As a young teacher 25 years ago, Larkin Beaman almost bought a hotel room that was converted into a studio condo in downtown Telluride. It was $80,000 for 371 square feet.
Last month the ninth-grade teacher at Telluride High School toured the same unit. It was going for $445,000 and sold in a blink.
“I guess I just didn’t have the vision back then,” she said as she prepared for a day of remote teaching from her classroom in a town where she has been searching for a small home. “I just want a tiny studio. I’m just waiting, but there is not anything below $500,000.”
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Beaman’s story is a timeworn tale in ski towns, where sky-high real estate prices have dogged teachers, doctors, firemen and other essential local workers for decades. But this summer, a surge of largely urban newcomers fleeing big-city problems during the pandemic is hastening the displacement of locals.
Not only are the newcomers buying everything — setting records for both prices and emaciated inventories of for-sale homes — but they are also renting resort-area homes at a breakneck clip.
Across the high country, visitors are becoming residents.
“I can’t blame them, but I think it caught us all off guard how quickly it changed,” said Amy Levek, Telluride’s former mayor who now heads the Trust for Community Housing. “We have been dealing with gentrification and people buying and renovating houses for years. But it’s been a gradual process and now it’s just wham. Everything is changing so quickly. It’s just so fluid right now as far as what people want and what people are willing to pay.”
In Telluride and Mountain Village, homes that have long been rented to local workers are selling. Fresh arrivals to the box canyon are capable of spending big on rent, too, further pinching the supply of housing for workers.
“Their budgets are often in the $5,000 to $10,000-a-month range, which is certainly not what locals traditionally pay for rent,” Levek said.
New buyers and new renters are only part of the reason the supply of local housing is dwindling in the narrow valley, where about 44% of the homes in the region are temporarily occupied by out-of-town owners or their vacationing guests. Those second-home owners are spending more time in their homes. And so are their not-so-short-term rental guests.
Communities like Telluride were built on tourism. They thrive on a steady rotation of visitors. When the visitors linger, though, the system gets off-kilter. The migration of wealthy urbanites has spiked real estate prices and rents, but they’ve also rescued economies that could have been decimated by the pandemic-triggered economic collapse.
After a complete shutdown of Telluride and Mountain Village’s hotels, short-term rentals, restaurants and shops in March, April and May, sales tax collections through July are down only about 10%.
“Which is really amazing,” said Telluride Tourism Board chief Michael Martelon, who has developed a complex network of data points to measure not just the number of visitors but their impact. “Second-home owners are certainly a big piece of the reason why that decline is so small.”
(Sidenote: Hotels and lodges in Telluride and Mountain Village also raised room rates in July to compensate for declining volume, bringing the cost of summer lodging closer to winter rates.)
The flight of urbanites is national. Bloomberg News this week studied data from United Van Lines to show city residents fleeing New Jersey, New York, Illinois, and Connecticut while states like Vermont, Idaho, Oregon and South Carolina are seeing more newcomers.
Many brokers in the high country say the pandemic has simply accelerated an already underway trend of people shifting their lives away from hectic cities and into places where lifestyle and recreation reign.
“Most of the buyers I’m seeing are people who I have been in touch with for many years,” said Frank Konsella, a real estate broker in Crested Butte who remembers a roommate living in an attic of a home he rented as a ski bum in the 1990s. “Whether it’s the low interest rates or the COVID or the low inventory — or a combination of all those things — they are pulling the trigger.”
The Colorado Association of Realtors showed a 38% annual decline in the number of homes for sale in July across Colorado’s 3rd Congressional District, which covers the entire Western Slope. The association noted a 29% decline in the number of townhomes and condos for sale in the district in July, compared with July 2019. The average sales price in July for a home was up 32% and a whopping 63% for condos and townhomes, compared with the same month in 2019.
In Colorado’s resort communities this summer’s spike in real estate prices and near-record lows in the number of residences for sale is even more dramatic.
- In Pitkin County, the average sales price of a home climbed 60% in July and the inventory of homes for sale fell 33% when compared with July 2019.
- In Eagle County, the average sales price of a home climbed 43% in July and the supply of homes for sale dropped 43%, compared with July 2019.
- In San Miguel County, the average price of a townhome or condo climbed 366% in July, fueling a 15% increase in the number of condos listed for sale, compared to July 2019.
- In Routt County, the average home price was up 34% in July while inventory has dropped 56%, compared with the same month of 2019.
- In Gunnison County, the average condo price was up 9% in July with the number of condos for sales up 30%., compared with July 2019.
- In Summit County, the average home price was up 25% and inventory of homes for sale was down 52% in July compared with 2019.
“Higher prices and reduced inventory is a formula to out-price the workforce population that ultimately supports the growth and sustainability of a community for generations to come,” reads a memo last week from Steamboat Springs’ Four Points Funding, which has an Opportunity Zone Fund that has invested in multi-family housing projects in Grand Junction and Glenwood Springs.
