Foreclosures follow in wake of GarCo drilling slowdown
A nearly fourfold increase in foreclosures from 2008 made for a bustling 2009 in the Garfield County Public Trustee’s office.
At the street level, though, the trend is made evident by the lack of activity — the homes that suddenly sit empty and quiet, the driveways and sidewalks that go unshoveled.
That’s not to mention the paucity of prospective buyers cruising through neighborhoods at a time when Garfield County’s once-hot real estate market has gone cold.
“I’ve been trying to sell my house for two years now,” said Silt resident Bruce Strasinger, who is more anxious to find a buyer now after losing his construction job in April.
He said he’s had to lower his asking price considerably to compete against banks trying to get foreclosed properties off their books.
Foreclosure proceedings began on a record 408 homes in the county last year, compared to 108 just a year earlier.
“It’s just putting more inventory on the market and lowering the price,” Strasinger said.
Like elsewhere, Garfield County has suffered the effects of the national recession. But the impact has been amplified by an accompanying local slowdown in natural gas development.
Based on data going back to 1980, the county’s 2009 foreclosure total far exceeded the previous high of 244 in 1985 in the wake of the oil shale bust. However, Chief Deputy Public Trustee Bob Slade notes the 1985 amount came at a time when the county’s population was a lot smaller. The population was estimated at 57,050 in 2008, compared to 22,514 in 1980.
Slade fears that when it comes to foreclosures, this year could be worse than last.
“We’re kind of in the middle of it still,” county Treasurer and Public Trustee Georgia Chamberlain said.
The problem isn’t limited to western Garfield County’s gas fields. For 2009 through mid- November, the Glenwood Springs and Carbondale areas had 59 foreclosures apiece.
But the Rifle area had the most, with 74. The relatively small populations of the Silt and New Castle areas had 51 and 44, respectively, and the Parachute/Battlement Mesa region had 44.
Mary Huffine, a broker at Rifle Realty Co., said Rifle took a bigger hit in part because a lot of new homes had been built there just before energy companies began to lay down drilling rigs.
Through November, the median 2009 sold price for a single-family home fell 10 percent from 2008 to $335,000 in Garfield County, according to Land Title Guarantee Co. in Glenwood Springs. Year-to-date transactions totaled 563, down 62 percent from the same period a year earlier.
In another troubling sign, the county offered for sale 307 liens for unpaid taxes for real estate and mobile homes in 2009, up from 163 a year earlier. A property owner has three years to pay the taxes, along with interest to the buyer of the tax lien. After that, if taxes go unpaid, the investor can apply for a treasurer’s deed to the property.
Chamberlain said she has heard from people who said they had lost their job and couldn’t pay their taxes.
Garfield County’s seasonally unadjusted November unemployment rate was 5.9 percent, compared to 5.7 percent in October and 3.6 percent in November 2008.
Not included in the county’s ranks of unemployed are those who moved to the county to work in the gas fields and left when the drilling dwindled.
Strasinger said he has equity in his home, but for those who don’t and lose their jobs, “walking away from a house looks very enticing.”
Adding to the glut of for-sale homes in his neighborhood are properties that investors bought to rent out. Often, transient energy workers were the tenants, Strasinger said. Now the owners can’t find any renters and must sell.
Huffine said that at the current selling rate, it would take 20 months to clear out the local inventory of homes under $400,000 in price.
Home prices in Garfield County remain high compared to many markets. But Huffine said they’re lower than they have been in years. An upside of the slowdown is that it is a good time to buy, she said.
Huffine said many of those with homes in foreclosure have left the area. In some cases, they’ve rented their properties to people who didn’t know the properties were foreclosed on, she said.
Sometimes the bank will work out a lease agreement with a tenant while a property is marketed, and sometimes the tenant will end up buying it, she said.
She said banks trying to sell foreclosed properties generally first try to sell them at prices comparable to other homes. But if a property goes unsold month after month, they start to drop the price significantly.
“That’s where it gets to be a disadvantage to the other sellers,” she said.
Properties that aren’t shoveled in the winter and otherwise maintained also make a neighborhood look less attractive, which creates another problem for other nearby sellers, Huffine said.
The good news is that banks usually will sell a foreclosed home within 90 to 180 days.
“They’re not going to be there for a couple of years, anyway. They are going to influence value, though,” Huffine said.
Despite living through a second energy-related slump in Rifle, Huffine said it’s important to recognize the benefits the booms bring. The latest one resulted in more stores coming in, and schools and city infrastructure being built with the assistance of energy-derived revenue.
“It’s a cyclical thing. Real estate’s always cyclical. And Rifle always seems to be in the throes of a boom or a bust, one way or the other,” Huffine said.