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Property values plummet in Colorado ski resort communities

By Jason Blevins - The Denver Post

After nearly two decades of steadily climbing — and often skyrocketing — real-estate prices, property owners in Colorado's resort communities are seeing values plummet.

In such ski-resort counties as Pitkin, Eagle, Summit, Routt and San Miguel, homeowners recently fielded local assessor reports that pushed their home values down by more than 20 percent.

"Some people have come in and complained that their value is too low, which is a new angle for us," said Mark Chapin, assessor for Eagle County, which saw a countywide average decrease of about 30 percent for home, commercial properties and vacant land.

Eagle's 30 percent decline in residential property is more than triple the average decline for homes in all 64 of the state's counties.

It wasn't the richest areas that saw the deepest drops. While the multimillion-dollar homes in Beaver Creek's Bachelor Gulch and downtown Aspen's tony West End did see 20-percent-plus declines, it was the affordable, working-class condo complexes and communities down valley from the ski areas that endured the steepest drops in value.

Nicole Miller's Steamboat Springs-area condo dropped 30 percent in value. She paid $235,000 for the one-bedroom in 2008, and the most recent sale of a one-bedroom in her complex two months ago was for $78,000.

She calls herself lucky because she has work and can afford her mortgage. She plans to "wait it out," she said.

"It could be five years or more before I break even, and who knows if I'll ever make a profit," she said. "The only thing that's unfortunate for me is that this was my first home, and it's supposed to serve as a steppingstone for me financially and in the real-estate market. Right now, it doesn't look like it's going to be either of those things."

In Basalt, where two years ago average home prices surged above $1 million, some condos and homes saw 50-percent-plus declines in value.

"This has just hit us sideways," said Joanie Haggerty, a 25-year broker and part owner of Basalt Realty.

For a couple of years, Basalt home prices were climbing 2 percent every month, peaking in 2007 and 2008. Last week, Haggerty sold a bank-owned Basalt condo for $240,000. In 2007, the same condo sold for $626,000.

"No one thought it would take this long to recover. We are at the bottom of our market," said Haggerty, who hopes the suddenly affordable Basalt will encourage a more diverse population of residents.

The resort communities experiencing the steep price declines for 2011 saw spectacular spikes in value in the 2009 assessment, with values growing by at least 10 percent every two years. The 2011 declines in assessment value mirror the increases from the 2009 assessment, when assessors gauged values using comparable sales from 2007 and early 2008, before the recession settled into the state's mountain communities.

The resort-area assessors said the residential declines are the first since the late 1980s, when the oil market crashed and savings and loans collapsed, triggering a real-estate bust in Colorado.

"I don't even think the total drops in assessed values were as great back then just because we didn't have these high property values to begin with," said Routt County Assessor Gary Peterson.

The value for vacant land in areas such as Stagecoach in south Routt County dropped as much as 75 percent. Lots in that once-promising and still- undeveloped lakeside community cost $12,000 in 2005, surged to $75,000 in 2008 and recently were assessed for half the original price, Peterson said. In fact, last month Peterson recorded three sales of Stagecoach lots for $1,000, $2,000 and $3,000.

The somnolent real-estate market in Colorado's mountain communities challenged local assessors and appraisers who use comparable sales to establish values. With sales volume down by as much as two- thirds of what it was a few years ago, the 2011 reappraisals relied on limited data.

"This is one of the more difficult I've ever been involved with in my 35 years," said Eagle County's Chapin, who in 2009 used 5,000 sales to assess values but had only 1,600 sales for the 2011 assessment.

Eagle County's downvalley, resident-rich communities in Eagle and Gypsum — such as Basalt and El Jebel — also saw the county's steepest declines in values.

Ben Zeeb's home in Eagle Ranch dropped 30 percent in value. But after seeing the market founder in the formerly hot community for the past two years, he thinks the recent valuation is "fairly accurate."

"It's unfortunate for those who are trying to sell," Zeeb said. "My concern is what the next move will be from the county's perspective. Real-estate tax is a significant portion of funding for the county, and that's a big hit for them to take."

Declining property-tax revenues are a statewide woe. State funds are required to cover lost property contributions for education, piling another $140 million onto the state's $1 billion budget deficit. For resort counties, which rely heavily on property-tax revenue, leaders have spent the past year preparing for the decline in next year's property taxes.

"They have been anticipating this and have been preparing," said Pam Caskie, executive director of the Northwest Colorado Council of Governments. "Capacities will definitely be stretched, and I think it's really pinching education the most."