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Mountain News: Will the real estate glass ever fill again?

ASPEN, Colo. - Two theories prevail about how the current economic travails will ultimately affect mountain destination resorts.

ASPEN, Colo. - Two theories prevail about how the current economic travails will ultimately affect mountain destination resorts.

One school holds that if the balloon has burst, it will begin inflating once again - perhaps late this year, but perhaps not even for three, four or five years. This viewpoint sees drama, but no fundamental restructuring. Real estate, after emerging as the top-drawer economic player during the last 10 to 20 years, will revive to regain some of its former glory, although probably not to the same proportions of 2004-2008.

A second theory sees the lights being permanently dimmed. In this view, the real estate bubble that caused the profusion of big vacation homes will never again regain the vigor of the last several years, and perhaps not even of the last couple of decades. As such, the economies of mountain valleys will again be driven more purely by tourism.

Deep-thinkers gathered at a recent meeting in Aspen tended toward the latter view. "I don't see how anybody can say we're going to return to lost levels of prosperity," said Ford Frick, managing director of BBC Research and Consulting, a Denver-based firm. Frick, an economist, has analyzed mountain and other economies since the late 1970s.

Many people in the wealthy mountain towns had come to believe that their economies were recession proof. After all, even in the depths of the Great Depression, there were wealthy people in these places. The downturn of 2001-2002 was certainly felt in places like Vail and Aspen, but after a year of self-introspection and plenty of affordable housing, they roared back beginning in late 2003.

Another downturn, in the early 1990s, was barely noticed.

But this one is different, Frick argues. "We haven't seen this one before. The resorts are more vulnerable." He went on to explain that the wealthy travelers who visit or live part-time at high-end resorts were at ground zero of the recession. This, he predicted, will cause not just a temporary lull in real estate sales, but will bludgeon the market. Prices will start dropping. "We're hardly there yet," he said.

Many people had been buying real estate in resorts speculatively, because it kept going up and up. The same thing was happening across the country, of course. But the resorts may have reflected this more so, because the appreciation rivaled that found in places like Phoenix, Las Vegas and along the West Coast.

But what will happen now if there's no prospect of making money by flipping properties, with a remodeled kitchen at every flip helping swell the ranks of craftsman skilled in installing granite countertops?

Some believe that tourism will enjoy a second golden era. Instead of having to share the front page with real estate developers, they can be considered the elite of the class.

Jim Westkott, a demographer with Colorado's Department of Local Affairs, adheres to this view. He suggests the dynamics of aging will result in more people wanting to be tourists, even if they can't afford to speculate in high-end vacation homes.

"The beauty of the area has not been lost," Westkott told the crowd in Aspen, although he could have made the same statement in Banff, Mammoth Lakes or Telluride.

But reading the same tea leaves, Frick saw a darker future. Mountain resorts may appeal to retirees in their late 50s and 60s, but as they continue to age, the snow and thin air lose their appeal.

Both speakers mused on the future with caveats, explains the Aspen Times , the source of much of this reporting. This is new ground, and so little can be predicted with any great confidence, they noted.

Much clearer is the past. A Montana-based consultancy called Headwater Economics has studied recessions going back more than 30 years to see how various counties of the West responded economically during and immediately after the downturns.

Strictly by the numbers, Eagle County - home to Vail and several of Aspen's suburbs - bounced back quicker than the rest of the country after every recession, reports the group's Ben Alexander, an economist. Pitkin County also did far better after the recessions of 1975, 1980, 1982, 1991, and 2001.

But Alexander warns against drawing too many conclusions. "Looking at statistics from the past alone can be risky," he said. "However, we know that more diverse economies are more resilient and more likely to recover faster," he told the group.

To see Alexander's full study, go to headwaterseconomics.org; and look for options under "Economic Profile Systems."

Sales may not top $1 billion

ASPEN, Colo. - If current trends continue, Aspen, Snowmass Village and Pitkin County will not surpass $1 billion in real estate sales this year. The county first topped that threshold in 2003 and for several years went on to rise above $2 billion. Last year sales fell to $1.37 billion, according to research by Land Title Guarantee Co.

Agents say mid-market will be tough

JACKSON HOLE, Wyo. - Prices of real estate in Jackson Hole continue to drop so rapidly that appraisers have struggled to get the estimated prices right. Condominiums at the Racquet Club that crested $500,000 at the height of the boom have now been reduced to $300,000.

Whether the market has bottomed out is, of course, the question. Two of Jackson Hole's most veteran real estate figures, Bob Graham and Bland Hoke, say they think that the lower end properties - and in Jackson Hole, real estate even now doesn't get much cheaper than $300,000 - may have bottomed.

