Anyone who has ventured into any Colorado ski town recently has noticed a profound change since Covid. Everything seems to be busy all the time, prices have skyrocketed, and longtime locals are quickly priced out. What is causing the swift changes and what does this mean for real estate prices, affordable housing and real estate regulations (nightly rentals, etc..)
What are the profound changes in Colorado ski towns?
Colorado is not unique. It seems like every tourist/recreational destination has been in high demand. This demand was supercharged from the pandemic. In Colorado, I’m now seeing huge changes in traffic patterns. Prior to Covid the weekend started Thursday afternoon and went until Sunday. Now the Weekend starts on Wed and continues through Monday, with peak times being extended to 4 days of the week. Living in a Colorado ski town, I’m seeing this in general traffic patterns and overall quantity of people in town. This change is happening in every Colorado ski town.
What caused the changes in peak visitation in Colorado ski towns
Covid put allot of the smaller ski destinations on the map as a great place to escape to during the quarantine. Furthermore, the work from home trend where people are in the office maybe 3 days a week enables workers to spend more time in the various mountain towns. For example they might work in Denver in the office a few days and spend the rest of the time at a second home or vacation rental in the mountains.
Will Colorado ski towns continue to see increases and changes to peak visitation?
I am seeing no indication that the increased traffic and increased peak periods will go away anytime soon. Even when we have a recession, I don’t think the bottom will fall out in the resort towns like in 2008 as there are now more full time residents and part time residents who work from the respective mountain towns.
The increase in volume and peak visitation has impacted real estate
With more people visiting and staying longer the delicate balance of workers in the various mountain towns has been severely impacted. For example, pre covid a business would need to really staff up for Friday, Saturday, and Sunday. Now with the traffic changes that business needs to staff up also for Monday and Thursday which is putting enormous strain on workers. This in turn has led to two huge changes to real estate:
- Real estate prices supercharged: With not only more people visiting the mountain towns, but also staying for longer, real estate has been off the charts. Demand has been increased for people that want to be able to work from the mountains for 2 or 3 days a week along with investors who can now get a higher return on their rentals due to higher utilization.
- Housing crisis amplified: More workers are now needed to service more tourists which is increasing demand on local housing. At the same time, with the surge in prices, more homes are being sold as rents cannot keep up with the increasing prices. Furthermore many of these units are being converted into short term rentals and vacation properties that are no longer in the rental market. The changing patterns and increased visitation have created a housing crisis.
Regulations now front and center
With tourism now at substantially higher levels and over longer durations, locals are becoming increasingly vocal about quality of life and trying to address the affordable housing issues. This has led to substantial legislative changes including:
- Limitations/bans on nightly rentals
- Increased Taxes on lodging for affordable housing
- Property tax increases to pay for housing
- Other Nightly rental regulations
- Other proposals to limit tourism impact; for example cutting funding for destination advertising
Summary
The mountains are in a radically new dynamic that shows now signs of abating. With new work from home patterns emerging, look for Colorado ski towns to continue to be a desirable place to visit and purchase property.
Remember only locals get to vote. The increased visitation had led to more conflicts that will ultimately lead to additional regulatory changes in the various ski towns to try and balance quality of life for residents, tourism, and affordable housing. We are just at the beginning of the new paradigm in resort real estate.
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Written by Glen Weinberg, Owner Fairview Commercial Lending. Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in Bloomberg, Businessweek ,the Colorado Real Estate Journal, National Association of Realtors Magazine, The Real Deal real estate news, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.
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