A second-home economy
They come, they spend, they leave. Then they come back. Eventually, some of them stay for good.
They’re the High Country’s second-home owners, a huge driving force behind the region’s economy who often fly under the radar of the community but whose influence can be seen in many a local balance sheet.
They pay property taxes but don’t send kids to local schools. They can’t vote, but often wish they could. They’re anywhere from well-off to fabulously wealthy, and their homes range from humble studios in Dillon Valley or Avon to log mansions of 10,000-15,000 square feet in Beaver Creek, Aspen and Breckenridge.
And they are changing the face of the High Country as surely as the growth of the ski industry did in the latter part of the past century.
According to a 2004 report by the Northwest Colorado Council of Governments – a multi-government research and advocacy group ” second homes account for 34 percent of all outside dollars coming into Eagle, Grand, Pitkin and Summit counties. Winter visitors, in comparison, account for 28 percent of those outside dollars.
“This is a large class of people with huge incomes, it’s different from 10 or 20 years ago,” said Pitkin County Commissioner Mick Ireland.
Like most of the people interviewed for this series on second-home owners, Ireland said the surge in second-home ownership in the resort region ” and in the U.S. as a whole ” is directly attributable to the baby boomers reaching their 50s and 60s.
“In your 20s, you buy a pair of skis, in your 40s you buy a sports car,” Ireland said. “In your 50s, you buy a second home.”
All that buying activity has fueled record-breaking real estate sales in Eagle, Summit and Pitkin counties, with prices rising along the way.
“There aren’t many places like Vail, where it’s so desirable to have a second home,” said Peter Francese, a demographic trends analyst for marketing giant Ogilvy Mather. “The boomers are bidding up the price of what little real estate is available for second homes.”
Previous generations, Francese said, didn’t have this kind of money, or the desire and ability to move around quite so much.
As Ireland noted, aging boomers are only part of the issue. Another, he said, is the shift in government policy that allows the wealthy to hang onto more of their money.
“The bottom 60 or 80 percent of the population has seen little or no growth in their income, while the top earners have gone up 20 times what they had 20 years ago,” he said. “So you have a highly empowered class in prime second-home buying age.”
As Francese said, the dollars involved are staggering.
“The top 20 percent of income households take home 50 percent of all the money earned in this country,” he said. “We’re talking about people who have a second home in Florida, a primary in Boston or New York and a third one in Colorado to ski in the winter. Why not?”
As the social and economic effects of second-home owners have grown over the years, different resort communities have wrestled with the pros and cons of their presence. Perhaps more than anything else, the elevation of real estate prices has caused towns and counties to do what they can to create affordable housing for locals ” or at least talk a lot about it.
On the other hand, there’s no doubt that second-homes and their owners create jobs, according to Patrick Long of the University of Colorado’s Center for Sustainable Tourism.
“Clearly, there are business opportunities,” said Long, who teaches a class on sustainable tourism in Boulder. “As more people come to live here, especially the second-home owners, it creates opportunities for business development – but also greater pressure on public and government services.”
Ireland agreed, saying the older, wealthier second-home owners expect to pay others to do everything from shovel snow to pull weeds.
“You don’t get on a ladder and clean windows if you have money,” Ireland said.
That demand for services and the attendant job growth spurs its own set of problems, Long said, not the least of which is traffic congestion. Demographic projections estimate that, by 2025, Eagle County will have to import about 30,000 workers daily, Long said.
“There are all kinds of issues, from moving the visitors around to moving the workers to these places,” he said. “When many of these second-home owners declare them as primary homes, there will be even greater demands on the local transportation system. It’ll be a huge issue for the resorts to face.”
What Long describes is sometimes called “The Aspen Effect,” a term coined by Cornell economics professor Robert Frank. Eagle County Commissioner Peter Runyon said it’s a spreading phenomenon named for the place where it was worst earliest.
“The greater purchasing power (of wealthy second-home owners) allows them to bid up the price of real estate, slowly forcing the workforce away from the center of activity,” Runyon said. “We’ll all be dealing with it – it’s worldwide.”
Eagle County leaders have just started to meet to discuss topics related to the second-home owner economy and other growth and sustainable community issues, Runyon said.
“Many of these problems are not just for the towns and the county but for the businesses, the large employers,” he said. “Where are we going to put these people?”
For Ireland, the question of where to put people is the No. 1 concern for resort communities.
“We’ve created a pretty aggressive affordable housing program,” Ireland said. “It really works – we’ve been able to hang onto teachers, fire people, newspaper reporters who would have been priced out.”
Resort communities, Ireland said, can’t stick their heads in the sand and hope these problems go away.
“Transportation won’t get better, it’ll get worse,” he said. “There’s no friggin’ money, and the state isn’t going to build you a six-lane highway to clear it up, so you’re stuck with it.”
Understanding the greater forces at work in the economy is key to arriving at real solutions, he said.
“Once you understand where the problem is coming from, we can can cope with it, and not just indulge in wishful thinking that the market’s going to change,” he said.
According to Francese, that may not happen for a good many years. But today’s booming real estate market aside, he said it likely won’t last forever.
“In 10 or 15 years, there will come a time when the boomers are going to say it’s time to cash in and retire,” he said. “I’d hate to be the last guy to have bought a million-dollar condo in Vail, because when they move on, they do so with a vengeance.”
Alex Miller can be reached at 949-0555, ext. 14625, or email@example.com.
Vail Daily, Vail, Colorado