Grand County Real Estate: Foreclosures high in 2008 compared to previous years
March 9, 2008
It’s only the beginning of March, but since January, Grand County foreclosures have more than past the halfway mark of last year’s grand total.
In all of 2007, Grand County saw 51 foreclosures. In only two months this year, there have already been 29 foreclosures, according to the Office of the Public Trustee.
Is the nationwide mortgage meltdown finally reaching one of Colorado’s resort areas?
If you ask Ross Cooney of MCH Development, Boulder, he’d tell you, “yes.”
Cooney designed and built Buckhorn Village in Grand Elk and put the units on the market a year-and-a-half ago.
Last summer, the Buckhorn units swept Grand County Parade of Homes awards for Best Architecture, Builder, Interior Design, Kitchen and Master Suite in the $500,000 to $1 million category.
Buckhorn’s future looked bright.
Seven months later, however, three of Cooney’s prize-winning speculative properties in Grand Elk stand in foreclosure.
“I’m in the hole,” Cooney said.
Despite price reductions and huge incentives, “We hit the market exactly at the wrong time. It’s really too bad. I really like Granby and I like Grand Elk. It’s a beautiful spot, but, boy, the economy is a disaster.”
Noting the abundance of inventory for sale in and around Grand Elk and Granby,
other property owners “must have more staying power than I did,” he said.
On the west end of Grand County in Kremmling, Forrest Hester, hearing the mountain real-estate market was hot, built a speculation home while still owning his primary home. But three years went by, and the “spec home” never sold. Paying for it and his own home mortgage took a huge toll, leading him into foreclosure.
Since then, however, he has found a way to make both payments, he said, and the newly built house remains on the market.
He added that it’s the first and final time he plans to dip into the real estate game.
“It’s bad, and it’s going to get worse,” said Gene Zachman, broker/owner of Colorado Investors Real Estate, which specializes in foreclosed properties in 14 counties in Colorado and more in southwest Florida.
Zachman notices community developers upping their incentive packages with free golfing or skiing, anything to entice buyers to pick up lots.
“Everyone’s having a tough time selling,” he said.
It may be that Grand County is experiencing the effects of the sub-prime mortgage crisis that came to a head last March, April and May.
“It was easy for people to get money, and mortgage bankers were lending on inflated prices, especially in a market like Grand County’s,” he said.
One foreclosed property Zachman’s company tried to sell in Grand Elk was originally priced around $800,000. Three months ago, it sold at auction for $350,000.
Foreclosed properties are selling for half their original price.
“These are the dirty little secrets developers are not going to tell you because they protect their interests,” Zachman said.
Homes sold in foreclosure can have a negative effect on neighborhood property values, he added, as well as deteriorate the tax base and make homeowners associations insolvent.
The effects of the meltdown generally are reaching people who may have over-extended themselves, including developers.
“It caught everybody off guard,” Zachman said. “The real danger lies in resort homes and second homes for those who leveraged themselves too much to get into a second home.”
Owners can get hit with a triple whammy of slow development affecting greater property taxes in the form of mills, an adjustable-rate mortgage that adjusted and rising HOA dues.
“And if they own two homes, which one are they going to let go? We’re also seeing more developers who built spec. homes taking a dive, too,” Zachman said.
Not as bad as it seems
But Grand County Treasurer and Public Trustee Christina Whitmer said doomsdayers are jumping the gun.
“We’re only slightly up in foreclosures,” she said.
Having worked in her capacity since 1990, Whitmer said that through the years the number of foreclosures in Grand County has remained steady at an average rate of five per month.
“We’re seeing more the beginning of this year,” she said. She attributes the rise to new foreclosure legislation the state passed last year.
Since laws completely changed Jan. 1, 2008 to allow homeowners as much time possible to bring their loan current, savvy property owners in financial dire straits may have held out until the new statute went into effect to foreclose.
“They now have a very long cure period to bring their debt current,” Whitmer said.
“The picture is being painted bleaker than what it is,” said Mike Conger, owner of Grand Contracting and president of the Grand County Builders Association, whose Grand Elk spec. home sold during the framing stage in December.
Of the seven Grand Elk homes currently in foreclosure, Conger said each had “something that was not quite right” in regards to building a product that sells in this real estate market.
What works in the local market is a formula of the right location, right price and right floor plan, he said, and any missing component can mean a property that doesn’t sell.
“Building the least expensive thing to capture the most profit” may not work anymore, Conger said.
Conger said he believes the market is solid when dealing with the “upper echelon” of buyers, or those who were not impacted by the sub-prime market, such as those who might choose financing “not because they have to.”
“Sales are not as brisk as we want them to be,” but they are selling, he said.
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