The rules change in the high country. As the labor crisis persists, community leaders are beginning to tackle the root cause of the challenges strangling the mountain valleys. They are cracking down on short term rentals. Redirect the flow of taxpayers’ money to affordable housing. Adjust economies rooted in tourism to focus on residents, not just visitors.
Here are two charts that explain why the rush is rampant in Colorado’s mountain towns. It all boils down to one thing: buyers are spending huge amounts on homes in the hills.
The amount spent on real estate in six of Colorado’s resort-heavy counties doubled from 2019 to 2021. Average prices in Eagle, Grand, Pitkin, Routt, Summit and San Miguel in 2021 were up 57% from to 2019.
It is an unprecedented frenzy. It’s hard to think of another multi-billion dollar industry in Colorado that has doubled in value in two years. Never. And it’s not really slowing down. As the supply of homes for sale dwindles, the pace has slowed slightly. But not the prices.
Jim Renshaw, chief marketing officer of Land Title Guarantee Co., called the end of 2021 statistics “stunning.” What interests Renshaw most? For the first time in these communities, buyers with cash outnumbered buyers with loans. (For example, in Pitkin County, 68% of the 1,203 transactions recorded in 2021 were cash, including 25 transactions for properties worth more than $20 million. Whoa.)
“Being a buyer in the market is extremely discouraging as we see more and more people offering cash offers at a higher than list price, which usually trumps an offer with a loan,” said Courtney Peroutka, a Fairplay-based broker.
Renshaw said his team’s early numbers for 2022 indicate demand for mountain homes remains high and prices are rising even further.
“On the land titles side, we continue to see orders despite incredibly low inventory,” he said. “It will be interesting to watch what happens with world events and global economies in terms of impact on second home purchases.”
(World events — like the war in Ukraine — appear to be driving up sales and prices in Aspen, where sellers are taking advantage of record inventory and flipping properties within months for millions.)
Name a problem in the high country right now and the challenges go back to housing. The school bus late? Lodging. The queues at the ski area? Lodging. Skyrocketing rents, absent neighbors, more investment homes, slow local government, record house prices in communities 100 miles from a ski resort? Lodging.
The land title indicates where buyers from mountain towns come from. The lowest numbers of local buyers over the past decade for the six resort counties were in 2020 and 2021. That’s because locals are selling, not buying. And when locals sell, they leave, sparking a cultural shift that could forever change the makeup of Colorado’s mountain towns.
There are a slew of innovative and aggressive programs underway in Colorado’s high country right now as communities maneuver through the booming real estate market that is throwing away working residents.
- Telluride and San Miguel County purchase 105 acres to build a community for residents 6 miles from Main Street.
- Aspen has completely overhauled its approach to tourism, arguing that the city’s billion-dollar tourism industry “needs to think about how Aspen can survive its reputation economically (disgruntled residents pose huge risks commercial), socially (gentrification and seasonal impacts), environmental (visitor pressure), and even existentially (losing one’s soul),” reads the new Aspen Destination Management Plan for 2022 to 2027.
- Many communities are moving away from traditional tourism marketing, marking a seismic shift for economies built around catering to visitors.
- A single anonymous donor in Steamboat Springs has given $29 million so the local housing authority can purchase ranches and develop affordable housing for residents.
Watch for a tsunami of news stories this summer as communities make dramatic changes so residents live close to jobs. And remember those real estate numbers. This is the reason behind it all.