Vail Valley Voices: Real estate a tough biz in Vail
Vail, CO, Colorado
Editor’s note: The following is an excerpt from the Vail Homeowners Association monthly report for September. We publish weekly excerpts from the association, which keeps a close eye on economic and political trends in and outside of the town. The newsletter electronic version with links to supporting documents is available at http://www.vailhomeowners.com.
There has been shrinkage in the number of local real estate agents. An industry observer reckons there are 700 agents operating in the Vail Valley area, which has been the norm for several years. The high (811) was in June 2007. Sources report that many of the experienced agents are “holding their own,” while others are less assured. Many are hanging on, hoping for a turnaround within the next 12 months. Sales, while on the rise, double over this time last year, are having marginal effect in reducing the inventory of available properties throughout Eagle County.
Foreclosures continue to rise: The foreclosure activity in Eagle County has reached thus far this year a high of $232.5 million in transactions as compared with the pre-recession amount of $5.4 million in 2007. Foreclosure rates are not abating in the hardest-hit Eagle-Gypsum area.
Town of Vail economy
Summer sales tax improving: The published numbers for July report a sales tax increase of 6.5 percent over last year. As of the end of June, across all funds and revenue accounts, the town is up 13.8 percent for the same period a year ago. (TOV Revenue Trends) The “Out of Town” category in the town’s June report showed a 21.6 percent bump upward from June 2009.
Much of the increase is the result of one-time sales of large shipments of furniture for development projects in the final stages of completion. According to a town of Vail report, some luxury hotel properties are reporting that both daily rate (3 percent to 5 percent) and occupancy are beginning to move upward. This trend is seen as a potentially positive sign for the Vail lodging industry.
Marketing logistics improving: The association’s effort to encourage the town and Vail Resorts to merge their summer and winter marketing campaigns is having a beneficial effect on summer business.
The credit, in large measure, goes to Vail Resorts for putting its Vail-based marketing expertise to work on the project. Progress was made in clarifying the marketing message and moving away from print to Internet-based promotions and social media.
Vail leads most major resorts according to taxable sales indicators through April this year. An analysis by the town reports that through April, the economic recovery is fragile and has not caused a significant change in demand for tourism or real estate.
Aspen is reported to have had a persistent 15 percent to 20 percent in-store vacancies, while Vail’s to date is but a small fraction.
Employment in a modest seasonal rebound: The Eagle County unemployment report for July is 7.88 percent, down from an 11.15-percent high in May.
The local work force will soon experience a quantum shift in the demand for employees who have experience in the tourism industry.
There will no longer be a strong demand for the construction trades. Competition is fierce for the work that is available. Many in the development business took up residency within the past 15 years. Their children have grown up in the valley. Current economic conditions have put their futures at risk.
The transient labor force cannot easily find work elsewhere. Many may remain locked in place until conditions improve. The continuing availability of public funds to create local jobs is in doubt.
Private sector economic development becomes the most potent tool to stimulate jobs. Vail and Eagle County remain highly valued destinations. There is ample inventory of residential property to attract domestic and international investors.
The vibrancy of the Vail lifestyle is dependent upon attracting and engaging a well-educated, youthful work force.
In the opinion of some observers, forward momentum in job creations is stymied because of the fractiousness of the local business community. There is a disjointed vision of the area’s future.
Ever Vail project a prime example: According to some, the development of a new town center in west Lionshead has fewer opponents as the recession drags on. It may be more of a two-way street than has been the recent popular perception.
There are those who speculate that Vail Resorts wants to add the $1 billion project to its bottom line. They see the need for the company to capitalize on the value of the project. It cannot afford to write it off.
There is an additional advantage because they don’t have to pay for the cost of the land; they already own it. Ever Vail could have a positive impact on the company’s stock price because of the latent fair market value of the project.
Vail Resorts will, if the town fails to approve the project, have to take their capital investment dollars elsewhere.
One of the consequences is the loss of a 1,200-vehicle, developer-built, parking structure that the town of Vail can ill afford to build itself – this in the face of demand for more low-cost or free public parking.
The badwill and potential for litigation generated by a denial may suit the objectives of those who believe that many of the qualitative aspects of the Vail lifestyle have been harmed by the magnitude of Vail’s urban development that has occurred in recent years.
It is being reported that a town of Vail research study is indicating that there is insufficient market justification for the amount of commercial space proposed for the project.
Company officials indicate that they may adjust their proposal downward, replacing the lost commercial space with additional residential units.
Many in the community are concerned that both town and company officials avoid a stalled multi-billion dollar project, like that occurring in the base village at Snowmass at Aspen.