Aspen’s economic engine: second homes
Modern-day Aspen was built on an economic model that was beautiful in its simplicity: Attract hordes of tourists to play in the mountains and attend cultural activities, send them home after they spend loads of cash on food and lodging, replace them and repeat the process.
Everybody was happy ” the tourists got to spend some time in Shangri-La, locals made enough money to scratch out a living in the mountains, the town could stay small enough to maintain its charm because tourists were visiting but not staying.
The model worked splendidly throughout the 1950s, ’60s and ’70s. But sometime in the last 20 years or so it started to change. An increasing number of tourists weren’t satisfied with a brief respite in the mountains. They wanted to stay longer.
Second homes have long been a part of Aspen. But until the 1990s, second-home owners were essentially like winter and summer tourists ” they came, they saw, they spent, and then went home after a week or two.
Now they’ve got the financial wherewithal and time to stay longer. Greater numbers of second-home owners are retired and can afford to spend more time away from the rat race. Thanks to technological advances, those still working as captains of commerce can command their ships from secluded spots in Pitkin County.
A greater willingness to travel means it isn’t difficult now to spend a few weeks in Aspen during winters and a few more during summers.
No one who watches the Aspen economy or national trends would be surprised to learn that annual spending by second-home owners is now greater than spending by winter or summer tourists in Pitkin County. But the degree to which second homes and homeowners dominate the local economy is an eye-catcher.
The Northwest Colorado Council of Governments recently released the first known study to take an in-depth look at second-home ownership in four resort counties in the heart of the mountains, including Pitkin County. The study examined who is buying second homes and why, how much they spend and the impacts they have on their adopted communities.
In Pitkin County, second-home owners account for 34 percent of all the dollars that flow into the county from outside sources. In contrast, winter visitors account for only 22 percent of those outside dollars, and summer tourists 18 percent. In other words, second homes are the county’s biggest economic engine.
“I was surprised by the size of the second-homes’ economic driver. It was a little bigger than I expected,” said Linda Venturoni, special projects director for NWCCOG.
Unfortunately, no comparable data is available from prior years.
Where the bread is buttered
The study estimated that about $1.33 billion in outside money comes into Pitkin County and stays there annually. Second homes accounted for $453.1 million. The study, performed for NWCCOG by Lloyd Levy of Denver, used a complex formula to arrive at that figure.
The key is, the dollars measured must stay in the county, not just pass through.
So, for example, if the Houston-based Hines corporation sold a million-dollar residential lot at Aspen Highlands, the sales price wouldn’t show up in the study because that money flowed to Texas. The sale of a lot by a full-time county resident would be included.
The study estimated that $115.5 million was spent on second-home construction. Again, that’s just money that stays in the county, like carpenters’ wages.
The study estimated that second-home owners spent another $337.6 million annually at local retail outlets and restaurants.
Mike Taets, a banker in Aspen for 13 years, wasn’t surprised at the economic power of second homes because the vast majority of his full-time local clients make their living from second homes.
“My clients’ business is taking care of the second-home owners,” he said. “The plumbers are unplugging the toilets in the second homes. The landscapers are landscaping the yards of the second homes. The retailers who are doing well in the core cater to the second homes.”
Local dependency on second homes has almost certainly increased during Taets’ years in Aspen.
“The handwriting is on the wall,” he said. “It has been for some time.”
Majority of housing units
After a 25-year building frenzy, second homes now account for 55 percent of the roughly 13,000 housing units in Pitkin County. The NWCCOG study arrived at that figure after an exam of Pitkin County assessor records.
Not surprisingly, second-home ownership is even greater in the higher price ranges. Second-home owners own 65 percent of homes priced between $2 million and $5 million. They own 73 percent of the homes priced above $5 million.
Two-thirds of the condominiums in Pitkin County belong to second-home owners, versus 43 percent of the single-family homes.