Still, Graham and Hoke tell the Jackson Hole News & Guide that they believe the recovery will take time. Nobody's going to make money hand-over-fist during the next several years. The lower-end market will bounce back most rapidly, but the high-end market will take more time. The middle-market, defined as $3 to $4 million, will be most difficult.

Both real estate agents arrived in Jackson Hole during the early 1970s and had established roots in the real estate sector within the decade. As such, they have seen several downturns.

Hoke recalls that the economy through the 1970s was bumpy, capped by the severe jolt of 1983-84. Sometimes no sales occurred for days at a time, even weeks, recalled Graham. The same lower-end condominiums now worth $300,000 at that time slumped from $100,000 during the market peak to $50,000. Prices didn't start climbing again for about three years.

This time, the causes have been different. Many buyers of Jackson Hole come from the financial services industry, which has been particularly hard hit. "I think that's going to have an effect on Jackson," said Hoke.

As for commercial real estate in Jackson, though, it's a disaster. "Thousands of square feet are just sitting empty," said Graham. "Tens of thousands," amended Hoke.

Rural real estate - the 35-acre ranchettes - also is deep in the tank.

Comparing their situation to that of other ski-anchored mountain valleys of the West, they see greater promise for their adopted turf. They describe Jackson Hole as a "mature resort," with good airline service and amenities, but not overbuilt. And, of course, there is that age-old real estate axiom: location, location, location. The Tetons are hard to beat, and Yellowstone is just down the road.

Recession? Cranes fill Vail skyline

VAIL, Colo. - Real estate may be softer than a marshmallow, but don't tell that to Vail. Hundreds of finish carpenters, tile-layers and other construction hands remain at work on five significant construction projects in the town's core. Included are a Four Seasons Hotel and Ritz-Carlton Residences. These and other projects represent roughly $1 billion of base-area redevelopment on top of another $1 billion completed earlier in the decade.

Planning continues, meanwhile, for another $2 billion in construction. A project called Ever Vail is first in the queue. Proposed by ski area operator Vail Resorts, it aims for the ultra-high end, with a new gondola access to the ski slopes, but also aspirations of a LEED platinum ranking, the highest of the four-tiered green-building standard.

Next in the lineup is replacement of the town's 1,100-space LionsHead Parking Structure. At the very least, remedial work will be needed to prevent decay of the garage, and town officials believe they can achieve that while also gaining a long-coveted community conference centre by partnering with a developer. The developer would gain the rights to build a couple of hotels - a W and St. Regis are the prime candidates - plus the usual assortment of restaurants and stores.

Several years ago, the town selected a Dallas-based developer, Open Hospitality Group-Hillwood Capital. The consortium includes Ross Perot Jr. The Vail Daily reports that the town and the Texas development group continue to negotiate. But the development planning has been difficult enough that some members of the town council have suggested launching maintenance of the parking garage for now.

Is landscaping public art?

MAMMOTH LAKES, Calif. - What is art? Polemicists have been asking that for ages. But in Mammoth Lakes, the question du jour is "What is public art?"

The Sheet , a local newspaper, reports that town regulations require developments to provide public art or an in-lieu fee to be used to create public art elsewhere. One developer paid into the fund, but then applied for a rebate, arguing that a waterway that flows through the housing development had been configured in such a way as to constitute art.

While art may be in the eye of the beholder, as some have argued, the second question was whether the public had access to it? After all, the water feature, to use the parlance of developers and landscape designers, is on private land and cannot be accessed except by crossing private land.

The town council decided the landscaping was art and public at that, rebated the developer $138,000 in fees, but the newspaper was more skeptical, alternatively calling the water feature "an irrigation ditch" and "yuppie landscaping."

Ski area cited in patroller's death

JACKSON, Wyo. - Kathryn Miller, a ski patroller at Jackson Hole Mountain Resort, died in March from injuries suffered while inspecting a steep rock-sided chute. The Wyoming state government is now issuing the resort operator a citation, charging that the ski area should have required its ski patrollers to wear helmets.

Jackson Hole will appeal the citation, arguing that none of the 400-plus ski areas in the United States required helmets as of March, when the accident occurred, reports the Jackson Hole News & Guide.

However, Vail Resorts in April announced that it would make helmets mandatory for all employees skiing or riding on the job beginning next ski season. The company has four ski areas in Colorado and one in California. Vail will also mandate helmets for children ages 12 and under who participate in group lessons.

David Byrd, director of education and risk for the National Ski Areas Association, told the newspaper he wouldn't be surprised to see other ski areas follow Vail's lead.

Would a helmet have prevented the death of Miller? That presumably remains a point of conjecture. But a 2008 study by J. Shealy, R. Johnson and C. Ettlinger concluded that the "salutary effect (of helmet usage) was limited to the less serious head injuries, such as scalp lacerations and mild conclusions."

