Vail Daily column: Lack of inventory ups prices
Editor’s note: The following is Part 5 of a five-part series excerpted from a Vail Homeowners Association Visioning Vail Report. The association keeps a close eye on economic and political trends in and outside of the Vail community. The electronic version of the entire report with links to supporting documents is available at http://www.vailhomeowners.com.
Shrinking housing inventories increase cost of housing: A leader in the local development and real estate industry tells the Vail Homeowners Association that the current inventory of available housing in Vail is less than both normal (1,400 units) and pre-recession (2,400 units) levels, standing at 1,100 units by the end of 2015. It is this lack of inventory that is driving up housing prices.
Shifting housing trend from speculator to user: Sixty percent of home purchasers are new owners. Trends have shifted to buyers-as-users rather than, as in the past, for value speculation. This is a huge change across all price ranges. Buyers, who are typically 50 years old when they first enter the Vail market, want newly constructed units; nowadays, they are looking for smaller-sized properties.
Buyers-as-users could also have the effect of increased occupancy rates in residential units. A pre-recession government study of residential development reported that there was a resulting increase in job creation.
It was this study that led the town of Vail and Eagle County to adopt mandatory requirements that tied new construction to the development of more affordable housing units. Compared to pre-recession levels there has been minimal new construction and therefore a limited expansion of additional affordable housing units for nearly 10 years.
Government will need to help developers if they want growth: Post-recession financing of new construction must comply with more arduous regulatory requirements than those that existed prior to the recession. Developers are saying that local governments, rather than imposing regulatory mandates if they desire new construction, will need to make it easier for development.
The private sector, said a development leader, can no longer do redevelop by itself, it needs government involvement. Only one major commercial building has gone into construction since 2007. The government has limited cash to build affordable housing on its own; it will likely need to partner with private developers.
Town keeping pace others are not: The town of Vail, while it currently has ample financial reserves, is already tasked with keeping pace with tourism. It has a long list of projects which are in need of funding. The town has maintained a positive 1.9 percent year over year increase in tourism related sales tax revenues for 2015. It has maintained positive growth in revenues, in spite of the recession, due in large measure to the promotion of tourism and tax receipts from real estate sales.
Retailers worry: There are worries among some retailers that they are not seeing as positive returns as lodges, bars and restaurants from the expansion of tourism. They say the consumer mix is no longer right; it is too hard for customers to park, and there is too much competition for the types of clients to make doing business profitable.
Overselling the Vail experience: The increase in traffic and parking congestion, the apparent on-mountain congestion, the concomitant decline in skier safety and the tourism caused worker housing shortage are indicators that the Vail experience is being over sold; that quality is being sacrificed for quantity. There is a growing consensus that Vail needs to return to an emphasis on quality.
The Vail Homeowners Association will continue to shine a light on these issues and advocate sensible solutions. We invite you to join and add your voice to this process.