Vail Valley Voices: Slower recovery better?
August 6, 2010
Editor’s note: The following is an excerpt from the Vail Homeowners Association monthly report for August. The Daily publishes 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 are indications that the “Vail on Sale” survival strategy, which has dominated the marketing strategy of Vail businesses for the past 18 months, may be on the wane.
The conversation at a recent meeting of local businesses revealed a shift from crisis to acceptance of what it is now required to survive the economic realities of the new normal.
The quest for customers used to be all about increasing gross profits. Now it’s about protecting the bottom line by keeping costs down and value up.
The community’s economy is no longer getting worse for many businesses. However, they say it is getting better, but at a much slower pace than they initially anticipated.
The emphasis, some are voicing, needs to be on giving better value rather than the wholesale discounting of merchandise or services. The proliferation of hastily crafted “sale” signs that commonly adorn local storefronts is a clue that many businesses have not yet bought into the “better value” strategy.
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Real estate upswing
Closings on pre-recession real estate residential contracts in Vail are primarily responsible for increases in sales volume and real estate transfer tax revenues for the town.
Countywide property sales are above the 2008 low, but an unprecedented number of property listings remain on the market.
Discounting on list prices continues between 14 percent and 40 percent. Some analysts speculate that buyers are continuing to take a wait-and-see position because they remain unconvinced that prices have reached bottom.
Custom-built, higher-end residential units are closing in most of the Vail Renaissance residential complexes. These top-of-the-line residential projects are all now in the final stages of completing construction.
However, defaults at closings on pre-recession contracts are predicted. Some Realtors are advising prospective clients to buy a property to use, not for the investment value.
More speculative development to the rescue: There is a belief among some Realtors that because of the bargains to be had, institutional investors will enter the market to buy up assemblages of units.
Some analysts are saying large banks will be reluctant to finance new large development projects in Eagle County for a long time to come because some have had to take over notable projects that fell into hard times.
Yet others say that if the circumstances are so difficult, why then are there large speculative developments proposed for Vail, Minturn, Edwards and Wolcott providing for several hundreds of new residential units and thousands of square feet of more commercial space working their way through governmental approval processes?
Conventional wisdom says they are getting their asset bottom line ready for the next hoped for wave of speculation — when it comes.