Foreclosure Home For Sale Sign in Front of Large House

A strong economy and a bustling housing market helped push Colorado Springs-area foreclosures to a 22-year low in 2019.

It was a dramatic turnaround from a decade ago, when a record number of local homeowners and businesses were hit with foreclosure notices; thousands lost their properties when they couldn’t resolve their financial troubles.

“It’s amazing,” El Paso County Treasurer and Public Trustee Mark Lowderman said of the drop in foreclosure activity.

Foreclosure notices are sent to property owners when they fall behind in their mortgage and loan payments. Property owners who fail to catch up on payments or otherwise settle with their lender risk losing their property at a Public Trustee’s auction.

According to a trustee’s report for December and historical data from the office:

• Last year, 827 foreclosure notices were sent to El Paso County residential and commercial property owners. That number was down from 908 in 2018 and was the fewest since 669 foreclosure notices in 1997.

• By contrast, a record 5,288 foreclosure notices were sent to county property owners in 2009.

• Sales of properties that went through the foreclosure process and were auctioned by the Public Trustee’s office totaled 228 in 2019. A decade ago, there were 2,419 sales — more than 10 times as many.

A combination of factors has led to the sharp decline in foreclosure activity, local officials say.

In the mid-2000s, many buyers used adjustable-rate and interest-only mortgages to purchase homes they couldn’t afford, which increased their chance of foreclosure when their loan payments spiked or if they fell into financial trouble. Today, stricter lending requirements have reduced that risk.

Also, the Colorado Springs-area a decade ago was wallowing in the post-Great Recession fallout. The December 2009 unemployment rate locally was a hefty 8%, and many people who were laid off or couldn’t find a job were foreclosure candidates.

The employment picture has brightened significantly. November’s unemployment rate — the most recent data available — was 3.1%, the lowest in 2½ years. More people working means more homeowners who are financially secure and paying their mortgages on time, Lowderman said.

The improved economy and historically low mortgage rates also have spiked demand for single-family homes. More than 16,000 single-family homes were sold locally in 2019, just shy of a record set in 2017, according to Pikes Peak Association of Realtors figures

Despite that demand, there’s a shortage of properties for sale on the resale side of the market in the Springs area, a situation faced by many cities.

As a result, homeowners stand a far better chance of being able to sell their homes and stave off foreclosure if they fall into financial trouble.

On Wednesday, the supply of homes for sale in the Pikes Peak Association of Realtors’ multiple listing service area totaled 1,201, with just 562 of them having a Colorado Springs mailing address, said Rick Van Wieren, a real estate agent with Re/Max Properties.

A decade ago, in January 2010, there were more than 4,100 homes for sale and buyers weren’t as plentiful.

“That is so ridiculously low,” Van Wieren said of the most recent inventory figure. “There’s just nothing for sale. ... So when you get to foreclosure, and somebody’s got a problem and they need to get out of the house, all they have to do is say so. We have buyers for them.”

Lowderman also speculated that many area residents have opted to rent apartments over buying homes; the Colorado Springs apartment vacancy rate was at a three-year low of 5% in the third quarter of 2019, according to the Colorado Division of Housing and the Apartment Association of Southern Colorado.

“If there is that number of people that maybe, a few years ago would have had single-family housing and now they don’t have a mortgage, it kind of takes them out of the foreclosure picture,” Lowderman said.

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