Housing surplus continues
November 26, 2004
EAGLE COUNTY - If you've moved here for the ski season or longer, one thing you won't have a hard time finding is rental housing.
Numbers released in a housing survey conducted by the Colorado Division of Housing show nearly one in five apartments in Eagle County - 19.9 percent - were vacant in September. That's a smidgen lower than the 20.4 percent reported last February.
It's the third consecutive year of a glut of rental housing and it isn't unique to Eagle County. The surplus extends to nearly every resort town in the state.
That's a departure from previous decades of historically tight housing markets that most resorts have experienced, the report states.
But vacancy rates declined in September to 8.9 from 11.1 percent last February.
"All of Colorado's resort rental markets reported higher than the state's 8.9 percent average, except Glenwood Springs," the report stated. "Aspen's vacancy rate remains high at 11.1 and Summit County showed a substantial increase from 7.4 last February to 14.5 in September."
Compare that to the mid 1990s when housing in Vail was so tight that one adventurous skier spent winter nights camped in his vehicle in the Vail parking garage.
Source of the surplus
In Eagle County, a combination of factors is causing the surplus, rental professionals say.
The slowdown of the booming construction industry here that peaked in 2000 reduced the demand for housing when construction workers left. At the same time, continued low interest rates have allowed renters to become owners.
"The entry-level housing market is hot right now," said Rick Bolduc of Bolduc Realty Management in Avon. "Tenants are becoming owners."
On top of that, several large affordable housing projects, like Avon's 244 unit Buffalo Ridge, Two Rivers in Dotsero and the 146-unit Vail Commons and others, have opened in the last two years, adding to the supply.
Several of the large projects have been promoted by municipalities like Vail and Avon that want to attract and keep more locals in town in the face of ever-escalating property prices driven by the second-home market.
"You can trace it back to 9/11," said Jerry Flynn, owner of Polarstar Properties, which oversees 350 rental units in Eagle County. "Things slowed down in the valley when construction trades left the valley, coupled with people buying homes, and there was an increased supply of new units."
Flynn thinks the state's survey overestimates the vacancy rate and that the supply has tightened up a bit since September, he said.
Surveys his company has conducted indicate the vacancy is somewhat lower, at perhaps 15 percent, Flynn said.
The vacancy rates at the 294-unit Eaglebend apartments in Avon, the largest rental complex in the valley, is at 4 percent and at the 50-unit Kayak Crossing in Eagle-Vail, it's 8 percent, he said.
"It's not any worse than last year," he said.
The glut of housing affected more than just rents and supply. It also changed the housing plans Vail Resorts had for 40 acres between Avon and Singletree that had been part of a large U.S. Forest Service land exchange.
The company last summer declined to pursue the land exchange because the need for housing decreased, a former company official said.
And Buffalo Ridge made headlines earlier in the fall when it received a $200,000 grant from a county housing board because it had had difficulty paying construction loans and leasing units. The property is now nearly fully leased, according to officials.
What about rental rates?
Rental prices are prisoner to the same economic forces of supply and demand that other commodities are.
"It's a great time to be a consumer," Bolduc said. "It's the basic supply/demand thing. We're overbuilt and running with a greater number of vacancies then we've had before."
Bolduc attributes the surplus of housing to the entry of governmment-supported housing projects over the last few years.
"The pendulum has swung a little further than in the past because of the role governments have decided to take locally," he said. "Absorbing the excess units will take at least two years."
Two years ago, he was unable to rent one property during the ski season, Bolduc.
"That's the first time that's ever happened," he said.
State Demographer Jim Westcott, in an earlier interview with this newspaper, said continued strong second-home sales will drive the job market in resort towns. That, in turn, will create more jobs and more demand for housing that will absorb excess housing units.
The state survey says rents have increased, but local property managers say that's not entirely accurate.
"Prices have stabilized and perhaps dropped," Bolduc said, adding that for the last three years prices per bedroom have hovered in the $550 to $650 range.
Staff Writer Cliff Thompson can be reached at 949-0555, ext. 450, or firstname.lastname@example.org