From 2002 through the fall of 2007, building permits in Montrose grew steadily, and staying well ahead of the construction of new homes was the development of land and plotted lots.
Now, with new construction at a 25-year low, hundreds of acres within the city of Montrose lie empty, waiting for more growth and construction.
Kerwin Jensen, Montrose’s city planner, said that as of the end of 2012, 920 final-platted plots lie vacant within city limits and more than 2,100 others have been developed on paper.
“(The final-platted plots) are ready for a building permit.” Jensen said. “They have sidewalks, streets and utilities.”
Jensen noted that the average single-family residence in Colorado houses 2.7 people. If the existing plots were to be constructed and occupied at that rate, the city of Montrose could grow by 2,500 people. If the conceptual plats were finished, there is room in the city limits for nearly 6,000.
Jensen said the preliminary platted plots is a statistic that only indicates someone took the time to divide up a property on paper and submit the plans to the city. But neighborhoods like American Village, Bear Creek, Brown Ranch and The Bridges are filled with final platted vacant lots and few are asking Jensen for single family home permits.
Montrose real estate broker Mark Covington with ReMax Alpine View said while there isn’t much movement, his research on Multiple Listing System shows only 160 lots priced below $400,000 actively on the market in Montrose.
“I think the numbers are very misleading,” he said. “There are a lot of them out there that aren’t on the market.”
Still, Covington noted that there are not many lots selling either, and he believes it is going to take a while to get them sold.
“According to the MLS system, 24 lots sold in 2012,” he said. “But that number is up from 18 the previous year.”
Jensen’s statistics show that in 2012, 19 building permits were issued for single family homes. The last time Montrose saw figures that low was in 1988. Building permits issued in 2006 were the highest in recent years at 356. According to Jensen, 2007 was on track to be even higher, until the trend slammed to a halt in October of that year.
Covington said that while houses are beginning to sell more easily, the lots are not moving because it is still cheaper to buy an existing house rather than build, despite many lots being priced low.
“I have nine lots right now, each with about 90,000 invested in them,” Covington said. “Now I am looking to sell them for $45,000.”
City planners like Jensen said they are staying busy with a number of other things when they are not issuing permits.
“While permits are down 90 percent, we are not down on our work load,” he said. “People are coming in here more often to kick around ideas or get permits for smaller projects like garages and remodels.”
Jensen also said the city is taking an active role addressing the number of empty lots.
“We are redoing and undoing what was done in the past. We have a lot of conceptual meetings with banks and developers,” he added. “Banks have inherited these properties and they are not in the real estate business. They come to us and ask what they can do with it.”
Ultimately, the sale of the buildup of vacant lots in Montrose will just take time, according to both Jensen and Covington.
“The market here will come back after the Front Range markets improve and people want to move here,” Jensen said. “New commercial permits were up from two to eight in 2012, and we had some nice buildings like Taco Johns and Russell Stover. So that upward trend might be a positive sign.”