Routt County construction industry hits biggest permit valuation in 7 years: $96.5 million |

Routt County construction industry hits biggest permit valuation in 7 years: $96.5 million

Tom Ross
Construction of custom homes like this one being built by Amaron Folkestad in The Range at Wildhorse Meadows, combined with large home remodeling projects, have spurred a resurgence in the construction industry here. As of the end of September, building permit valuation had surpassed totals for the previous seven years, at $96.5 million.
Tom Ross

— The 2016 construction season can’t match the drama of 2007 and 2008, when some of the largest multi-family residential projects at Steamboat Ski Area began to come out of the ground. However, it may prove to be a watershed year.

Fueled by 13 $1 million home starts, numerous six-figure remodels and a handful of big ticket institutional building projects, this construction season is putting up numbers like the Yampa Valley hasn’t seen since the boom years of almost a decade ago.

Expressed in terms of the valuation of building permits, Routt County Chief Building Official Ben Grush confirmed this month that through the end of September, this year’s construction industry is $20 million ahead of 2015, with total permit valuation of $96.5 million. That’s easily the most bullish number since 2009.

“I see this as being a reasonable level of growth,” Grush said. “This year’s been a little challenging, more so than the last several. But I think this is creating job opportunities and business opportunities from design professionals all the way through to suppliers.”

His department has conducted more than 4,000 inspections this year.

The construction rebound is also putting stress on general contractors as they compete for the attention of subcontractors they need to show up on time to keep their projects on schedule. The problem is the electricians, plumbers, dry-wallers, painters and tile setters they rely upon are in short supply.

The roster of skilled subcontractors who understand the challenge of building in the mountains was depleted by the ravages of the Great Recession, with many relocating to distant markets, as Routt County lagged the recovery nationwide.

General contractor Tom Dover, who came to Steamboat in 2003 in the midst of a 25-year career, said the construction industry is as busy as it’s ever been here, but it’s not all good news.

“It’s killing it right now, everybody is so busy,” Dover said. “Even in 2007, it wasn’t like this. Well, it probably was this busy in 2007, but I don’t think we have the workforce to handle it now.”

Dover is in the middle of building four $1 million-plus homes — “Houses below a million are few and far between,” he said — and for the first time in his career here, he said he’s going to miss on the promise of a move-in date.

“I have clients who are supposed to move in Thanksgiving week,” he said. “Since 1993, I’ve never missed a move in, but I’m going to miss this one. I had to tell my clients, ‘Guys, I’m fighting an uphill battle. I can only push so hard. You’ll get in a couple of weeks late.’”

Dover acknowledged that subcontractors are being stretched thin, but he said though they charge top dollar here, they aren’t the only reason building costs are so high.

“It’s not just the subs,” he said. “It’s as much materials. Lumber is up, it’s a commodity and it’s in high demand. Plywood, OSB (oriented strand board) and two-by-fours have gone through the roof.”

Realtor Tom Valicenti of Colorado Group Realty attributed the challenge of securing subcontractors to supply and demand.

“The price of new construction has risen for many reasons but during the recession we lost a good percentage of our work force that relocated to find construction work in the Denver area where work was plentiful,” he said. “So our current craftsman have limited availability and have adjusted their prices accordingly.”

Where the valuation is

The city of Steamboat has accounted for $66.5 million in permit valuation so far this year and $24 million is attributable to single-family home construction, Grush said.

Commercial projects include the $700,000 remodel of the Walmart store, the new $2.03 million building on the United Methodist Church campus, a $3.89 million permit for the expansion at Yampa Valley Medical Center and $7.89 million combined for the two buildings in The Reserves affordable apartments being developed by the Overland Property Group.

Single-family projects in the county (excluding Hayden, which has its own building department) account for $23 million of the total of the overall $30 million in permit valuation.

“Those are mostly builds on (parcels) 35 acres and up in the county,” Grush said. “There have been maybe a half dozen houses in Steamboat, Silver Spur (and Heritage Park).”

Scarce building lots fuel remodel trend

If there’s a concern looming just over the horizon, it might be the scarcity of building lots in the city and close-in rural subdivisions.

Ulrich Salzgeber, executive director of the Steamboat Springs Board of Realtors, said he turned up 85 lots on the multiple listing service, but that number includes larger acreages in the countryside close to Steamboat.

When one searches the website of one of the real estate brokerages here, there are only 11 building lots priced between $260,000 and $370,000 in the city proper, and the asking prices go up from there. The lowest-priced building lot in the city is a shallow .26-acre lot on Apres Ski Way with an asking price of $195,000. That’s a problem.