And Taets is right about the job dependency on second homes. While second homes account for 34 percent of the outside dollars pouring into the county, they account for roughly 40 percent of the jobs created when outside dollars flow in, NWCCOG’s study said.
Winter tourism accounts for 27 percent of those jobs, and summer tourism accounts for 11 percent.
Coming often, staying longer
It’s not just the sheer number of second-home owners that’s affecting Pitkin County’s economy. It’s how they’re spending their time, which influences how much they spend.
“Second-home owners are spending more time here,” said Brent Waldron, an Aspen real estate agent for about 30 years and a partner at Coates, Reid and Waldron.
In the 1970s, many second-home owners spent up to two weeks per year in Aspen and rented their dwellings out the rest of the time, according to Waldron.
But now, he continued, “many people buying second homes will typically use them two to four months.”
According to NWCCOG, 44 percent of second-home owners said only they, their family and their friends used their residence. Another 24 percent said their units were used by the owners only.
Almost 40 percent said they will rent their units at least part time. Another 12 percent of second-home owners said they rent full time.
The increased use is partially due to the graying of America. NWCCOG cited a national study showing that most second-home buyers are in the 55-to-64 age group, followed by 65 to 74.
Waldron’s firm has seen a significant increase in the number of retired clients who sold a business or cashed in their stocks to enjoy the mountain lifestyle.
Census data shows 83 million Americans are between ages 35 and 54. Those baby boomers comprise the single biggest block of consumers in America. As they reach retirement age, second-home meccas like Aspen can expect increasing demand.
But it’s not just retirees who are flocking to Aspen. An increasing number of professionals are using modern technology to spend more time here. Taets knows of a stockbroker who works during the heart of winter in Aspen because he can stay in touch with the market electronically, then hit the slopes after the market closes.
Taets also knows an attorney who works from Aspen part of the week and returns to his big-city office for the other part. The lawyer and stockbroker aren’t alone, said Taets.
“These guys’ mission in life is to figure out how to spend more time here and less time there,” he said.
The second-home study shows that 11 percent use private aircraft to travel to Aspen. Another 71 percent use commercial flights.
Look in the mirror
Full-time residents of places like Aspen often contend that visitors don’t appreciate the area like they do, but NWCCOG’s study shows second-home owners can lay claim to being “locals” as well.
Venturoni said a survey of 123 full-time residents and 129 visitors in Pitkin County show they value many of the same things about mountain life.
“It’s not like we’ve got culture wars going on here,” she said.
– 92 percent of full-time residents placed high value on the scenic and visual quality, compared to 95 percent of second-home owners.
– 88 percent of full-timers placed a high value on recreational opportunities, compared to 90 percent of part-timers.
– 78 percent of full-timers placed a high value on arts and cultural opportunities compared to 72 percent of part-timers.
In a separate question about recreational activities, second-home owners proved to be more “local” than locals when it came to skiing. Eighty-nine percent of second-home owners said they enjoyed downhill skiing compared to 79 percent of full-timers.
Full-timers were bigger hikers, 85 percent versus 75 percent.
Golf, on the other hand, was a pastime undertaken by 41 percent of second-home owners, versus 29 percent of full-timers.
Understanding helps planning
The Northwest Colorado Council of Governments didn’t conduct the study just to come up with fun facts. Venturoni said the intent was to help its clients in Pitkin, Eagle, Summit and Grand counties understand what was driving their economies and how the biggest driver, second homes, affects their communities.
“The more you understand, the better you can plan,” she said.
But some impacts may be difficult or even impossible to offset.
For example, if 44 percent of primary jobs in Pitkin County are tied to second homes, and if the number of second homes is expected to increase, then it’s unclear where all of those future workers will live. It’s equally unclear where and how to provide basic services for them ” health care, schools, police and all the rest.
Venturoni noted that second homes compete with worker housing and community services for the limited land that’s still available. “This [second home] driver is crowding out all other users in the competition for land use,” she said.
Scott Condon’s e-mail address is email@example.com.
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