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Second homes and their secondary effects

Lauren Glendenning
Illustration by Amanda Swanson
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Part-time valley residents escape the hustle and bustle of their hometowns to find tranquil landscapes and peace of mind in the mountains.

What they also find is scrutiny.

Second-home owners are criticized in the valley for sucking up real estate, driving up property values and boosting the need for workers who have no place to live.

But the valley’s second-home owners also contribute to the area. They spend an average of 64 days per year in their homes, which are typically either vacation or investment properties, but pay the entire year’s worth of property taxes. When they’re here they spend money, adding to sales tax revenues while not requiring too much from local government services like education and public works, said Peter Runyon, an Eagle County commissioner.

“Second-home owners are a double-edged sword; they’re a blessing and a curse,” Runyon said. “But it’s not quite as black and white as it might seem to be.”

The National Association of Realtors studied second-home owner demographics in 2006 and found that the median age of vacation homeowners is 59, while the median age for investment property owners is 55 ” the same age range that is most common among Eagle County’s second-home owners. Investment property owners typically buy properties they intend to sell once the value increases significantly. Some rent them out in the meantime, while others might vacation there until it’s time to sell.

Vacation homes are usually about 220 miles from the owner’s primary residence, and investment owners typically live within 10 miles of their properties.

Sixty-four percent of Eagle County’s second-home owners consider their properties vacation homes. The rest call them investment properties.

The Northwest Colorado Council of Governments, which includes representatives from Eagle County and its localities, has studied the local impacts of second-home owners extensively. In 2004 it looked at the social and economic effects of second homes and followed up with a 2006 study of “transitions” in mountain communities, released earlier this year.

The studies tracked the demographics of second-home owners, their reasons for buying homes here and the amount of time they spend in their homes, among other statistics.

The county assumes that when property tax bills are sent to a different address, the unit is likely a second home. It’s not an exact science, but it’s a starting point for demographers.

Based on the 2005 U.S. Census for Eagle County, demographers determined that about 36 percent of the county’s homes are unoccupied throughout the year, which is representative of at least some of the total of second homes here.

Comparatively, the Town of Vail had a 66 percent vacancy rate, but vacancies don’t necessarily represent the number of second homes because renters might occupy many of the homes.

When homes are worth upwards of $1 million, though, owners tend not to put them into the rental pool, said Dale Bugby, president of Vail Resorts Rentals, a property management company. Of 142 second-home owners surveyed by the council of governments, almost 40 percent own homes here that cost more than $1 million.

Nebraska doctor Barrett Klemm, 44, has been a vacation homeowner in the valley since 1992. He’s made money from several properties and upgraded his vacation homes either in size or location. He’s been coming here since he was a kid, and now he’s considering moving here full time.

“I’ve been successful enough that now I’m pondering becoming a ski bum,” he said.

The part-time residents studied are typically in their 40s, 50s and 60s, and most make no less than $200,000 a year. Nearly 20 percent of the part-time residents surveyed make more than $1 million per year.

But for Klemm, part of the reason he likes Vail so much is because everyone blends in together and peacefully coexists. From the “lifties” and bartenders to the rich entrepreneurs and retirees, “no one gives a hoot on what you have in your pocket, at least not that I see.”

Runyon said the downside of second-home owners is that locals see second homes as houses on a hillside, but “in truth, they’re little factories.”

Building a large home requires a lot of workers, and the home requires an ongoing workforce to service it once it’s built, he said.

“Even if (the second-home owners) never come here, the home is an asset and they want to maintain it,” Runyon said.

The Council of Governments’ study shows that part-time residents use all kinds of services, from landscaping and snow removal to housekeeping, childcare, butlers and personal trainers.

The people who work in these service industries are usually downvalley residents, because housing costs upvalley are through the roof, said Jeff Schroll, Gypsum’s town manager and the vice-chair of the Council of Governments. And all the commuters create yet another problem: traffic.

Critics say part-time residents have a low regard for the environment with their multimillion-dollar, energy-sucking homes ” and because that’s exactly what many of them demand, that’s what the developers are building, said Avon Mayor Ron Wolfe.

