Homebuilding permits haven't hit bottom yet

The pace of new home construction faltered again last month in the Pikes Peak region, disappointing some builders and developers who say a rebound in the local housing market remains at least a year away.

Single-family building permits totaled 78 during August in Colorado Springs and surrounding El Paso County, a drop of nearly 55 percent from the same month a year ago and the lowest onemonth total since 54 permits were issued in February 1991, according to figures released Tuesday by the Pikes Peak Regional Building Department.

For the first eight months of 2008, single-family permits totaled 959, down almost 44 percent from 1,709 during the same period last year.

The Springs and the rest of the nation remained mired in a housing slump last month that experts have blamed on too many mortgages given in recent years to buyers with risky credit histories. That practice resulted in thousands of foreclosures nationwide and increased numbers of homes coming back on the market for sale.

As a result, financial institutions have tightened up lending practices, making it tougher for buyers to purchase either new homes or resales, said Ralph Braden, a vice president with Springs real estate developer Nor'wood Development Group and who will become board president later this year of the Housing and Building Association of Colorado Springs.

Also, a backlog of resales has created stiff competition for the new home industry, Braden said.

The slowdown has hurt the area's construction industry, which employs thousands of people; several builders have laid off workers over the past 12 to 18 months. The housing slump also has hurt Colorado Springs and El Paso County governments, both of which rely heavily on sales tax revenue. When builders construct fewer homes, they cut back on their purchases of building materials that otherwise pump millions into local government coffers.

"A lot of what we're dealing with are factors beyond our control," Braden said. "What it's going to take for us to have a healthy recovery is for there to be some stability in the financial markets, where money starts pouring back in under new underwriting standards."

August's building permit numbers are especially frustrating because they continue an up-and-down trend; homebuilding activity appeared set for a rebound in May, dropped off in June, came back a little in July and fell again in August.

"There is no pattern that anyone can discern," said Bobby Ingels, a Springs developer and HBA board president. "The guys who do forecasting for a living are tearing their hair out."

Braden said he doesn't expect improvement in the home building industry until the second or third quarter of 2009. And when it happens, Braden said, the market will improve gradually - a slight uptick, not an all-out recovery.

Meanwhile, El Paso County foreclosures took a respite from their steady increase, totaling 253 in August - one of the lowest monthly totals in the past year and a half, according to a report released Tuesday by the El Paso County Public Trustee's Office.

However, Public Trustee Tom Mowle said in his report that the slowdown in foreclosures might be the result of a new state law that took effect Aug. 1; the law requires lenders to disclose foreclosure-related information to homeowners 30 days before filing a foreclosure notice. The additional time requirement might have pushed back some filings, resulting in the August slowdown, Mowle said.

After lenders become more familiar with the new law, the pace of foreclosure filings might pick up, he said.

El Paso County foreclosure filings for the first eight months of the year totaled 3,144, 412 behind last year's record total of 3,556.

In Colorado, a foreclosure filing is the first step in a process that can lead to the loss of a home, although not every foreclosure filing means a homeowner will lose his or her property. Some catch up on missed payments or work out deals with lenders.

Still, the number of deeds released this year, indicating a homeowner facing foreclosure was able to stave off trouble by paying off a mortgage, refinancing a home or selling a property, is down 7 percent during the first eight month of 2008 when compared with the same period last year.

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Contact the writer: 636-0228 or rich.laden@gazette.com