Single-family building permits drop nearly 18% from last September

Homebuilding remained mired in a slump last month in the Pikes Peak region, while the pace of local foreclosures slowed, even as it continues on a record pace.

Single-family building permits in Colorado Springs and El Paso County totaled 97 in September, a nearly 18 percent drop from the same month last year, according to a report released Wednesday by the Pikes Peak Regional Building Department. September's permits fared better than August's dismal showing, when Regional Building issued 78 single-family permits.

For the first nine months of this year, permits totaled 1,056, down 42.2 percent from the same period in 2007.

Homebuilding is a closely watched component of the Pikes Peak region's economy. Not only does the construction industry employ thousands, but the purchase of building materials generates millions of dollars annually in sales tax revenue for city and county governments. Those governments rely on that money to help pay for police and fire protection, roads and other basic services.

As fewer homes have been built, Colorado Springs and El Paso County budgets have taken a financial hit, and both governments are making deep spending cuts.

The construction slowdown continues a downturn in the local and national housing markets that's been under way since at least early 2007. Sales and prices of existing homes also have fallen locally, while area foreclosures are on pace to top last year's annual record.

In El Paso County, foreclosures for September totaled 256, down by a handful from the same month last year, according to a report from the Public Trustee's Office. For the year, foreclosures total 3,400; last year's total of 3,556 was a record.

September's slowdown in foreclosures might have occurred because a new state law requires lenders to disclose foreclosure-related information to homeowners 30 days before filing a foreclosure notice, Public Trustee Tom Mowle said in a statement accompanying his report. He added, however, the pace of daily foreclosure filings has recently picked up to the higher levels of earlier this year.

If there are positives for the housing industry, it's that some national statistics indicate the state is closer to getting past the worst of its foreclosure problems, said Fred Crowley, an economist with the University of Colorado at Colorado Springs.

And while building permit numbers are down from a year ago, the rate of descent seems to be slowing, Crowley said.

Resolving the nation's credit crunch will help revive the building industry, he said.

Banks made too many loans to buyers with risky credit histories and are saddled with bad debt as a result.

"Until banks get rid of the bad paper, they don't have money to lend," he said.

What's more, homebuyers, like commercial developers, are finding it's much tougher to borrow money. Lenders are requiring homebuyers to have higher credit scores and to put down 20 percent of a home's purchase price as a down payment.

"That's a small minority of the population that can get into that position," Crowley said.
And for buyers who do qualify for a loan and want to move to a new home, some can't sell their existing properties because other buyers can't quality for a mortgage, he said.

"The building industry in town has done everything they can - price cuts, incentives, lot price cuts," Crowley said. "If you can qualify for a loan, this is a steal of a time to buy a home."