“That’s a big problem for affordable housing,” he said.

Once the downvalley real estate markets become out-of-reach for the average worker, Eagle County could face a serious workforce crisis ” dwarfing the one it faces today. In neighboring Garfield County, a booming oil and gas industry means workers who live there will likely stay there rather than commute up here for work, Wolfe said.

“We’re in an incrementally greater problem than we’ve been in in the past,” Runyon said. “We’ve always had that safety valve of moving downvalley (for workers), and that safety valve is closing.”

The more a home costs, the less likely its owners will rent it out, Bugby said. Retirees and aging second-home owners take homes out of the rental market when they’re paid off, he said. Many of those owners also might cash in on selling their home for a larger one ” one that costs more and wouldn’t be rented. The home they sold is now more expensive, too, which essentially takes two properties out of the rental pool.

“I haven’t really added any rental units to speak of in the last couple of years,” Bugby said. “I’d be curious to see if anyone is really gaining any rental properties.”

Lisa Agett, of Vail Property Sales and Management, said she hasn’t noticed a loss in rentals, but she has noticed that several homeowners’ associations are restricting owners’ property rights by not allowing short-term or seasonal rentals ” another jab at the average worker who can’t afford to live here.

But the seasonal worker benefits from the market that Vail and surrounding towns are attracting, said Jim Lamont, executive director of the Vail Village Homeowners Association.

Vail is going through a movement tailored to bring in the high-end destination guest, rather than depend on the day skier, or “brown-bagger,” he said.

That, in turn, means the service worker can make more money, he said, but it won’t be enough to live locally.

“When politics is controlled by the construction and real estate industry, affordable housing will never really be addressed,” Lamont said.

Lower income seasonal workers aren’t the only ones affected. The young professional doesn’t have a lot of options here either, Wolfe said.

A developer made a point recently, Wolfe remembers, that there’s a need in the area for high-end rentals, too, because the sizable pool of most rentals tends to be for the seasonal workers.

“There’s not a lot of product coming on the market that even very successful local people can afford,” Wolfe said. “Unfortunately, it’s squeezing out the middle class.”

Wolfe said the town of Avon wants to try to influence the mix of housing that developers build by providing “incentives and motivation to produce smaller homes in a price point that young professionals can buy.”

It won’t be a specific policy change, Wolfe said, because every project is different and the solutions are negotiable. The developers of Avon’s Westin Riverfront Resort and Spa, for example, contributed money to the town’s housing fund. The complex also has public benefits, such as a park, railroad crossings and a public plaza ” all somewhat overshadowing the complex’s impact on housing.

“You can’t go 100 percent against just housing and ignore the other things,” he said. “You’ll get negative consequences.”

In Vail, Lamont said the affordable housing program that’s been around since the 1970s is aimed at maintaining the middle class. Deed restrictions and caps on home value appreciation is all for the middle class, he said. But everyone can’t “have their cake and eat it too” ” meaning the middle class that ends up living in such places wants to take part in appreciation too. “Many people who come here have the expectation that they are owed a similar lifestyle to those who pay fair market rate,” he said.

“The open market ownership drives the market everywhere,” Lamont said. “The American ownership and capitalistic system isn’t going to easily adapt to a European socialist system, which is what’s being promoted here.”

Only 12 percent of the 142 second-home owners who answered a 2006 Eagle County survey said job opportunities were important to them, proving that many of the valley’s second-home owners are retired or can operate their businesses ” or multimillion-dollar stock portfolios ” from the comfort of their second homes.

“A lot of them are now telecommuting and working out of the home,” said Doug Westenskow, the research project manager for the Northwest Colorado Council of Governments.

In Cordillera, nearly 75 percent of the homeowners in the posh community near Edwards call someplace else home for most of the year. It’s hard for many of them to serve on the boards and commissions that meet monthly when they’re only in town sporadically. But that doesn’t stop them from pitching in and volunteering, said Dan Sweeney, president of the Cordillera Property Owners Association.

Those who can’t commit to monthly meetings still pitch in with the more seasonal committees, such as the Vail Club committee in the winter or the landscaping committee in the summer.

