The Vail Valley’s in for a bumpy ride
Vail, CO, Colorado
BEAVER CREEK ” We need to plan for growth, but growth is going to look a lot different in the future.
Those seemingly contradictory thoughts were two of the bigger pieces of brain food served up Thursday at an Eagle County-sponsored forum at the Vilar Center.
The forum, called “Resort Communities: Surviving the Economic Storm,” was put together before the stock market’s current convulsions, but the experts gathered for the event already had plenty of material to work with, since, among other things, the dollar has been falling steadily since 2002 and the current financial crisis was brewing for more than a year before the market crashed this month.
The speakers at the morning session were:
– Nariman Behravesh, the chief economist for Global Insight, Inc.
– Jonathan Schechter of the Jackson, Wyo.-based Charture Institute.
– James Chung, president of Research Advisors.
Here’s a selection of their observations, of the present and near future:
– Be wary of anyone who says this is the “worst economic crisis since the Great Depression.”
Among Behravesh’s PowerPoint charts were a couple of telling ones about the Great Depression. One showed that the stock market lost nearly 90 percent of its value then. The current stock drop is around 40 percent. National unemployment during the depression peaked at 25 percent. It’s hovering around 7 percent now, and peaked at 11 percent during the country’s last deep recession in the early 1980s.
That said, Behravesh added that the current economic crisis is a bad one. In the last year or so, more than $7 trillion in wealth ” that’s about half of the United States’ gross domestic product ” has vanished.
The people who have lost that wealth are less inclined to travel, or buy vacation homes, Behravesh said.
“Growth is not going to be a problem for a while,” Behravesh said.
– This isn’t just our fault.
Behravesh said the collapse of the subprime mortgage market was just the first domino in a worldwide “liquidity bubble” brought on by easy credit and other factors. When that bubble burst and banks started failing, banks essentially stopped trusting each other and the credit markets froze up. Effects of the government rescue program should start to really be felt in the next four to six months, Behravesh said.
– Don’t count on continued demand for second homes in ski resort areas.
Chung’s company specializes in research for resort areas, and has crunched both economic and demographic data.
That data indicates that people tend to be less interested in winter sports starting at about age 47. Coincidentally, that’s also the prime age for buying vacation homes.
What does that mean for the Vail Valley? It’s hard to tell, because…
– We’re not as much of a tourism-based economy as we think we are.
Schechter believes resort areas have become much less dependent on tourism than they once were. As evidence, his graphs indicate that visits to ski areas and national parks are virtually flat over the past 15 years. Meanwhile, the population and per capita income of those areas have gone way, way, up.
That shows people are moving to these areas are moving less for tourism than for lifestyle reasons. Many of the people moving to resort areas are working from their homes. Technology is only going to advance that trend.
– We’re not as bad off as other places.
One of Chung’s slides showed the excess housing inventory in several other resort areas. In the worst case, an unnamed resort had a 112-month backlog of unsold housing units.
The national average for unsold homes is 41 months at the moment. In the Vail Valley, there’s a 12-month inventory.
What that means, Chung said, is our valley’s going to take a hit from a national recession, but it won’t be as hard a hit as some other resort areas take.
“But make no mistake ” this is big, it’s bad and it’s broad-based,” Behravesh said.
Business Editor Scott N. Miller can be reached at 748-2930, or firstname.lastname@example.org.
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