Vail Valley Voices: Season brings success
May 6, 2011
Editor’s note: The following is an excerpt from the Vail Homeowners Association monthly report in May. We plan to publish weekly excerpts from the association, which keeps a close eye on economic and political trends in and outside the town. The newsletter’s electronic version with links to supporting documents is available at http://www.vailhomeowners.com.End-of-season numbers have yet to be officially posted. However, there is a sense in the business community that it was one of the best. Some are speculating that not only were the total snow fall records topped, but the long standing glass ceiling of 1.6 million skier days may have been exceeded as well. Town of Vail sales tax receipts marginally lagged behind the most recent high set in the 2008 winter season.Judging from the flood and diversity of foreign languages encountered on the streets, the weakened dollar appears to have drawn in record numbers of international visitors. According to hoteliers, the Mexican market predominates with a strong presence from Brazil, Argentina, Venezuela, Australia and the United Kingdom. Domestically, adverse weather dampened enthusiasm from some East Coast markets.There are business people saying, unlike last ski season, consumers are spending more freely across a much broader spectrum of goods and services. The season’s success may well have vaulted the Vail brand back to the top position in North America, perhaps even globally. Vail, it is being said, has regained its unique “adventuresome spirit” of greatness. For those laboring in the vineyards, there is a push to sustain upward momentum through the summer and beyond. If tourism market growth can be sustained, there is a higher probability residential property values will float upward as well.The broader viewAmerican consumer confidence has been making gains in recent weeks because of improved corporate earnings and employment numbers, according to the Bloomberg consumer comfort index. The gains are fragile and could be negatively affected by climbing gas prices and declining home sales. Speculation persists over how much longer the federal government’s economic stimulus effort can continue keeping interest rates at historic lows, while saturating the economy with newly minted cash (quantitative easing 2), which risks hiking inflation rates.Warnings by Standard & Poor’s, a financial credit rating agency, indicates that U.S. government debt must be reined in or suffer severe economic consequences. The risk of default on the national debt is not likely, according to other analysts. Either way, this leaves Americans with few options other than to economize on their lifestyle expectations. The political mood of the nation remains gloomy.Britain, which took drastic steps to curb government spending, may be a harbinger of what lies ahead for American households. The U.K. economy is experiencing a downturn in retail sales as disposable household income is declining faster than at any time in the past 60 years. Inflation caused by higher fuel and food costs accompanied by weak personal incomes, rising taxes and a fluttering real estate market has caused consumer confidence to decline. These factors have caused the first year-over-year decline in disposal income in 30 years.Nationally, housing prices continue a downward trend with a negative 5.7 percent year over year decline in February, with Colorado down 12 percent. The rate of new home construction and sales of existing homes are expected to remain tepid. The exception is the purchase of bank foreclosures and distress sales. New home purchases increased in March, which is a positive sign.Foreclosures leveling offHigher foreclosure rates cause a greater drag on home values. There were fewer foreclosures in Eagle County compared to this time last year, a positive indicator for real estate values. However, dollar figures are up due to some large properties that have gone into foreclosure. There are those reckoning the leveling off is because the worst of the job loss related foreclosures occurred last year. Eagle County unemployment has improved slightly compared with the same time last year. With no major development projects forecasted to start construction, new employment opportunities will be in the lower wage services sector.Building, real estate and property taxesPace of Vail building permits down: Town of Vail first-quarter building permits have dropped below 2010 levels. There are no large construction projects except those funded by the town of Vail. In the private sector, remodels and residential additions predominate. There are those in long established Vail businesses who have seen the potential that the Vail renaissance is generating. Some now have greater confidence in taking the personal risk of reinvesting in upgrading and remodeling their family-run businesses, hoping that they will reap dividends for years to come.Local first-quarter real estate sales slower: According to Vail Valley real estate sales figures, a local analyst is reporting that the Vail Valley real estate market is trending a bit slower than last year. Land Title statistics show that with all real estate transactions through February, dollar volume is down by 18 percent; also the number of units sold is down by 14 percent from 2010.A more current first-quarter analysis by Vail Prudential Realty of residential properties shows the number of units sold on a par with 2010 (178 to 174) but dollar volume is down 22 percent from 2010. The average sales price is approximately $1,057,000. By comparison, the first quarter in 2010 had an average sales price of $1,364,000, 2009 averaged $1,570,000 and 2008 was $1,772,000. Correctly priced properties are selling.The town of Vail is reporting real estate transfer tax collected through March for major redevelopment projects to be flat. Collections not related to redevelopment are down 14 percent from this time last year.Decline in real estate values equals lower property taxes: Realtors have been consistently reporting that property sales have been discounted from the 2007 market high between 20-40 percent. Property values for the purpose of taxation are reappraised every two years based upon comparable market sales within the first 18 months of the biennium. The new appraisals are expected to be out May 1 with the average projected to be 25-30 percent less than the previous biennium valuation.All property owners have the right to appeal (protest) their propery value directly with the Assessor’s Office between May 1 and June 1. Appeals can be made in person, by mail or fax. Lower property tax revenues not without potential consequences: Outmigration of the construction workforce, accompanied by a decline in state funding and property tax revenues has caused the Eagle County School District to cut 40 jobs, 30 of which are teaching positions. Voter attitudes are causing school officials to look at a tax increase election as a last resort.