County housing in flux
The issue has undergone a dramatic change lately, however. Where scarcity and correspondingly high rental prices once ruled, a new market reality is now exerting itself. There’s even talk of a housing glut. Rents are down and supply is up.
If you’re a renter, things are good. More then 100 properties were listed for rent in the classifieds of this newspaper one day this week.
“We’re running vacancies over the last two years for the first time ever,” said Rick Bolduc of Bolduc Realty Management in Avon, who manages 45 properties. “We’re telling people (with rental properties) to anticipate a 90-to 120-day vacancy period this time of year. It’s not automatic any more.”
Bart Cuomo of Vail Realty agrees.
“We had a three-bedroom in Sandstone that five years ago we would have seven or eight applications a week,” he said. “Last summer we had to struggle to rent it.”
Lots of reasons
Reasons for the swing of the pendulum are largely economic, although some people believe they’re cultural – even strategic – in nature.
“The market has changed. There’s not the imbalance there has been for the last 15 years,” said Jerry Flynn of Polarstar Development, co-developer of the 248-unit Buffalo Ridge affordable-housing development at the Village in Avon. “A lot of the rental market has been from the construction trades that have left.”
“Because of a depressed economy and low interest rates, we have an increased availability of median-income housing,” added K. T. Gazunis, executive director of the Eagle County chapter of the nonprofit Habitat for Humanity, which provides properties for low-income families at below-market prices by using volunteer labor and providing no-interest loans. “When interest rates come back up and the bond market goes back up, then our inventory of affordable-housing stock will disappear.”
Despite the current supply of housing, Gazunis said, as many as 4,000 people in Eagle County soon will be needing affordable housing.
For Vail Resorts, the shift in the supply of housing has changed some of its development plans, said Jack Lewis, director for development. The company now wants to put 300 to 400 units of housing envisioned on a parcel in West Avon on the market, instead of renting them. That parcel, however is part of a convoluted land swap still in progress.
“For the first time in my (10-year) tenure in Eagle County, rental rates are actually decreasing. It’s unheard of,” Lewis said. “It’s certainly different than two years ago.”
Property managers say the shift in supply has been gradual.
“It’s actually been going down a little for the last five years,” said Lisa Agett of Vail Property Sales and Management, who’s been in the business for 20 years.
She said low interest rates have had an impact.
“They have been a great catalyst, allowing people to move out of the rental category and purchase property. Those interest rates may actually create a greater supply of rental properties, Agett said, because people can purchase property to generate income.
“Because interest rates are so low, things will cash flow at a lower rent than they used to, so it still makes sense to own rental property,” she said.
Rental rates are down 10 or even 20 percent, depending on the property, she said.
The area’s growing dependence on foreign workers may have contributed too, she said.
“Our worker base has changed. We’re not getting the young kids here for the ski season. We’re getting more people from other countries who seem more comfortable with more people per bedroom,” she said.
The national recession and the slowing it brought to the booming construction industry here has had a dramatic affect on the supply of housing, said Vail pioneer and Town Councilman Rod Slifer.
“The construction work force has shrunk a lot,” he said. “The construction that will take place this year is a lot less than in the past.”
The number of building permits requested from Eagle County seems to suggest that not only were there fewer new and large units being built, but that many of the projects requiring permits were renovations. The valuation of building permits last year was $135.6 million, 43 percent less than 2001’s $240 million.
Pass prices too
The situation encompasses many resort towns throughout the region. Part of it, some say, stems from a new strategy employed by ski resorts aimed at winning market share – and discounting season ski passes.
Nowhere, perhaps, is that battle as fierce as in Summit County, where Vail Resorts and competitor Intrawest battle over the 500,000-strong Front Range skier market.
“We’ve had to decrease rental rates to get properties rented,” said Mike Garver, chief executive officer of the Managers in Summit County. “In some cases we’ve rolled back prices 10 or 15 percent.”
Garver, who has been in Summit County since 1990, said he believes the ski-pass wars have had an impact on the demand for rental property.
“With the low cost of passes, people used to move here to get a job with a season’s pass,” he said. “Now they can live on the Front Range, where it’s cheaper, and drive up to ski. They’re the ones clogging the highways on weekends.”
