Later, experts said that without the Colorado Foreclosure Hotline, 1-877-601-HOPE, which has received more than 60,000 phone calls, has played a big role in stemming the tide of people losing their homes.

“We’re making good progress,” said Ryan McMaken, who released the report that showed a record 46,394 foreclosure filings last year, an 18 percent increase  from 2008, but only 20,437 foreclosure sales – a 4 percent drop from 2008.

“I think we are doing very well, especially in light of the 2009 foreclosure filings setting a record, but we still had fewer foreclosures being completed,” McMaken said.

Last year, a new state law required people who were facing to receive information about the foreclosure hotline. McMaken noted that there were about 19,000 foreclosure filings in the five-month period when the law was in effect last year, and the hotline received about 18,000 calls during that period.

He noted that some people would have called more than once and not everyone who called the hotline during that time period was just beginning the process. Still, it indicates that people are taking advantage of the free hotline, which is staffed by HUD-approved counselors.

“We know that 16,000 people who called the hotline have reached a resolution,” McMaken said. “If you added another 16,000 people to foreclosure sales, it would had a huge increase.”

Shannon Peer, who heads counseling for the non-profit Brothers Redevelopment, which manages the hotline, said without a doubt it is the single factor that made the biggest dent in the outcome of foreclosure, although he cautioned the state is still dealing with a “foreclosure crisis.”

And it typically takes a great deal of patience and persistence on the part of the homeowners, whether they are trying to get a permanent loan modification, a short sale, or something else.

“This is something that can take many months to resolve,” Peer said. “It is not something that is going to change in a month. It’s a long process. In some ways, it is hard even to compare one six month period to another, because it can take so many months to work its way through the system.”

Statewide, the former hotbeds of foreclosure sales – Denver and Adams County – have shown dramatic drops in foreclosure sales by public trustee offices, noted McMaken.

The growth is primarily occurring in “mid-sized” markets on the Western Slope and eastern plains, which is the past weren’t the victims of rising foreclosures, he said. In some cases, such as around Grand Junction, the problem is because of a job cuts in the formerly growing and lucrative oil and gas industries, he said. In other places, such as Teller and Park counties, people owned homes based on the “drive to buy” principle, can no longer have the income to pay their mortgages, because they either lost their jobs or are grossly under-employed.

In addition, resort communities in places such as Eagle and Summit counties, are reporting rising foreclosures. McMaken said that figures indicate that many of those are second homes and maybe a third of them are some form of timeshare units.

Ron Woodcock, a broker with RE/MAX Southeast, said the overall Denver single-family housing market is the strongest he has seen since moving here from Florida 3-1/2 years ago. He said some counties in Florida had 30,000 foreclosure filings last year.

“We’re really bucking the national trend,” Woodcock said. “We’re nothing like California, Florida,  Nevada or Arizona.”

Woodcock, however, disagrees with some people who say that if mortgage loans were once again assumable, that would help the foreclosure crisis. “Currently, mortgage rates are lower now than they were two or three years ago,” he said. “Why would you assume a loan of 5.5 percent, when you can get a 4 percent loan today? It might help going forward, but it is not going to help today. And while it is harder to qualify for a loan, really what has happened is that we have returned to what it used to take to qualify for a loan.”

McMaken, of the housing division, said the first wave of foreclosures was due to bad ARMs, interest-only loans, and subprime mortgages. Rising unemployment and falling incomes are responsible for most of today’s foreclosures, he said.

Woodcock said some lenders now would rather work with borrowers on loan modifications, rather than short sales, in which the bank accepts less than the mortgage amount. Still there have only been 1,072 permanent loan modifications in Colorado through 2009. (For more on loan modifications, please go to this blog.)

But Woodcock said that he does worry about the so-called “shadow market.” The shadow market is an unknown number of homes held by the banks, which are not actively being marketed. Nationally, the banks may be holding as many as 7 million properties in this fashion, Woodock said.

“An influx of a lot of those homes would have a negative effect on the market,” Woodcock said. “On the other hand, a lot of investors groups are raising money to buy big portfolios from lenders. They’ll step in and buy 50, 60 or 100 homes at one time. Those type of deals aren’t reported in the MLS, but that type of activity is going on.”

Contact John Rebchook at JRCHOOK@gmail.com or 303-945-6865.

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Only Colorado Springs and Sterling, out of 22 cities and towns surveyed, reported fewer vacancies during the third quarter of this year than during the same period last year, according  to a report released today by the Department of Local Affairs’ Division of Housing. And monthly rental rates were basically flat from a year earlier.