Resort communities across the West have spent years laboring to build more diverse economies that don’t rely solely on vacationing tourists. They foster non-tourism-related businesses. They install faster internet, build more recreational amenities like trails and river parks, and provide better, year-round air-service to help entice those remote workers and employers who can build their businesses anywhere.
New residents relocating their jobs, buying homes and settling in rural areas are the spark for many rural economies across Colorado’s Western Slope as they diversify beyond sole reliance on single industries like energy development or tourism.
But when the newcomers arrive with their well-paying jobs and big budgets, they can push out locals who keep tourism economies humming. And this summer, the impacts of urban migration into Colorado’s high country are clearly evident.
“It’s almost a case of be careful what you ask for,” said Chris Romer, the head of the Vail Valley Partnership, which in May launched its “Welcome Home Neighbor” campaign to encourage Vail-area second-home owners to visit longer and even move to their vacation spreads.
Romer and his Vail-to-Gypsum push to yoke second-home owners as the key drivers of an economic rebound from the pandemic shutdown were on the front end of what would become a national acknowledgement that owners of vacation homes were going to fuel recovery in rural locations.
“We were pushing that message when other communities were digging in their heels and discouraging people from visiting their homes. But it turned out to be pretty brilliant,” said Romer, noting that Vail’s sales tax revenues through the summer, like Telluride’s, are not far off last year’s thanks in part to lingering visitors. “And we are not done needing the contributions of our second-home owners. They absolutely will play an instrumental part in the success of our community and the success of our ski season from an economic standpoint.”
Still, the sudden surge of largely urban newcomers this summer has caught many rural communities off guard.
Levek’s trust recently enlisted the help of Colin and Kai Frolich in the mission to find more housing for local workers. They are residents of Truckee, near California’s Lake Tahoe, and their LandingLocals.com online marketplace connects vacation-home owners with local workers in need of year-long leases.
The Frolichs are working with Truckee, Telluride and Montana’s Big Sky. All three communities have long toiled with finding housing for local workers. The struggle has become critical this summer.
“There is a community housing trust in almost every Western mountain town and they are all raising the red flags right now,” said Colin Frolich, whose LandingLocals.com website connects renters, who fill out profiles, with homeowners who list their resort-town properties for rent.
Jason Peasley, the head of the Yampa Valley Housing Authority, recently saw 390 local families apply for 72 new deed-restricted units. That’s indicative of the demand for affordable housing in Steamboat Springs, he said.
His housing authority has 175 rental units and about 100 deed-restricted ownership units, plus a mobile home park. He’s breaking ground on another 90 affordable units later this year.
Peasley said the pressure on housing for locals will be slightly eased by the lack of temporary-visa workers who typically spend only four or five months in Steamboat Springs every winter. (The Trump Administration banned J-1 and other visa workers for 2020. But resort operators are reporting more local college kids are applying for jobs.)
But the number of new arrivals relocating from the Front Range and elsewhere could add a different level of pressure, he said.
“They largely seem to be people who can buy nice houses but they are part of the catalog of people who are looking for housing in Steamboat and make it unaffordable for regular wage earners,” Peasley said.
Summit County has a multi-partner apartment complex for locals opening this fall. The Village at Wintergreen in Keystone has 36 seasonal units for Vail Resorts, 40 units reserved for low-income workers and 120 units for local workers.
The new units will help offset a need for more than 2,400 affordable units in Summit County in the coming years, according to a 2019 housing needs assessment. That assessment showed year-round businesses adding more than 700 jobs since 2016, which has increased demand for housing. The assessment also concluded that local residents were being squeezed out of the county’s supply of homes — pointing, in part, to 9,800 units marketed as short-term rentals, which is close to one third of all the homes in the county.
The opening of Wintergreen “couldn’t happen at a better time,” said Amy Priegel with Summit County’s Combined Housing Authority, who has seen more owners of vacation homes coming up to Summit County for longer stays this summer instead of leaving them vacant or renting them out.
Pent-up demand for affordable housing is a decades-old story in the Vail Valley, where recently the Town of Vail listed a $210,000 deed-restricted condo that drew more than 50 locals in a lottery. One of the challenges for the local workers vying to buy the 60 to 100 deed-restricted units that hit the market in the Vail Valley every year is getting approved for loans when their tourism-dependent jobs are unclear in the pandemic.
“We have seen a lot of locals struggling to get pre-qualified because their hours were reduced or they were on unemployment or they were not back to work full time,” Eagle County Housing Director Kim Bell Williams said.
Williams said it’s too early to clearly see the impacts of changing migration patterns on affordable housing in Eagle County, but she has a glimpse of the impacts every time she walks around her neighborhood in Eagle-Vail.
There are 26 homes on her street, evenly split between year-round residents and second-home owners who either use their place occasionally or rent to vacationers.
This summer, all those second-home owner units have been occupied, and typically by people who are staying for several weeks or even months.
“It’s not just traditional two-week-a-year occupancy like it has been in the past,” she said. “People are staying longer. I mean why not, with remote employment and remote schooling, why wouldn’t you want to be up here. I’m not saying it’s a bad thing or a good thing, it’s just changing. And I think these changes will end up changing our culture a little bit too.”
