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Economic uncertainty hits building, real estate industries in Grand County

Tonya Bina
tbina@grandcountynews.com
Grand County, Colorado
Byron Hetzler/Sky-Hi Daily News
ALL | Sky-Hi Daily News

The building industry in Grand County, Colorado, is tightening its belt for a long winter, hoping buyer confidence returns by springtime.

Many single-family dwelling projects are being put on hold, builders say, as second-home aspirations stay shelved in times of fragile nest eggs.

Building permits are down, and in Fraser, home of the large Grand Park and Rendezvous subdivisions, use taxes on building materials have been decreasing over the past three years.



In 2006, Fraser saw $483,700 in revenue from the tax, and last year’s actual proceeds came in at $324,500. But the 2008 year-to-date total of $80,800 is only crawling toward the $175,000 budgeted amount.

Fraser Finance Manager Nat Havens said the town expected less building materials taxes, “But we didn’t realize ’08 was going to drop off the end of the earth,” he said.



From “developer input at this time,” Fraser is budgeting $20,000 in use tax for 2009, Havens said.

“None of our main developers are planning on building right now.”

Downriver, Granby, Colorado, also sees indicators that times are tighter in the building industry.

Use tax, which includes vehicle sales, is down 59.69 percent, nearly a half-million dollar decrease from last year.

Projections are that Granby will come in around 76 percent of what was expected even though the town budgeted for a downturn.

The Granby Water and Wastewater Authority that serves water and sewer to Grand Elk and Granby Ranch has sold only one-quarter as many water and sewer taps this year compared with last year.

Foreclosures are up, and some fear that if the economic crisis continues, home values could be adversely affected, thereby undermining government services.

No ‘ramp up’ this year

“A little sense of uneasiness has slowed us down,” said Tom Pierro, owner of Legacy Building Specialties, which supplies items such as doors, cabinets and appliances to builders and consumers.

Pierro said his business began seeing a shift as early as June.

“It was not as much a slowdown, but it didn’t have a ramp up like we’ve had in other years,” he said.

Legacy let go three administrative employees in response.

Sales people are “thankfully” still keeping busy, Pierro said.

To brace for what might be ahead, the appliance retailer Gambles in downtown Granby recently moved in with Legacy. “Going through the winter is going to be tough; we might as well combine businesses ” join forces,” Pierro said. “It’s a win-win situation for both of us.”

What Pierro has been hearing from builders is that work is not lined up like other years and many projects have come to a halt. Meanwhile, some commercial and government building projects are still moving forward.

“Cautiously optimistic” is how Brad Smith, a real estate agent and owner of Terra Firma Custom homes, categorizes his take on Grand County’s building situation.

“I think real estate sales have fallen like a rock here,” he said, referring to residential sales.

In some ways, he’s correct.

Declining sales

Vacant land has taken the biggest hit, with sales down 58 percent from last year, according the Grand County Board of Realtors. Average sale price of vacant land has decreased by 35 percent.

For residential homes, sales are down 41 percent compared with year-to-date 2007. But sale prices of homes have not dropped significantly, only by 6 percent.

The drops in sales are largely contrasted from 2006 to 2007 stats, when residential sales were up by 4 percent.

And although vacant land was moving slowly, vacant land prices were up by 70 percent, in contrast to today’s decline in prices.

And speculative-built homes are having a tough time selling, according to Board of Realtors President Becky Brosh, who is also vice president of the Grand County Builders Association board.

But Brosh says she’s encouraged by an overall rise in sales in the last 30 days, which may show there are buyers still willing to invest. Plus, stats show that some single-family homes are sitting for slightly less time on the market.

Fall months are typically when many buyers choose to close, she said.

“There’s a ton of people sitting on the fence, and they’re not going to get off that fence until after the election,” she said. “I really think everything’s going to be fine, we just have to ride out the uncertain storm. I wouldn’t still be hanging my shingles if I didn’t.”

Safer than equities

Smith sees people holding off buying and building waiting to see what happens with the general economy.

Then there are those who are “looking at building in Grand County as a safer thing to do with their money rather than have it in the equities market,” he said.

In his view, the number of people moving forward unscathed by the economy has “diminished,” but “has not been eliminated.” People who planned ahead and can afford to weather the storm may be waiting for markets to hit bottom, then catch opportunities on the upswing.

In January, Smith lost a few employees , and rather than rehire, opted to stay smaller.

Although he is optimistic that Grand County will bounce back because of its inherent attractions, “events going on recently cannot be ignored,” he said. “If people think we’re immune to what’s going on everywhere else, I think that’s definitely wrong.”

Bids on jobs are becoming more competitive ” a minus for builders, a plus for consumers willing to start projects.

And, trends during rough economic times point to remodeling rather than building anew, which may create jobs for smaller builders and builders willing to diversify.

“Worst-case scenario, we’ll be a little slower, we’ll tighten our belts up, and we’ll spend more time with the kids,” Smith said.

” Tonya Bina can be reached at 887-3334 ext. 19603 or e-mail tbina@grandcountynews.com.


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