Aspen, mountain towns face ‘tough transition’
Migration report breaks down what flight to mountains means for future of local, year-round residents
Pitkin County has lots of bragging rights when it comes to its expensive housing market, like that flashy $72.5 million home sale on Red Mountain last month, or the 650-acre Snowmass Falls Ranch that recently hit the market for $50 million.
But for all of the furious action over the Aspen-area’s jaw-dropping home sales, there have been multiple reactions. That includes making it even more difficult to rent or own housing in Pitkin County.
A recent study emphasized that point, concluding the trend of shrinking inventory and escalating home prices will hang around for the foreseeable future in Pitkin County, as well as surrounding mountain-town counties.
“It seems unlikely that prices will correct to the extent that year-round residents will be able to purchase market homes or compete with part-time renters and newcomers for rental housing,” said the report.
Released in June, the Mountain Migration Report is a wide-sweeping examination of the coronavirus pandemic’s impact on housing and services in mountain-resort communities in Pitkin, Eagle, Grand, Routt, San Miguel and Summit counties. Those counties are home to Colorado’s top-flight resort towns — among them Aspen, Breckenridge, Snowmass Village, Steamboat Springs, Telluride, Vail and Winter Park — which have attracted increased demand not only because of people relocating due to the pandemic, but also because of civil unrest, the report said.
There’s a fallout that comes with that, said the report, which made a call to action of sorts to community leaders in the region studied. The report recognized that some potential solutions to consider are taboo — like building affordable housing on such public property as “school lands, oversized parking lots, and prized civic properties like adjacent federal lands and, (gasp) open space.”
Yet “we don’t mind going out on a limb here. May this report be a wakeup call for local leaders, a renewed call to action for those already involved in tackling community challenges, and a reference point for those seeking to understand the trends so they can have a positive impact on the places they live. The consequences are real,” wrote Jon Stavney and Margaret Bowes in the report’s introduction.
Stavney is executive director of the Northwest Colorado Council of Governments, which partnered with Colorado Association of Ski Towns, headed by Bowes, to launch the study. Supporting grants also came from the Colorado Department of Local Affairs and the Economic Development Administration.
Moving to the mountains
High-level employees and executives once strapped to their office chairs in Manhattan or L.A., and also with the financial means to buy or rent in the more expensive resort towns, have been taking their work to higher altitudes.
Those “location neutral” workers already were relocating from metropolitan areas prior to the pandemic, a trend the coronavirus “rapidly accelerated,” the report said.
Those remote workers, however, don’t fill local jobs and they “outcompete local workers for housing,” the report said. “This hurts the ability for local businesses to find, keep, and attract employees, lowering the level and quality of services they can provide to residents and visitors alike. This has been a struggle for resort communities for years; and is primed to get worse, at least in the near term. Businesses, existing residents, and communities may face a tough transition in the years ahead.”
Visitors also have stretched out their vacations into seasonal rentals. Add in the investment buyers and the local workforce, and the housing market gets even tighter.
“High part-time resident demand for homes, visitor demand for vacation rentals, and investment buyers were all competing for the scarce housing inventory with residents who make their living locally,” the report said. “The increased housing demand fueled by the ability to work from home and, to a lesser extent, COVID fears and civil unrest, has further added to this competition, causing an explosion in home prices and plummeting inventory.”
Aspen and the rest of Pitkin County fit the bill for a “trend that will continue to make mountain towns popular places to live for location neutral workers,” the report said.
If high real estate prices are a gauge for popularity, then Aspen is in the running for prom queen.
The average price of a single-family home bought in Aspen in 2020 was $10.38 million, 47.5% higher than the $7.25 million average in 2019, according to data from the Aspen Board of Realtors. Last year, in Aspen alone, also generated 176 purchases of single-family homes listed for sale, 77% higher than 99 of the same-type transactions in 2019, according to the Board of Realtors.
And that real estate bubble people talked about popping in 2021? Hold that thought.
“Some correction is possible for home prices and rents; however, the wide perception among area real estate agents was that the high-demand, short supply housing market is here to stay, at least for a while,” the report said.
Through May of this year, 48 single-family homes listed for sale in Aspen alone sold for an average price $12.1 million, Board of Realtors statistics show. Residential inventory in Aspen also was at it lowest level in May since 2009. There were 137 listings (that didn’t include deed-restricted residences and fractional ownership) that month, according to Andrew Ernemann of Aspen Snowmass Sotheby’s International Realty.
“Last year there were about 375 residential sales in Aspen and about 260 sales in Snowmass Village,” he wrote in a recent newsletter. “That means there’s only a few months of supply (current listings) in the entire Aspen/Snowmass market today, and we are just heading into the prime summer sales season.”
Ski-town counties in Colorado saw an explosion in real estate sales in 2020, with Pitkin County’s volume at the top of the mountain. Here is a look at the counties, their 2020 gross sales volume and the percent change from 2019 to 2020:
Pitkin $4.083 billion 129%
Eagle $3.492 billion 53%
Summit $2.319 billion 22%
Routt $1.345 billion 49%
San Miguel $1.151 billion 94%
Grand $994 million 39%
Source: Mountain Migration Report
The report also noted, “The other side is shrinking supply. Despite demand remaining high, many areas are facing a stagnant market and large drop in sales simply due to a supply problem. Some communities are already at critical low sale inventory. In Aspen, brokers are calling homeowners asking if they want to sell to find homes. For the most part, those that wanted to cash in have; others that might cash in are not because they will not find another home.”
Renters also are feeling the pinch. The cost of rent has risen 20% to 40% in the region, where in “Aspen, a three-bedroom townhome was renting for $6,800/month. When it turned over in October 2020, the rent was raised to $10,000/month,” the report said.
Ever since the pandemic disrupted local life as Aspen residents knew it, it was if the very issues the community had wrestled with over the years were doused with fertilizer — be it the lack of housing, the size of traffic jams, the shallow employee pool, crowded backcountry trails and the rising cost of everyday living.
As the report noted, mountain communities such as Aspen can feel the strain when they’re operating at seemingly near- or full-house levels with visitors staying longer and more homes being bought for longer term use, rather than just a few weeks a year.
“When stays are increased and extended over longer periods of time, as occurred during COVID, the stress on the community and infrastructure is felt by all,” the report said.
The survey yielded 4,710 responses from residents in the six-county region. Pitkin County had the lowest number of responses, 446. Summit County’s 1,428 responses topped the others’.
About 50% of the homes in the six counties the report covered are occupied by full-time residents, “with the rest being owned and occupied by part-time residents, investment buyers, and visitors.”
Given that half of those residences are occupied, “the influx of more owners and visitors staying in part-time homes and short- and mid-term accommodations can, in theory, allow the population in the area to double seemingly overnight; and this does not include visitors that may be in commercial (hotel) lodging units. … When stays are increased and extended over longer periods of time, as occurred during COVID, the stress on the community and infrastructure is felt by all.”