Frolich, from LandingLocals.com, is hearing from all kinds of mountain-town employers — big and small — as well as workers looking for housing.
“They come to us and write their profiles and everybody is saying the same thing: ‘I’m looking for housing because the house I’ve been living in has been sold,’” Frolich said.
Meanwhile the people with remote work are coming in and renting sight unseen, paying a year up front and even paying landlords more than what they are asking.
MORE: Why Colorado’s housing market looks so hot even though coronavirus is ravaging the economy
“They are coming from cities where they are used to that kind of frenzied market scenario,” said Frolich, who describes his business as “geared toward convincing homeowners to rent to locally employed workers who are the foundation of the community.”
Frolich used to work for Airbnb in the Bay Area when he decided to move his family to Truckee. He hoped to find a rental home. But the explosion of short-term rentals made his search almost impossible. That’s the story across resort communities, where thousands of homes that used to house local workers are now rented to vacationers in what has become a multibillion-dollar industry.
When the pandemic settled on resort towns this spring and tourism evaporated, there was a spark of hope that maybe the reset could lift some of the pressures caused by the short-term rental boom. Maybe homeowners would start renting their properties to locals when the pool of vacationers dried up. No such luck. Yet.
The impacts of the pandemic will linger into this winter. The steady stream of fly-in vacationers will not be nearly as robust as visitors avoid long-haul flights. Maybe the short-term rental markets in remote ski towns like Telluride and Crested Butte could still contract and homeowners could convert their homes to rentals for locals.
“The uncertainty and unpredictability of the short-term market may help the long-term market. Maybe this spring, with homeowners saying, ‘Wow, I don’t want to go through a drought like that again,’” Frolich said.
Jennifer Kermode, the executive director of the Gunnison Valley Regional Housing Authority, has seen more buyers and vacationers further stressing the market for local housing.
The flood of out-of-town renters who are booking homes for months at short-term rental rates has left homeowners flush and less likely to convert their properties into year-long rentals for locals, she said.
Deed-restricted workforce housing is under construction, but won’t be a remedy for at least a year. Kermode is pushing her housing authority to use a program she built during her tenure as the head of the Summit Combined Housing Authority in Summit County. The Housing Works Initiative master leases homes from owners and then offers rental agreements to long-term locals. The initiative allows locals to rent with only a first-month payment and smaller security deposit.
“So they can actually get into a unit without needing $6,000 to $7,000,” Kermode said of the program, which also includes a program to help renters improve their appeal to landlords.
The Gunnison Valley Regional Housing Authority has 268 deed-restricted housing units for local workers plus several employee units in hotels near the Crested Butte Mountain Resort ski area. Another 120 units are under construction and a recent needs assessment concluded the valley could use another 800 deed-restricted units to house the valley’s workforce.
This summer, as big crowds converged on Crested Butte, Kermode said some restaurants were forced to close because they could not find workers. That was a sign for second-home owners, she said. And some of them saw what the community would look like without ample housing for wage-earning workers.
Kermode said she is finding many property owners in Gunnison and Crested Butte who are willing to work with her to offer more affordable housing.
“There is a growing number of homeowners in the valley who recognize the problem and are willing to take their homes out of the short-term rental pool and put it into the long-term market,” she said.
Romer suspects a reliance on part-time residents and newcomers relocating to rural mountain towns is “the next normal for the foreseeable future.”
“I think it’s more than a passing fad, right? At a minimum it’s a trend and it could just well be the way it works from here on,” he said. “We are seeing more companies saying they will be completely remote for the near future.
So, Romer says, communities need to start building the infrastructure needed to support these shifting demographics.
“And we need to shift the way we think about workforce housing,” Romer said. “Counties and towns are going to need to view housing as critical infrastructure … just like they do with roads and bridges.”
Housing advocates are hoping that a huge, snowy winter — with all that shoveling under gray skies in remote, cold valleys — could send the newcomers back to the warm, vibrant cities. Or maybe ski areas will close again, sending tourist-based economies into hibernation, which could open up short-term rental homes to hunkering locals who still have work. Or maybe the market will collapse as it did in 2008 after real estate prices skyrocketed. Maybe.
Meanwhile, there are countless locals like Beaman, the Telluride teacher, waiting and hoping for one of those maybes. Locals like her are digging deep as appraisals for real estate fall short of sales prices, forcing them to come up with extra cash to cover the gap for wary lenders. And they are commuting from afar while they wait for homes close to their jobs.
On drive up from her friend’s house in Ridgway on a recent morning, she found herself stacked in a line of about 30 cars, all workers heading to their jobs in Telluride.
“I can really understand why people want to be here. I’m doing the same thing, I just have a much more limited budget,” she said. “I think about all those people in their cars, lining up to get into Telluride. I bet all of them would prefer to live here. But sometimes I wonder about the investment. Are these tiny studios designed in the ’90s really worth $500,000? Do I really like that space, or am I being pressured by this land-grab scenario right now?”