The rules are changing in the high country. As the labor crisis lingers, community leaders are beginning to address the root cause of the challenges that are strangling mountain valleys. They are cracking down on short-term rentals. Redirecting the flow of tax dollars toward affordable housing. Adjusting economies anchored in tourism to focus on residents, not just visitors.
Here are two graphs that explain the why behind the frantic scramble in Colorado’s mountain towns. It all boils down to one thing: buyers are spending huge for homes in the hills.
The amount spent on real estate in six of Colorado’s resort-anchored counties doubled from 2019 to 2021. Average prices in Eagle, Grand, Pitkin, Routt, Summit and San Miguel in 2021 were up 57% from 2019.
This is an unprecedented frenzy. It’s hard to think of another multibillion-dollar industry in Colorado that doubled in value in two years. Ever. And it’s not really slowing down. As the supply of homes for sale dwindles there has been a slight easing of the pace. But not the prices.
Jim Renshaw, Land Title Guarantee Co.’s head of marketing, called the end-of-2021 statistics “jaw-dropping.” What’s most interesting to Renshaw? For the first time in these communities, buyers with cash outnumbered buyers with loans. (For example, in Pitkin County, 68% of all the 1,203 transactions recorded in 2021 were cash, including 25 deals for properties worth more than $20 million. Whoa.)
“Being a buyer in the market is extremely discouraging because we are seeing more and more people bringing cash offers at over list price which typically wins over an offer with a loan,” said Courtney Peroutka, a broker based in Fairplay.
Renshaw said his team’s early numbers for 2022 indicate demand for mountain homes remains high and prices are climbing even higher.
“From the Land Title 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 the impact on second home purchases.”
(Global events – like the war in Ukraine – seem to be spiking sales and prices in Aspen, where sellers are taking advantage of a record-low inventory and flipping properties in mere months for millions.)
Name a problem in the high country right now and the challenges trace back to housing. The late school bus? Housing. The lines at the ski area? Housing. Soaring rents, absentee neighbors, more investment homes, slow local government, record-high home prices in communities 100 miles from a ski hill? Housing.
Land Title tracks where buyers in mountain towns are coming from. The lowest numbers of local buyers in the last decade for the six resort counties were logged in 2020 and 2021. That’s because locals are selling, not buying. And when locals sell, they leave, triggering a cultural shift that could forever change the make-up of Colorado’s mountain towns.
There are a bunch of innovative and aggressive programs underway in Colorado’s high country right now as communities maneuver in the exploding real estate market that is rejecting working residents.
- Telluride and San Miguel County are buying 105 acres to build a community for locals 6 miles from Main Street.
- Aspen has rejiggered its entire approach to tourism, arguing that the city’s billion-dollar tourism industry “needs to reflect on how Aspen can survive its reputation economically (unhappy residents pose enormous business risks), socially (gentrifcation and seasonal impacts), environmentally (visitor pressure), and even existentially (losing its soul),” reads the new Aspen Destination Management Plan for 2022 through 2027.
- Many communities are abandoning 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 buy ranchland and develop affordable homes for locals.
Watch for a tsunami of reporting this summer as communities make dramatic shifts to keep residents living near jobs. And remember these real estate numbers. This is the reason behind it all.