Surviving a slump
Vail, CO, Colorado
EAGLE COUNTY ” Carol Warner rode out the last economic slump thanks mostly to luck. She’s a little better prepared if the economy dips this year.
Warner’s store, the Kids Cottage, has been in Edwards’ Riverwalk center for 13 years, so she’s ridden out a couple of slow spots in the local economy, including the national recession that followed the terrorist attacks of Sept. 11, 2001.
“I had sales people tell me I was just lucky to get through that one,” Warner said. “They told me a lot of other small stores didn’t make it.”
Now, with the Dow Jones Industrial Average at its lowest point since late 2006 and a seemingly endless parade of TV pundits doing their best to blab the country into another recession, Warner’s a little better prepared.
“I’ve cut back a lot on my summer orders. If I need to, I can order more,” she said.
Warner’s also being more careful about what she’s ordering, concentrating on more infant and toddler clothing and toys, since there seems to always be a good market for those items.
“Somebody’s always having a birthday party,” she said.
Larry and Jane Stone, owners of The Scarab in the Eagle-Vail, rode out the last economic downturn ” roughly from 2001 to 2003 ” by expanding and moving.
“Our banker said to us, ‘You know we’re in the middle of a recession,'” Stone said. “It was a good move.”
Larry Stone said his business grew during the last recession through a combination of carefully watching cash flow and scrupulous honesty with customers and vendors.
“That’s the best thing,” Stone said. “As long as you’re honest with customers and vendors, you’ll be all right. Nothing’s as valuable as a trusting relationship.”
OK, for now
During a winter that’s brought abundant and frequent snow ” and cars parked along Vail’s frontage roads ” for almost two months, it seems odd to worry about a slump. But one longtime Vail real estate agent said while people he’s talked to seem to be having a good season, cars along the frontage roads may not be a good indicator of prosperity.
“That’s really a marketing move by the parent company (Vail Resorts),” said Ron Byrne, who specializes in high-end property in and around Vail. “The company deeply discounts passes. These are motivated, discount skiers and not really destination guests.”
That said, Byrne said his part of the local real estate business is going strong, as it has been for the last several years. Prices for homes and condos are starting to exceed $2,000 per square foot.
“We’ve had our strongest year ever,” Byrne said.
But the customers Byrne caters to are largely outside of the national credit crunch.
“In fact, a cash buyer or someone who uses long-term financing may be getting a better deal right now,” Byrne said.
The offshoot of tightening credit requirements for mortgage applicants is more apparent in the western part of the valley.
Laurie Slaughter, an agent in the Gypsum office of Prudential Gore Range Properties, does a lot of work in the lower end of the valley’s real estate market.
People are still buying and selling homes, she said, but it’s become much harder for first-time buyers to get financing.
“There aren’t 100 percent mortgages any more,” she said. That means buyers have to have 10 percent, or ideally, 20 percent, of a home prices for a down payment. On a $400,000 home, that’s anywhere from $40,000 to $80,000.
“But people are still moving to the valley to take jobs, and they’re looking for homes,” Slaughter said.
As credit requirements have tightened, homes are staying on the market longer, and prices have leveled off. A year ago, it was virtually impossible to find a home in Gypsum for $300,000 or less listed in the Vail Daily’s real estate classifieds. Now there are a handful on the market.
“It’s probably not a bad thing that things have leveled off for the moment,” Slaughter said.
Riding it out
If ripples from a national economic slowdown do hit the valley, the people interviewed for this story all had advice for business people who haven’t been through a slump before.
In the real estate business, both Slaughter and Byrne said newer agents need to work harder, and pay even more attention to customer service.
“You need to focus on service, and advising buyers and sellers,” Slaughter said. “You need to keep working with them to understand where the market is right now.”
That advice is true at the upper end of the market, too, Byrne said.
“What I had to do during the last downturn was to focus on my core business,” he said. “You need to pay more attention to your customers. There are buyers who need to make their money work harder for them. You have a lot more questions to answer.”
Stone said he believes a small business plan should have as much flexibility as possible.
“You also need to manage your cash well, and trust your customers and vendors,” he said.
“Watch your buying, and think hard about your market,” Warner said. “But there’s no reason to panic, either. This will be a blip and we’ll recover, so don’t close down.”