While first-quarter 2010 figures apparently reflect a positive trend in Pagosa Country real estate sales, foreclosures remain a dominant force in the market. Nevertheless, at least one local Realtor sees room for early optimism.
According to Lee Riley, licensed local Realtor since 1989, “Our frozen real estate market shows hints of thawing along with the snow. We are certainly not out of the woods yet, but I have several surprisingly good statistics to share.”
Riley’s comments came in the form of an e-mail sent to The SUN late last week.
“The headline number is a 95 percent increase in year-to-date home sales compared to the same period last year,” he continued. “We are running nearly double of last year’s pace, we are ahead of the 2008 pace, and we are only one sale behind the pace set in 2007.”
Riley added that this year’s first-quarter condominium sales increased 75 percent over the same timeframe last year, while vacant land sales increased 36 percent. Further, he noted a few 2010 property sales in excess of $200,000 — a price range unseen in the first quarter of 2009.
Of course, Riley’s report wasn’t all roses, as he acknowledged that “bank repos” continue to dominate the local market. “While they (bank foreclosures) represent only 7 percent of the residential real estate listings,” he stated, “they comprise 28 percent of the sales this year.”
Therefore, Riley believes that listed properties not subject to a prior foreclosure should, nonetheless, be priced similarly to remain competitive.
“We have a large inventory, and it is growing every week as it always does this time of year,” he wrote. “If you have a home or property to sell, you absolutely must be priced toward the ‘bargain’ end of the spectrum, or you likely won’t get many showings.”
Though Riley insists numbers are improving, he agrees, “ ... being a seller is still a tough proposition.”
While Riley’s early analysis raises hope for a better 2010 market, its reliability goes only so far. “The first quarter is traditionally a very slow time for Pagosa real estate,” he reminds us. “Even though we’re showing some positive numbers, we’re dealing with a pretty small sample size.”
A look at sales of commercial properties is, indeed, a small sampling. In 2009, just one commercial property sold in the first quarter. In the first three months of this year, Riley said the area has seen a 300-percent increase over the same timeframe, which, of course, equates to just four closed transactions through March.
Riley suggests home sales have offered a slightly more reliable outlook thus far, with 43 transactions having closed through March of this year, compared to just 22 in the first three months of last year.
Riley further noted that, “2009 was a really lousy year for Pagosa real estate. All together, we’re up 78 percent over last year at this time, but after a year like last year, there isn’t much room to go anywhere but up.”
Like all area Realtors — and the entire community, for that matter — Riley is hoping for a stronger market this year. “I look forward to the 2010 ‘selling season’,” he added. “We will soon see whether or not this statistical recovery has any legs. I’m hoping that these positive numbers are a sign of things to come, and not just statistical noise during a slow time of year.”
For the local market to really recover from its most recent downturn, the large inventory of homes lost to foreclosure will have to move. According to the Colorado Division of Housing (a division of the Colorado Department of Local Affairs), the 2009 Archuleta County foreclosure rate was 1.9 percent, or one completed foreclosure for every 53 households.
Last year, the county saw 219 foreclosure filings, with 96 ending up as completed sales. The year before, 38 foreclosures were sold at auction, while 17 were completed in 2007. That equates to a 464.7-percent increase in finalized foreclosures from 2007 to 2009. Filings increased by 397.7 percent over the same period.
In Colorado, and most areas of the country, a property typically goes into foreclosure when the owner/borrower is three months delinquent in mortgage payments. The lender files a Notice of Election and Demand (NED) with the public trustee of the county where the property is located, and the county notifies the borrower of an intended sale (auction) date.
In some cases, foreclosures are “cured” and withdrawn before a sale, usually by submission of past-due payments plus interest, a short-sale agreement with the lender, or successful re-negotiation of the original loan terms.
A short sale allows a borrower upside-down in a mortgage to sell the property in question for current market value, as the lender agrees to forgive the remaining balance due on the loan. Any of the above cures help salvage a borrower’s credit worthiness, while a completed foreclosure generally hurts a person’s credit score for some time.
Though local foreclosure filings and sales increased dramatically in 2009, statewide sales fell more than 18 percent from 2007, and a little more than 4 percent from 2008. As a result, the state housing division believes lenders, borrowers and housing counselors are finding strategic ways to mitigate loss, even as foreclosure activity continues.
Too, many mountain counties saw elevated foreclosure rates last year, while those closer to major metropolitan areas reported flat or declining rates. Historically, smaller communities are the first to feel the adverse affects of a declining market and the last to recover.
Meanwhile, Riley doesn’t expect a return to the boom days of 2005 and 2006. “Those heady days are long gone,” he acknowledged, “and I do not expect them to come back any time soon.”
For now, he says, “I choose to focus on the fact that for now, things seem to be improving.”