City officials in mountain communities are worried rising home prices are pricing the workforce out…
I thought it was ironic that Vail resorts announces a giant price drop to increase sales volumes of their passes while at the same time Breckenridge announces a proposed moratorium on nightly rental licenses. The opposing announcements were not coincidental and similar struggles are playing out in every mountain town. What does this mean for real estate?
Vail resorts drop pass price 20%
Vail Resorts has reduced all Epic Pass prices by 20% so more people can enjoy the slopes, the company said Wednesday morning. “We reduced pass prices 20% to make it easier for everyone to enjoy the mountains,” . In essence Vail announced a massive price drop to spur an increase in volume of pass sales which in turn will spur more visits to the resorts to provide more opportunities for sales of food, lessons, lodging, etc.. to increase the bottom line.
How will the reduced Epic pass price impact Breckenridge
The reduced pass price will no doubt increase volume and much of this volume will be drive up volume. With the reduced pass price there will be large increase in sales throughout Denver and the front range. The closest resorts on the Epic pass are Breckenridge and Keystone which are a short drive (depending on I70) for the Daytripper from the front range. Unfortunately the day trips have huge impacts on towns like Breckenridge. Before Covid and the reservation system it would routinely take well over an hour to go about 15 miles from the I70 exit and the mountain. Residents were essentially trapped every weekend and the mountain was nuts. With the reduced pass prices along with pent up demand look for the traffic and other impacts to grow substantially next season.
Breckenridge imposes nightly rental moratorium
Last summer was a tipping point with mountain towns overflowing with tourists and their impacts becoming more noticeable including traffic, crowded trails, etc… As more people move to the mountains full time there is a bigger push to diversify the mountain towns away from a free for all tourist economy. This is not unique to Breckenridge; you are seeing this same struggles play out in every mountain town throughout Colorado. Breckenridge is merely at the forefront due to its proximity to Denver has amplified the impacts.
At the last City Council meeting in Breckenridge, the counselors proposed a moratorium on nightly rental licenses to try and mitigate the impacts of tourism. Essentially the city would take a “break” from issuing anymore short term rental licenses until it can develop a plan going forward.
By placing a moratorium, the city is acknowledging that there are various issues because of “over tourism” including loss of affordable housing, traffic, impacts on residents, etc…
What is the impact of a nightly rental moratorium on real estate?
If you were buying a property with the intent of renting it heavily, the impact of the moratorium is huge. Fortunately to the entire real estate market, the moratorium will have no impact. Many of the newcomers to the mountains are not buying for investment purposes but for personal use. In Breckenridge and other ski towns there is zero available inventory and considerable pent-up demand which will lead to zero impact on real estate prices or sales.
Who will win the battle over tourism and nightly rentals?
It is ironic that Breckenridge is pumping the brakes on over tourism while at the same time Vail resorts is trying to supercharge the amount of passes they sell to drive more traffic and in turn tourism to cities like Breckenridge. Resort communities are changing and no longer just tourist destinations as more full-time residents move in. The struggles playing out in Breckenridge are just the beginning as resort towns begin to balance residents needs with tourism impacts. Vail might win the initial “battle” to increase tourism this upcoming season, but I’ll bet my money that Breckenridge will win the “war” over tourism. As more full-time residents move in, the trend to regulate tourism will supercharge; remember, only residents get to vote for the town council.
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Written by Glen Weinberg, COO/ VP 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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