Among large metropolitan areas, Fort Collins and Loveland reported the lowest vacancy rates at 5.9 percent and 4.3 percent respectively. All other metro areas measured in the survey reported vacancy rates above 7 percent.

Pueblo and Grand Junction reported the largest increases from the third quarter of last year to the third quarter of this year. In Pueblo, rates rose from 6.8 percent to 12 percent year over year, while they rose from 2.4 percent to 7.5 percent in Grand Junction during the same period.

Third quarter vacancies in the metro Denver area, measured in a separate survey last week, were at 7.4 percent.

“Although unemployment in Colorado fell in recent months, unemployment is still up when compared to last year,” said Gordon Von Stroh, professor of business at the University of Denver, and the report’s author. “In Grand Junction, for example, where vacancies are up quite a bit, the unemployment rate rose from 3.7 percent to 8.2 percent over the last year.”

However, the apartment vacancy increase was more  modest than expected.

Von Stroh said the consensus of most experts earlier this year was that the vacancy rate would rise to 10 percent by the summer, but it never hit those levels.

And although there are fewer people in the workforce than earlier this year when the unemployment rate was higher, he said the falling unemployment rate provides the confidence that the market is improving, making people more willing to sign leases.

Colorado’s unemployment rate in September was 7 percent,  compared with 5 percent a year earlier, but down from 7.3 percent in August. By comparison, the overall U.S. unemployment rate was at 10.2 percent in October and 9.8 percent in September.

“Unemployment in Colorado dropped, and most people did not think that was going to happen,” Von Stroh said. “The unemployment rate has dropped significantly, and the vacancy rate correlates very strongly with the unemployment rate. The unemployment rate dropping provides sends a strong psychological message. People says I’ve been living too long in my parent’s basement or I’m tired of having a roommate, and so they go out and rent an apartment.”

Terrance Hunt, a broker with the Denver office of Apartment Realty Advisors, agrees.

“The confidence factor is very important,” said Hunt, noting that vacancy rates typically drop from the second quarter to the third quarter, not rise as they did.

Still, he expected a vacancy rate of about 9 percent, not 7.4 percent.

“I think people who had seen a lot of layoffs at their companies and have survived all of the cuts, think they must be pretty valuable to the company and there’s a pretty good chance they will not lose their jobs,” Hunt said. “So they now have the confidence to move out of mom and dad’s basement and get their own place.”

However, he said it is possible – and even likely – that vacancy rates will rise in the fourth quarter from the third quarter, as they tend to do for seasonal reasons.

“But this is a great indicator for 2010 showing signs of recovery,” Hunt said. “The state is still adding households and little supply is being added to the market, which bodes very well for 2010. I think we will then start being able to get down to the 5 percent or 6 percent vacancy levels.”

In general, a vacancy rate of 5 percent is considered to be the “equilibrium rate.”

Colorado Springs was the only metropolitan area where vacancies fell. Experts note this is likely due to recent troop arrivals in the region which has led to an increased demand for housing in the area.

Average rents were flat or falling in many areas of the state from the third quarter of 2008 to the same period this year. Rents fell in Colorado Springs, Greeley and the Fort Collins/Loveland area. In spite of increases in the vacancy rate, however, some areas reported rental increases. Average rents increased from $514.17 to $554.58 year over year in Pueblo, and they rose from $670.24 to $674.31 in Grand Junction during the same period.

In non-metropolitan areas of the state, average rents rose in Alamosa, Buena Vista, Durango, Ft Morgan/Brush, Glenwood Springs, Montrose, Sterling, Summit County and “Southeastern Colorado.” Rents were flat or falling in Aspen, Cañon City, Eagle County, Gunnison, Lake County, Salida and Steamboat Springs.

“It’s difficult to raise rents in the current economic environment, and we’ve seen rents fall in several metro areas including the Denver metro area, which is certainly good news for renters” said Ryan McMaken, a spokesperson with the Division of Housing. “Many owners who are trying to cover the increasing costs of apartment ownership will continue to raise rents where they can. But this carries the risk of increasing costly turnover, so it’s a balancing act.”

The Vacancy and Rent Surveys are a service provided by the Colorado Division of Housing to renters and the multi-family housing industry on a quarterly basis. The Colorado Vacancy and Rent Survey reports averages and, as a result, there are often differences in rental and vacancy rates by size, location, age of building, and apartment type. The report  is available online at the Division of Housing.

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