Summer business all about the show
Editor’s note: The following is an excerpt from the Vail Homeowners Association monthly report. We 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.
In the summer months, the success of headliner events in Vail plays a major role in setting and sustaining economic momentum through the season.
Slippage occurred during the 2012 summer season following two years of an upward trajectory. The Pro Cycle Challenge time trials in August 2011 were the high-water mark for that year’s successful summer event season.
Hotel bookings for 2013 are somewhat lagging behind last summer’s pace, but expected to be on track once adjustments to the summer marketing program are made and the season hits its stride beginning with the Fourth of July. The Pro Cycle Challenge time trials are returning, complementing a strong summer season of concert and dance performances.
The shoulder season business months of May and September-October are seeing modest increases, which is being credited by some to efforts in promoting conferences and conventions.
Some speculate that significant increases should not be expected every successive season as marketing numbers are working from a higher base each year.
Others say Vail has too much going on and that it needs to spend more on quality rather than quantity.
Status of town’s reserve funds: The town of Vail Fund Balance declined from a 2010 high of $93.5 million to $82.7 million in 2012 attributed to buying down the debt on the Timber Ridge affordable housing complex in the hopes of putting it on a path of redevelopment.
Should the town proceed with some of the large projects it has under discussion, such as a new municipal building (estimated to cost around $15 million), further declines should be expected.
The replenishment of the reserve funds is in large measure dependent upon real estate sales, which have the potential to improve, but have not yet fully recovered. This causes some analysts to recommend a continuation of cautious spending practices by the town.
Early year resort real estate sales off: The town’s revenue tally reports Vail’s real estate transfer tax collections through June 25 are down 31 percent from the same 2012 period. The Vail multiple listing service shows that unit sales are minimally down, but dollar volume is down by 18 percent from last year at the same time as reported by Prudential Colorado Properties. Local inventories of available properties are shrinking, but some analysts expect them to expand over the coming months.
Through March by comparison, the Aspen-Pitkin County Market, Land Title reports a 22 percent dollar volume decline.
While the resort market is lagging, mid- and lower-valley markets are making progress, according to the Land Title report for April.
Local analysts say some buyers believe that sellers of recreational properties are still unrealistically high in their pricing, especially in the higher end of the market.
New construction permits limited: The town of Vail’s building permit valuations are running behind 2012 for the first half of the year. New construction thus far in the season is limited to homes and remodels. Anecdotal reports from local building subcontractors indicate that there is plenty of work, which is a sign that labor costs may be on the rise, and that will increase building costs.
Awaiting the reopening of the development floodgates: Large project developers are beginning to explore projects that could continue the image makeover in Lionshead.
There are also developers who appear to be venturing into uncharted territory in the Golden Peak neighborhood.
Others are making adjustments to projects that received approval prior to the recession, but are still waiting for market conditions to ripen.
Audacious plans must stand the test of post-recession reality: There are analysts predicting that some of the more far-reaching development concepts will be audacious in their scope, playing to the desires of local governments to reignite that portion of their financial portfolio.
There are those questioning whether there will be depth and longevity in the condominium market once it re-emerges because financial conditions are much different now than before the Great Recession.
Large inventory on the books: Vail has a large inventory of condominium units, spread throughout the town, awaiting developments that were approved prior to the recession.
The town itself has two major affordable-housing projects to bring to market.
There is a need to finish the redevelopment of several properties in Lionshead. Some are still awaiting town review and final approval. Should the herd effect cause several projects to go into construction simultaneously, it could potentially oversaturate the market, which has been the history of earlier building booms gone bust in Vail.
National housing market prices stabilizing: Unprecedented low-interest rates are affecting housing prices nationally, causing them to stabilize. But some urban markets are seeing banks begin to raise mortgage rates, and recent announcements by the Fed may signal the end to low rates.
Investor buying is shrinking inventories of saleable properties, which is motivating banks to complete the processing of a backlog of delinquent mortgages causing the foreclosure rates nationally to rise.