Local foreclosures tumble in 2011, while homebuilding dips

Two key sectors of the Colorado Springs-area housing market provided some good news and bad, according to a pair of reports released Tuesday.

The number of homeowners who fell into foreclosure in the Springs and surrounding El Paso County fell sharply in 2011, though foreclosure activity remained historically high.

Meanwhile, the pace of homebuilding in the Pikes Peak region in 2011 dipped from the previous year after a poor December countered gains the building industry had seen late in the year.

According to a report on foreclosures  by the El Paso County Public Trustee’s Office:

• Foreclosure filings — the  start of the legal process in Colorado that can lead to the loss of a home or other property — totaled 3,603 in 2011, a 25.4 percent decline from the previous year.

• Last year’s foreclosure filings were the fewest since 3,556 in 2007; the total also was down significantly from the record 5,470 filings in 2009.

• Still, foreclosure filings in 2011 were the fourth highest annual total over the last three decades.

One reason for the decline in filings: A gradual decline in the area’s unemployment rate, said Public Trustee Tom Mowle. Local unemployment hit 10 percent in February of last year, but fell to 9.2 percent in October. November unemployment figures are due out Wednesday.

Another factor, Mowle said: The pool of homeowners getting into trouble by buying homes with interest-only and other non-traditional mortgages has shrunk over the past few years.

Foreclosure filings in December reached 361, the highest monthly total since last January. But Mowle’s report noted that there has been a “noticeable uptick” in almost every December for the past 11 years. 

Mowle expects foreclosure filings in the first part of 2012 to total 300 to 350 monthly. But as the number of homeowners with exotic loans is all but exhausted, foreclosure filings should taper off and this year’s total of filings should drop 10 percent to 15 percent from 2011, he said.

On the homebuilding front in Colorado Springs and El Paso County, a Pikes Peak Regional Building Department report showed:

• Single-family home permits issued to builders and individuals totaled just 80 in December, down 20 percent from the same month in 2010. December’s tally was the second lowest for any month in 2011.

• For all of 2011, single-family permits totaled 1,399. The total was five fewer than 2010, or a year-over-year decline of 0.4 percent.

• Building permit totals in 2010 and 2011 were better than 2008 and 2009, yet remain far below the homebuilding pace of six to seven years ago, when annual permits regularly topped 4,000.

“December is just a tough month,” said John Cassiani, board president of the Housing and Building Association of Colorado Springs and a Banning Lewis Ranch Management Co. official. “You have people who are not focused on buying a house in December. There’s other things. There’s family coming in. There’s people getting ready for the holiday. People are traveling. Every year, December is just a tough month.”

Single-family building permits are a closely watched yardstick measuring the health of the homebuilding industry, which is a key part of the Pikes Peak region’s economy. Not only does the industry employ thousands, but sales taxes on the purchase of building materials pump millions into local government coffers — money used to pay for basic services.

Even as homebuilding finished 2011 with a thud, Cassiani remains optimistic for 2012. The HBA expects an increase in the pace of homebuilding this year, albeit a slow gain.

“The months leading up to December showed some promise, showed some increased activity in terms of building permits,” Cassiani said. “So we’re encouraged that 2012 is going to be better than 2011. We’re not sure about how much, but I wouldn’t be surprised to see a 5 or 10 percent uptick in 2012 in building permits.”

Mortgage rates remain low, there’s pent-up demand on the part of homebuyers and builders have taken steps to keep prices attractive, Cassiani said of potential market influences in 2012.

A reduction in the inventory of distressed properties — foreclosures and short sales — also would boost the new-home industry, while propping up prices for the re-sale market, he added.

“It’s still a slow rise, in terms of anticipated building permits,” Cassiani said of 2012. “It’s not going to be a rapid jump. But I think the uptick has started. ...There’s nothing out there that says we’re going to have this big, monster jump. Everything is going to be slow-paced, one step after the other.”

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