The study, says the Jackson Hole News & Guide, found "no significant effect" for the more severe concussions, closed-head injuries, and skull fractures.

Still, use of helmets continues to increase. A study by the National Ski Areas Association found 48 per cent of skiers and boarders used helmets this past winter, up from 43 per cent the year before.

Vail more than halfway to goal

VAIL, Colo. - Last year, Vail Resorts chief executive officer Rob Katz announced a goal of reducing energy use at the company's five ski areas and other properties by 10 per cent within two years. On Monday, he announced the company is more than halfway there. The company had been spending $25 million for energy per year, notes the Vail Daily.

Katz now has announced another goal, eliminating non-essential use of paper. The company spends close to $1 million per year on paper, printing and related expenses. Employees will be asked to identify things they need to print versus things they want to print, explains the Daily.

Aspen installing smart-grid

ASPEN, Colo. - Aspen has taken the first steps to installing a so-called smart-grid. More than 200 meters have been installed in buildings, mostly in an affordable housing complex called Burlingame Ranch.

The meters communicate information about how much energy a person is using and when, helping the consumer figure out how to most efficiently use the electricity. A smart-grid infrastructure also improves efficiencies in countless other ways that do not necessarily require human decision-making.

The city hopes to land a federal grant to expand the metering program, reports The Aspen Times. Two-thirds of Aspen residents are customers of the city's utility department. Smart meters are also being installed to help the city's 3,700 water customers understand their water consumption.

Bull moose shot

BANFF, Alberta - A fish and wildlife officer shot and killed a moose that was charging him. The bull moose had earlier run across a small girl, but had not injured her.

"For some people, being charged by a moose is worse than being charged by a bear," said Dave Dickson, the wildlife officer.

Although dogs had chased the moose and children had thrown rocks at it, Dickson didn't know why the moose was cranky enough to charge people. It's not yet rutting season, and moose normally don't get that territorial.

"I know some people won't like the decision I made," he told the Rocky Mountain Outlook, "but they weren't shaking in their boots. It's a regrettable part of the job."

Couple may be billed for rescue

BANFF, Alberta - Pretend you have an 11-year-old German shepherd. You take him on your outing, but the sharp rocks have hurt his feet so much that when you reach the base of the mountain you intend to climb, he's already limping. What to do?

In Banff National Park, a couple decided to rope Rover around a tree. That maybe wasn't the best idea to begin with, but it deteriorated when they found the going on the mountain much more difficult than expected. Forced to overnight on high, they called rescue officials by cell phone and asked for assistance - with their dog.

Rescue officials similarly saw danger to the dog, fearing the dog might be attacked and eaten by a predator, reports the Rocky Mountain Outlook. At first light, the rescue officials dispatched a helicopter to retrieve Rover. Parks Canada, which administers Banff, was reportedly thinking of assessing the couple $600, the cost of flying the helicopter.

Big boxes say no thanks

SILVERTHORNE, Colo. - The plastic-bag competition among ski towns and valleys sponsored by the Colorado Association of Ski Towns is more than two-thirds complete. Early in the contest, two areas - Basalt and Winter Park-Granby - were ahead in this effort to nudge consumers to forsake new plastic bags for every trip to the store in favor of reusing bags.

In Summit County, a variety of stores in Summit County agreed to participate, but organizers tell the Summit Daily News that the two biggest stores, Target and Wal-Mart, declined.

New McMansion law

BRECKENRIDGE, Colo. - Breckenridge town officials have returned with plans that they hope will prevent the spread of McMansions. The new proposal, reports the Summit Daily News, would allow homes of 4,000 square feet to 9,000 square feet, depending upon the subdivision, plus 900-square-foot garages. Precise home sizes would depend upon the lot size.

Spring rains bringing lots of flowers, skeeters

EAGLE, Colo. - Even in an ordinary year, the array of wildflowers atop the Flat Tops can be enchanting, every meadow a Van Gogh of vividness.

But this was no ordinary year. Long-timers in the Eagle area - those who have been around 30 to 60 years - say that they had never seen such dazzling colours as they witnessed in mid-July on the Flat Tops, an island of uplift between Glenwood Springs and Steamboat Springs. Everywhere that the eye wandered were blues, reds and purples, but also whites, oranges and yellows, although those simple words fail to do justice to the nuanced shadings.

Elsewhere across Colorado, the story seemed to be the same. The rains that had caused gloom in May and June had given way to sights to which no scenic calendar could quite do justice. Paradise always has its purgatory.

But in evening summer's full glory, there was misery. The same rains that produced the flowers also seem to have created epic numbers of mosquitoes and flies. Campers and backpackers in Colorado's high country say it was, as Dickens long ago observed, the best of times and the worst of times.