Vail Valley Voices: Some signs of growth begin to appear
Vail, CO, Colorado
Editor’s note: The following is an excerpt from the Vail Homeowners Association monthly report for May. We plan to 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
First order of business: Vail residential property owners are, as a result of the recession, hearing Realtors recommend lowering selling price expectations by 20 to 40 percent from the 2007 market high.
The Vail Homeowners Association advocates that the first order of business is to follow those pathways that will most effectively return the appreciation of property and business values.
There are some outside observers who have given a harsh assessment of Vail real estate prospects. (The Wall Street Journal)
However, local Realtors are reporting that since the first of the year a pattern has set in of steady month-to-month increases in property sales. (Land Title Guarantee market analysis)
The town of Vail is reporting first quarter construction activity in Vail is showing some signs of growth compared to the first three months of 2009. Building valuation totaled $6.44 million as of March 31 of this year, compared to $4.7 million during the same period in 2009, a 37 percent increase. Vail’s record year for valuation was $496 million in 2007.
Vail Resorts reports positive growth for winter season: While some local business owners are showing indicators that the worst may be over for the winter tourism segment of the local economy, other Vail merchants say that in their view net revenues have contracted by as much as 20 percent over the past 18 months.
There are others saying the community’s return on investment is not what it should be and needs to be improved. Vail Resorts is reporting winter season positive growth from its winter sports resorts over last year.
An end-of-the-year status report on the work force in Eagle County indicates that the supply of new jobs and the demand for affordable housing is decreasing.
Employment figures since the beginning of the year show a steady loss of jobs. Job numbers during the off-season will be an indictor of employment conditions within the county as well as the rate of foreclosures, which continues to rise.
Need more detailed business reports: The bellwether of economic success is measured by trends in town of Vail revenues from sales taxes, fees and real estate sales.
While the pace of the decline has slowed, a climb back to pre-recession values is predicted to be challenging and drawn out.
There are those saying that the town’s reporting methods are not refined enough to identify the full impact of the recession upon local businesses.
Banking on redevelopment renaissance: The community is banking on its redevelopment renaissance efforts to speed its recovery.
To some, the nearly 2-decade-long redevelopment is but a first step in Vail’s modernizing renaissance. A successful renaissance will also liberate economic and other forces from outmoded institutions and goals. To them, this is the phase that the Vail community is now entering. Reform is being given even further impetus because of new realities brought on by the recession.
Moving to a higher plateau: If a higher plateau of economic progress is to be attained, it is important to distinguish between reinvigorating traditional markets, supplanting those that are minimally productive and diversifying into new ones.
Vail, in their view, should now be working to build upon its established strengths to diversify its economy by developing new destination guest markets not only domestically, but from throughout the world. They see a need to replace those markets that have dissipated or been undervalued.
Restoring profitability: Until the profitability of the summer and winter economy are restored, there are those who believe the costs associated with the decades-long quest to infill the off-seasons needs to be sidelined.
Health and wellness is and will continue to be a steadily growing niche market for Vail, but it is faddish prone and as yet not proven it could produce an ample return on investment. There are those who doubt it will be comparable to the well-established draw of the winter and summer seasons.
Merging summer and winter marketing: It is reported that the coordination among groups responsible for summer and winter economic development is improving.
However, the need for strategies, both long and short term, to diversify or expand the more lucrative winter destination guest markets is still being given short shrift by government officials.
They provide minimal guidance beyond the distribution of $2 million in obligated tax receipts they spend annually on summer and offseason business promotion. As well, local chamber of commerce associations are cash poor and depend on the town for much of their revenue.
Taking the first step: It is said among local real estate developers that to enter a new market, it takes nearly 20 years of commitment to create a robust reoccurring client base.
The summer and winter success of the Latin American market is proof that the development of Vail’s international markets is possible, as witnessed by the vibrant performance of the Latin American market this past winter season.
Once a cultural critical mass is reached, long-term exponential and sustained growth over multiple generations is highly probable.
In Vail it is important to know that the growth of the Latin American market was created through the efforts of the private sector. Little direct effort has been made by the public sector to enhance this market.
No cheap seats: Local developers use a rule of thumb that to sustain the current high-end real estate market, it takes a prodigious $60 million income to afford a high-end $6 million residential property in Vail.
The available pool of buyers at this level from the United States has been substantially reduced by the economic events of the past two years. The domestic destination guest market for hotels and rental units has been affected likewise.
First steps are being taken: There are incremental steps being taken by some in the private sector to anticipate and diversify into new destination guest markets.
Exploratory forays have been conducted in Eastern Europe. The Asia-Pacific market is being assessed. Emerging markets with their growing middle and entrepreneurial classes are seen as offering potential for Vail as a “must visit” destination on the grand tour of winter and summer mountain resorts.