“It will probably always remain a community where less than half the homes are occupied by full-time residents is my guess,” Sweeney said. “We try very hard to create a sense of community for those who don’t have the opportunity to be here all the time.”

The Cordillera Motorcycle Club alone, through its charitable foundation, has given nearly $1 million to Vail Valley charities since 2002. Most of the club’s members jet set around the globe during a large chunk of the year. The rest of the time they’re playing golf or skiing in the valley’s playgrounds ” and they’re usually doing those things together.

The second-home owners who are moving here permanently tend to be very involved in the community, Runyon said. But while they might bring a lot to the nonprofit and volunteer world, “they bring very little to the workforce.”

Lamont said the Vail Village Homeowners Association’s active members are the ones who anticipate moving here full-time at some point. Those folks are generally getting ready to retire and view their Vail Village home as a great place to do that. Or they might want to sell that property to make some money that would help them buy a larger home somewhere downvalley.

The second-home owners who are less involved in the community are reluctant to get involved because they’ve come here to avoid that kind of stress, Lamont said.

Klemm is a perfect example. He’s been very involved in the community he lives in back in Nebraska, but plans to tone things down if he moves to Vail permanently. There’s an exceptional quality of life in Vail, he said, and “it can be as busy as you want it to be.”

Lamont says many part-time residents feel the political system isn’t representative of their community. They have a value system that isn’t reflected in local government, he said. The community’s lack of involvement might have to do with their lack of awareness, which Lamont blames on local government and media.

“When one invests millions into a property, it’s trite to assume they don’t care about the (local government) agency,” he said.

Alan Kosloff, a former part-time resident who now calls Vail home, thinks there’s a new trend of new full-time residents becoming more involved in the community. Kosloff, 66, has served on several local boards of directors, is president of the Vail Village Homeowners Association and is an active skier. He sees many people like himself moving to the valley, which “is going to have a significant impact on the way communities are run in Eagle County.”

“People like myself who have a history of being active are moving to a community and looking for something to do,” Kosloff said. “They’re not going to ski or play golf every day, so they’re going to want to get involved and serve on committees … it’s a real growing asset for the community.”

Second-home owners in the valley are always going to be here, but in recent years there has been a migration of sorts ” second-home owners are increasingly making the valley their primary residences.

Of the second-home owners surveyed in the council of governments’ study, 12 percent intend to retire here, about 4 percent plan to move to their second homes full-time and 54 percent said they plan to visit more.

For those who don’t have the money to move to Florida or Arizona once their ski legs give out, aging in the valley means a need for more senior services, like handymen, grocery shopping assistance, nursing homes, assisted living facilities and retirement communities, the Council of Governments’ study shows.

But Runyon isn’t so sure that extensive senior care, such as assisted living facilities, will be so necessary here. Only time will tell, he said. High alpine environments aren’t very conducive to senior living in the first place, and Wolfe suspects aging seniors will move to lower elevations.

Since retirees spend most of their money on goods and services, it stabilizes the economy, the study found. This age range also uses social, police and school services significantly less than the younger population.

Kelli McDonald, the town of Vail’s economic director, said the town is starting to look at the effects of the second-home owners on the town’s services. The more units that are occupied, the higher the positive impact is on the economy, she said. The town is working with a consultant currently studying the same effects in Aspen, which McDonald said would hopefully help Vail figure out the impact. And with so many new developments that will have part-time residents coming on board, such as the Arrabelle, Solaris and the Four Seasons, it will be hard to tell, she said.

“I think we will be able to refine a lot of this information within the next 12 months,” she said.

The Northwest Colorado Council of Governments is also planning more follow-up studies on second-home owners and their effects. From 2003 to 2006, the years when it did the first two studies, there was a decrease in both second homes and rentals ” a likely sign that theories of second-home owners moving here full-time are not just theories. But Westenskow said the studies were probably conducted a little too close together to track any significant trends. He said the council would probably start studying this every five years or so.

“There’s a certain mental image of the community that everybody here is young and strong and active,” Kosloff said. “There’s no senior facilities around really, and we need more of that.”


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