Last year, the lending division Peter Garvin headed from his Denver Tech Center office made $1.5 billion in mortgage loans to new-home buyers across the country.

On Aug. 6, he was laid off when his company, American Home Mortgage, filed for bankruptcy.

The Melville, N.Y.-based company said "extraordinary disruptions" cut off its funding to make new loans.

The company had grown from the 42nd-largest mortgage lender in the nation when Garvin joined it in 2000 to No. 10, closing $60 billion in loans annually, Garvin said.

Garvin, a 30-year veteran of the mortgage industry, already has landed on his feet, with consulting work lined up. He also is mulling two offers from other mortgage companies in Denver.

Garvin has weathered many past cycles. What was remarkable for him about this latest downturn, though, is how quickly an entire industry collapsed.

"And people losing their jobs is always horrible," Garvin said.

Garvin is one of tens of thousands of people, from executives like himself to framers and drywallers, who are losing their jobs in the wake of a nationwide slump in housing sales, overbuilding, record foreclosures and a change in lending practices that has eliminated loose underwriting practices associated with risky subprime loans.

"Everybody gets hurt" when the housing market slumps, said Denver housing consultant S. Robert August.

"It's clearly a drag on the economy," said Bernie Markstein, senior economist and director of forecasting for the National Association of Home Builders.

In the Denver area, Markstein said, some people in the trades working at home-construction sites will find jobs in the booming commercial market, where construction of office buildings, hotels, retail centers and condos is still healthy.

"The nonresidential construction market is quite strong in Denver, which will help offset some of the impact of the drop in residential construction," Markstein said.

Others, he said, will pick up home-remodeling jobs.

Still, the almost 40 percent drop in new-home building permits in the Denver area will take its toll on other parts of the economy, from appliance and furniture sales to landscapers, he said.

"You'll see a drop in Dunkin' Donut sales," he said, half-jokingly.

The Denver economy is more dependent on construction and housing-related jobs than most areas, said Sean Maher, an associate economist at MoodysEconomy.com.

"Our estimate is that they account for about 15 percent of Denver's employment base, compared with 10.5 percent nationally, so Denver is fairly sensitive to housing trends," Maher said. "It is going to weigh on the overall economy and have a broader impact than in many other parts of the country."

Both Maher and Markstein said the Denver area won't be hammered the way it was in the late 1980s, following the crash in energy prices and overbuilding, when there was an exodus of thousands of workers from Denver for California, Arizona and other places where jobs could still be found.

Both economists said they think the Denver area will burn off most of its excess supply of unsold homes and will be in much better shape by mid-2008 than it is today.

"Builders in the Denver area won't be offering huge incentives and paying closing costs a year from now, when supply and demand are much more in balance," assuming that nothing happens nationwide that throws the country into a recession, Markstein said.

Garvin, the mortgage executive, is taking the latest downturn in stride.

"I think the nature of the mortgage business is that it is a transient business that ebbs and flows with interest rate fluctuations," Garvin said. "You lose jobs, you get jobs. That has happened to me six or seven times."

New-home statistics

• Permits are down 39 percent for new single-family homes in the first six months of this year, compared with the same period last year - to 4,229 from 6,929.

• Adams County showed the biggest percentage drop, with permits falling 75.4 percent to 42 from 171.

• New-home sales in the Denver area dropped 33.3 percent to 5,842 from 8,758 in the first half of the year.

• Building 100 single-family homes in most metropolitan areas adds $16 million in direct annual income, adds $1.8 million in taxes to local coffers and creates 284 jobs. Indirectly, the same homes create $3.2 million in annual income, $648,000 in taxes and 63 jobs.

Sources: Home Builders Association Of Metro Denver, The Genesis Group And The National Association Of Home Builders

rebchookj@RockyMountainNews.com or 303-954-5207

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