Foreclosures, permits point to ongoing slide

Colorado Springs’ housing woes continued last month, as November foreclosures pushed the area’s year-to-date total to 3,106 — the highest in 20 years.

It’s only the third time since 1981 that annual foreclosures have broken the 3,000 barrier, according to figures released Monday by the El Paso County Public Trustee’s Office.

Another bad month in December could give El Paso County the dubious distinction of breaking its yearly foreclosure record of 3,476, set in 1988. In 1987, foreclosures totaled 3,240.

“It’s very possible we’ll beat that record,” said Fred Crowley, a University of Colorado at Colorado Springs economist.

While foreclosures are up, they’re spread over a larger number of households, which means the area’s foreclosure rate isn’t as severe as when the annual record was set in 1988.

Meanwhile, single-family homebuilding permits in El Paso County, a yardstick by which to measure construction activity, totaled 115 in November, a 26.8 percent decline compared with the same month last year, according to a Pikes Peak Regional Building Department report released Monday.

Through November, Springsarea single-family permits totaled 2,053 or a nearly 38 percent reduction when compared with the same 11-month period in 2006. With December to go, it’s likely this year’s permit total will be the lowest since 1,154 in 1991. Two years ago, a record 5,314 single-family permits were pulled in El Paso County.

Housing has been in a slump for more than a year, and the Springs’ economy has felt the effects.

Foreclosed homes that go back on the market have inflated the inventory of houses for sale, triggering competition with the new home and resale markets. Builders have stepped up incentives, while sellers of existing homes have slashed asking prices and sometimes wait months to find buyers or take their homes off the market.

“We’re doing everything we can,” said Mark Long, vice president of Saddletree Homes and Symphony Homes in the Springs. “We’re advertising. We change the incentives that we do frequently. Everybody who’s in the market to buy knows builders are going to do what they need to do to move product.”

The housing industry, meanwhile, employs thousands of carpenters, framers and electricians, and some builders have laid off workers.

Also, Colorado Springs and El Paso County rely on tax revenue from the sale of building materials to pay for public safety, roads and other services. Because of reduced revenues caused by the construction slowdown, the city and county are cutting millions from their 2008 budgets.

Crowley and Long, however, suggest the slump may have reached bottom or come close.

Interest rate cuts by the Federal Reserve should help some homeowners avoid foreclosure, Crowley said.

Also, the supply of subprime loans — those with higher interest rates made to borrowers with risky credit — is drying up and foreclosures should drop slightly in 2008, he said.

Long said customer traffic has been solid at Saddletree and Symphony.

Still, some buyers want to purchase only if they can opt out later, and builders are reluctant to sell on a contingency basis because they don’t want to add unsold homes to their inventories if buyers walk away, he said.

But the city’s population continues to grow, he said, and the homebuilding industry will perk up when Fort Carson soldiers arrive home from Iraq and thousands of additional troops transfer to the Springs as a part of the Department of Defense’s base realignment and closure process.