The apartment market in El Paso County is at a tipping point with the momentum quickly swinging in favor of landlords. Apartment vacancies are down and rents are up, while troop withdrawals and the likely landing of an aviation brigade at Fort Carson will contribute to a scarcity of affordable housing in the area.
But even as demand for new housing grows locally, the Associated General Contractors of America faces an ongoing bloodbath in the building industry. Unemployment in the construction sector exceeds 20 percent, dozens of builders in the area have shut their doors, and the ones that have made it this far are dealing with rising material costs and absurd bidding wars over the few available projects.
With the housing collapse still fresh, it may seem early to start thinking about new construction again. But if the county is going to avoid a serious housing crunch, the hammers are going to have to start swinging at some point.
So what can be done to spur building activity in the area?
The Pikes Peak Regional Building Department recently unveiled a plan whereby local builders will share $325,000 worth of credits toward building permits. The plan is paltry; the average cost of a permit for a single-family home is about $700, and it seems unlikely this will be incentive enough to significantly lift the number of single-family home permits, which have fallen nearly 60 percent since 2006.
But officials in Fountain have a plan that might help their city out when the coming crunch leaves other cities scrambling to raise walls.
“If Fort Carson gets that aviation brigade, we want that influx of troops in Fountain,” City Planning Director Dave Smedsrud said. “Apartment vacancy rates are dropping, rents are going up, and there are a lot of homes in foreclosure that haven’t hit the market yet.”
“So there’s a real shortage of good housing. The demand is there, the builders just need a little push.”
The push will come in the form of across-the-board reductions and waivers on city development fees. Fountain is eliminating surcharges on water acquisition and service expansion and reducing water tap, school and park fees, in addition to wiping out all species of surcharges and application costs.
Smedsrud estimates the savings for builders at $10,000 for every new single-family home.
“The construction of new single-family homes has really fallen here the last few years,” Smedsrud said. “We wanted to develop an incentive program that might get residential activity going again. We felt reducing and eliminating some of these fees might be necessary to jump-start the construction of new homes.”
And Smedsrud isn’t concerned about the affect this will have on the city coffers. He believes the incentives will pay for themselves.
“There are so few homes being built right now that we’re not generating any fees, so anything we can collect will be better than what we would’ve had,” he said. “Plus, the addition of new housing attracts retail, and sales taxes are where the city really generates money.”
Smedsrud said he believes Fountain is the only governmental agency in the region to offer such generous fee reductions, creating a nice little control group in this government incentives experiment.
That is, of course, unless the Springs’ City Council decides to follow suit.
A number of previously obscure or nonexistent words have wormed their way into the lexicon since the housing collapse. Below are the five I consider to be the ugliest:
Robo-signing: The rubber-stamping of foreclosure documents by loan servicers who didn’t even take a look at the paper work.
Jingle mail: The homeowner walks away, but kindly drops the house keys in an envelope and mails them back to the lender.
Rocket docket: When courts burn through foreclosure proceedings in a cold, by-the-book manner, sometimes hearing up to 1,000 cases in a day.
Short sale: This is so commonly applied to house sales now that you might have forgotten that before 2008 it was usually used in connection with stocks.
Down payment: OK, so this one isn’t new. Once again, when purchasing an expensive item such as a house, buyers are being asked by lenders to front an initial payment that the lender can recover in case of default. These were rare for a while prior to 2008, but all of a sudden the foreclosure crisis has brought them back.
Jonathan Easley can be reached at email@example.com or 719-329-5235. Friend him on Facebook, find him on Twitter, and follow his blog at www.csbj.com/realestate.