Summit’s interim housing director, Eileen Friedman, noted an increase in supply and decrease in rental prices. She said two-bedroom units are renting for $800 to $950 a month, while three-bedrooms are renting for $900 to $950.
Flynn said the new units at Buffalo Ridge in Avon are leasing for $575 a month for a studio and $1,390 for a 1,200-square-foot three-bedroom apartment. Those rates include some of the utilities.
In Aspen and Pitkin County, where the Aspen/Pitkin County Housing Authority has 1,000 deed-restricted units and 1,000 rental units, the demand for rental units has decreased as well, said Victoria Giannola, assistant director.
The reason is a new 100-unit project that came online this year, she said.
Aspen is notorious for its pricey real estate. The median income in the county is approximately $60,000, Giannola said, while a 300-to 400-square-foot condo in town can cost as much as $300,000 and a small, single-family dwelling can cost $1.3 million, she said
“We’ve addressed a good chunk of the rental housing need,” Giannola said.
Deed-restricted units there are still coveted, however, and there’s typically 50 to 100 people bidding on available units, she said.
Pendulum to swing again
Some experts believe the oversupply of housing is a short-term correction to the rental market.
“The expectation is that the recreation industry will hang in there and that second-home sales will continue to be strong,” said State Demographer Jim Westkott. “That will create jobs, and it will dominate property values and continue to make it difficult for workers to find housing.”
Once the economy rebounds from its recession, building should begin anew here and begin to drive demand for seasonal and year-round housing. That fact was demonstrated in year-end real estate numbers. High-end properties have caused the average sales price of a home in Eagle County to soar to new heights – $643,642.
Demographer Westkott said he thinks the price will only increase with more development as property becomes scarcer, driving service workers and others farther and farther from resort areas.
Vail’s Slifer says he knows about affordable housing first-hand. He encountered it when he moved here from Aspen, and he expects the cycle to continue, he says.
“Housing was a problem here in 1962 when I had to live in a crappy trailer,” he said. “It is today and it will be 40 years from now. Harder to resolve will be the affordability.”
“Glut’ in the works?
The change in availability of rental property comes at a time when local governments and developers are bringing significant numbers of units of affordable housing to market.
Vail Realty’s Bart Cuomo is concerned there may be a glut of housing.
“With all the stuff being built, it’s almost as if there’s been an overreaction,” he said. “It’s my opinion there’s going to be a glut.”
Determining housing supply is an inexact science, and determining what is “affordable” is an ever grayer area. Eagle County makes those judgements based on cost and supply.
“It’s difficult to determine because things keep coming and going,” said Eagle County Planner Rebecca Leonard. “We consider (housing affordable) when someone is spending 30 percent or less of their (gross) income.”
Leonard’s office has generated reports outlining numbers that represent a best guess of the availability of affordable housing. There is a significant number of units in the works this year. Some of them are for lease, others are for sale with or without deed restrictions. Leonard’s list of projects throughout Eagle County that may be under construction or partially online in 2003 includes 741 units of rental or purchasable units:
– The 246-unit Buffalo Ridge at the Village at Avon.
– The 15-unit Barrancas in Avon.
– 100 units of the 433 planned at Two Rivers in Dotsero.
– 38 units out of the 282 planned at Berry Creek in Edwards.
– 142 units at Vail’s Middle Creek.
– 100 units at Gypsum’s Chatfield Corners
– 100 units out of 900 planned at Gypsum’s Buckhorn Valley.
– 200 units on the North Day Lot in Vail to replace those lost in the Lionshead redevelopment.
There are more units on the radar screen, too, Leonard said, including:
– 350 or more affordable units in Vail Resorts’ proposed West Avon land exchange.
– 45 affordable units at the Confluence in Avon.
– 15 units on the vacant Chateau St. Claire site, southeast of the roundabout at U.S. Highway 6 and Avon Road.
– Another 250 units at the Village at Avon.
– 58 more units in various projects in Eagle .
– 80 units in Edwards.
Boulder economist Ford Frick said Colorado’s resort towns are unique in their approach to affordable housing.
“I don’t know any place in the country that has as extensive public housing as the resorts in Colorado,” he said.
– Cliff Thompson
Cliff Thompson can be reached at 949-0555 ext 450 or email@example.com
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