Realtor Tom Valicenti confirmed supply is dwindling even though the local market has seen a great deal of sales and spec home construction in the Barn Village subdivision just east of Pine Grove Road and in Greystone on the Green perched above Rollingstone Golf Course.

“With new home construction running between $275 and $450 per square foot depending on finishes and architecture, many buyers are turning to remodeling an older home that they purchased for less per square foot than new construction would cost,” Valicenti said.

Grush pointed out that in addition to lower costs per square foot, remodelers also realize value in the fact that the utilities are already extended to the house, and a significant number of tap fees, which can add up fast, have already been paid.

Grush believes that aesthetics are also driving the trend toward remodels — affluent buyers who are looking for homes in Steamboat have an expectation that they will have a dramatic view out the window of their great room. When they can’t find a suitable lot that offers a mountain view, they are more inclined to look at an existing home that doesn’t meet their expectations but does sit on a view lot.

Realtor Nick Metzler confirmed that trend.

“After driving people around Steamboat for 25 years, I’ve found that for 80 percent of them, four out of five, the view is going to be in the top three items they are looking at in a home,” he said.

Valicenti said inevitably, as homebuyers continue to take advantage of the remodel option, those prices too will rise.

“With fewer available lots on the market, this trend should continue until the price of resale homes becomes too high to make good financial sense to buyers and homeowners,” he said. 

Metzler said the scarcity of existing single-family homes under $600,000 and the age of those homes is also a factor in current trends. Among the 11 single-family homes in the city limits priced under $600,000, the average asking price per square foot is $408, he said.

“The kicker is that the average of these 11 homes is 50-plus years,” Metzler said. “And only three of them have a two-car garage.”

Salzgeber pointed out the longstanding rule of thumb, that the construction value of a house should be about three times the value of the lot. That means a $250,000 building lot implies a $1 million construction project. At $300 dollars per square foot, a modestly sized home of 2,300 square feet would add up to $690,000 for the structure on top of $250,000, or $940,000.

Metzler said buyers’ thinking on balancing lot costs with building costs is evolving, particularly on the higher end, as homebuyers increase their emphasis on efficient homes. High-end buyers are increasingly willing to build a smaller, more efficient home on a large estate lot.

It goes without saying there are still people in Routt County who want to build a home for less than $1 million. But their options are shrinking significantly and may lie to the south in unincorporated Stagecoach and to the west in ready-to-build subdivisions in Hayden.

Metzler and his partners in the Sunlight subdivision on an elevated parcel with views of the ski area above the north side of U.S. Highway 40 between the community center and the stoplight at Elk River Road, hope to release the first 40 lots in the 92-lot subdivision in 2017.

Pricing isn’t available yet, but Metzler said they will soon establish a formal process allowing buyers/builders to reserve one of the first 20 lots in Sunlight. The intent, he said, is to allow buyers to begin the planning process for a new home in advance of going to contract and closing next year.

‘We then will release another 20 lots by mid-summer, if not sooner,” Metzler said. “Sunlight will have some custom homes and also new homes built for sale next summer.”

A rare species

One of the lessons the Steamboat Springs/Routt County community took from the Great Recession was that many of the people intent on purchasing reasonably priced family homes were people working in the housing industry themselves. They were plumbing contractors, people selling custom-cut granite countertops, installing hardwood flooring, designing and installing custom kitchens, and on and on. But not as many of those skilled people live here as once did, and the housing market has been evolving in the meantime.

Looking ahead to retirement, Dover is developing 10 live-work units in Cooper Ridge, with an eye on housing construction workers for other contractors.

“All my subs are complaining they have nowhere to house employees,” Dover said. “My plumbing contractor had a guy from Kansas, who was very good, but after a few months he left. He couldn’t get a house. Really good workers are making $30 an hour … if you’re a kid with no bills that’s great. But if you’re an adult, you can’t survive.”

Dover isn’t certain where the upward spiral of building costs will end.

“I don’t know where it’s headed,” he said. “There’s no labor force. Is there going to be one? Not as long as the cost of living is as high as it is.”

Valicenti suggested construction is challenging throughout the mountain towns.

“When looking at most world class resort markets, Steamboat fares very well in determining good value with competing ski areas,” he said.

To reach Tom Ross, call 970-871-4205, email or follow him on Twitter @ThomasSRoss1

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