Will the Vail Valley run out of customers?
VAIL ” Are we running out of customers, or are we about to be hit by a wave of retirees that will overwhelm local economies with their demands for goods and services? It depends whether you’re talking to Chuck McLean or Jim Westkott.
Both McLean and Westkott were in Vail Friday to speak at the annual Mountain Real Estate Update, sponsored by the Burns School of Real Estate and Construction Management at the University of Denver. Both painted worrisome pictures, but for different reasons.
McLean, an Aspen resident who runs the Denver Research Group, a private consulting business, said he’s worried that the baby boom generation ” the roughly 90 million Americans born between 1946 and 1962 ” is rapidly losing wealth.
His figures indicate that as many as 60 percent of middle class retirees will outlive their retirement savings. People in the middle class retiring this year can expect their standard of living to drop by nearly 25 percent, McLean said.
Those people are losing wealth because the value of homes is dropping in much of the country, he said. More worrisome is the fact that baby boomers haven’t been saving for their retirement, McLean said.
Add in numbers that indicate that the U.S. population of men between the ages of 24 and 54 ” those who have traditionally been the biggest spenders ” is declining, and McLean worries that there won’t be enough people to buy the things produced by the U.S. economy, including second homes.
Westkott is worried, too, but for very different reasons.
Westkott works in the Colorado Department of Local Affairs as the head demographer, tracking population growth, household income and housing. He said numbers that show limited savings and ballooning credit bills don’t mesh with the tremendous accumulation of wealth that’s taken place in the country over the past 30 years or so.
In 1990, the Dow Jones Industrial Average was hovering around 2,000. Just before the end of the trading day Friday, it was above 11,700. Even considering the roughly 20 percent drop from the all-time high in October of last year, someone holding stocks in that index for the past 18 years has nearly sextupled their money, not counting inflation.
“How do you think people are spending more than they earn?” Westkott said. “It’s
because of wealth.”
Westkott and McLean agreed that the country has big problems brewing with its debt, roads and bridges and future Medicare payouts. And they agreed the current economic slump could last as long as another couple of years. But while McLean thinks we may be running short of paying customers, Westkott worries that retiring baby boomers are going to create a demand for services places like Eagle County aren’t prepared to handle.
While the market for mansions may dry up in coming years ” Westkott speculated that some of those large homes may be turned into duplexes or even condominiums in coming decades ” people still going to come, he said.
People are moving in droves out of cities across the country, Westkott said. They come because they’re attracted to placed with less traffic and crime, as well as better scenery than they can find in metropolitan areas. Many of those people have families and are still in their peak earning years, but many are also retirees.
Those people are going to demand services ranging from home health care to gardeners, he said. That means an ever-increasing demand for places for those people to live.
“I’m deeply worried that as you restructure, the potential is there to kill the golden goose you have now,” he said.
Business Editor Scott N. Miller can be reached at 748-2930, or firstname.lastname@example.org.