dropping from 108 in 2010 to 100 in 2011.
Despite the increase in sales, the dollar volume of sales in San Miguel County dropped 22 percent in 2011. But when you look more closely at the figures, the dollar volume of sales in the Town of Telluride and unincorporated San Miguel County is only slightly down, by seven and five percent, respectively.
The explanation is a whopping 40 percent drop in the dollar volume of sales in Mountain Village, despite 22 percent more transactions, dramatically skewing the county’s overall figures.
“Mountain Village represents a lot of dollars and if they are not selling, San Miguel County is going to be down,” Kiernan said. “Mountain Village kind of plays by its own rules because they are not subject to the same pressures other sellers have. I am not saying there aren’t foreclosures and short sales up there, but there are a lot of people who don’t have the motivation to sell at current market values.”
Telluride-based Prospect Realty, Inc. owner/broker Todd Creel agreed there is a lot of inventory in Mountain Village, but, he noted, properties are selling. Comparing Mountain Village to Telluride is hard to do, he said, because they are so different.
“There is a lot of condo inventory that has to be absorbed in Mountain Village,” Creel said. “The Town of Telluride is a market unto itself. There are a finite number of properties that are in consistent demand and it seems to be pretty stable. Overall sales numbers are still slow but people are buying up the bank sales.”
When talking with property owners looking to sell, Creel said he’s very candid with prospective clients, telling them that if they need to sell within the next three to six months, they have to price their property “realistically.” If they can hold onto a property for another year or two, he tells them to wait, because the value will be better at some point in that time.
“Many people can wait, and if they can, I would advise them to wait,” he said. “There is no chance we are going lower. The question is, What will the rate of recovery be? A lot of that will depend on overall national confidence. I know people are waiting on the sidelines to jump back in.”
Mixed Numbers in Ouray County
In Ouray County, on the positive side, foreclosures are declining, moving from 71 in 2009 to 56 in 2010 to 46 in 2011. The total number of single-family home sales stayed consistent the past two years at 61 sales each year with an overall increase in the dollar volume of those sales of six percent.
While the City of Ouray actually saw a decline in the number of sales from eight in 2010 to five in 2011, there was an increase in dollar volume of nearly 18 percent.
In Ridgway, traction toward a recovery hasn’t yet taken hold. The number of sales continues to decrease from 18 in 2010 to 11 in 2011, marking a 40 percent drop. Dollar volume in Ridgway continues to drop as well, and in 2011 it saw a decrease of 34 percent.
“We are such a statistically small demographic area that it’s hard to make a prediction on what we can expect after 2011,” United Country Sneffels Realty broker Marc Hitchcox said, and “2011 was the slowest sales year on record and there are a lot of different reasons. Prices did go down quite a bit, foreclosures were down and we always tend to lag behind the Denver/Front Range market.”
Hitchcox pronounced himself encouraged by the fact that some vacant land sales were occurring, since construction is a main factor in Ridgway’s livelihood.
“Have we seen the bottom? I’m not sure,” Hitchcox said. “Until people start building houses we can’t say, because that’s the indicator I am looking for. Right now, construction is way down.”
Still, there is a positive feeling that the market in Ouray County is beginning to improve.
“I would have to say enquiries seem to be up,” Cimarron Realty broker Alan Stapleton said. “Overall, contracts do seem to be up above where they were a year ago. There seems to be a slight improvement in the economy and a little more consumer confidence.
“I wish I could say for sure things are turning around,” Hitchcox said. “I am optimistic. Last year was better than the year before and that year was better than the prior year. As a trend it does seem to be improving.
Have we reached the bottom? My gut feeling is yes.”
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