Remote work allowed more wealthy newcomers to enjoy Colorado’s recreation destinations, but their presence means more stress on towns that already have a hard time providing housing for long term residents.
“I look back with fondness when [the median home price] was in the $700,000 range,” said Kim Bell Williams of Eagle County, Colorado. “Now, it’s like $1.1 million.”
Williams is the executive director of the Eagle County Housing Department, a unit of the local government that provides affordable housing for residents. Eagle County is home to the ski town of Vail in the White River National Forest.
In Colorado’s resort communities, the supply of affordable housing can’t keep up with the demand, which means housing organizations like the Eagle County Housing Department are a much needed resource. Between 2019 and 2020, gross home sales increased by 53% in Eagle County.
Williams said the housing boom in Eagle County was a direct result of the pandemic, citing a 2021 migration report by the Northwest Colorado Council of Governments. The report presents findings from a survey of 4,700 residents in six ski resort counties in Colorado’s Rocky Mountains.
The surveyed communities are all members of the Colorado Association of Ski Towns (CAST) and are popular recreation destinations.
In Pitkin County, Eagle County’s neighbor to the south, the average home sells for over $4 million. From 2019 to 2020, the average sale price of a home in Pitkin County increased by 55%, from $2.9 million to $4.5 million.
Newcomers Put Pressure on a Stressed Housing Market
At the beginning of the pandemic, Colorado resort communities attracted more than the usual interest from out-of-state homebuyers, according to the migration report. Half of newcomers cited remote work as the main motivation for either moving to or spending more time in one of the surveyed counties. Newcomers are residents who started living in the region either full-time or part-time since 2019.
Housing developers in the town of Telluride in San Miguel County were already constrained by the mountainous topography and the large amount of land that belongs to the federal government. But newcomers put a bigger strain on the housing market. In March 2021, Telluride only had seven homes for sale.
People who don’t spend all year in their second (or third) homes often leave them vacant while full-time residents struggle to find a place to live. In 2020, only a third of home sales went to full-time residents in the six county region.
The housing vacancy rate in the six county region is almost a third higher than the rest of rural Colorado, according to data from the U.S. Census. The Census defines a unit as vacant if no one is living there at the time of the survey or if the respondents of the unit have primary residences elsewhere. In 2021, the vacancy rate in the resort counties was 51%, compared to 29% in the rest of rural Colorado.
But even though both newcomers and part-time residents don’t live full-time in the county, they still compete with full-time residents for housing.
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Because part-time residents and newcomers are generally wealthier than full-time residents, they get the upper hand in a competitive housing market.
Part-time residents have the highest incomes of all three groups, followed by newcomers. About half of part-time residents make more than $300,000 annually, while a third of newcomers make as much. Only 13% of full-time residents make $300,000.
The average annual median income of the six counties was $82,344. That’s 16% higher than the national median income.
In Summit County, the median household income was $93,505 in 2021, $22,712 more than the national median.
Communities try to cope by building more units, but the solution isn’t that simple. In Grand County, developers hire contractors up to three years out. But the contractors have trouble finding workers to finish projects because they can't find affordable places to live, something the report calls “an ironic cycle.”
More Californians Now Call Colorado Home
Williams speculated that the housing boom might have been from California homeowners.
“In California, people could sell their houses for $2 million [to buy] a $1 million house,” said Williams. “Which is still super expensive. But they’re just stepping out of those more expensive markets into [Eagle County] where they can just show up with their cash and buy the next house.”
From 2019 to 2020, 141 individuals moved to the six Colorado resort counties from California, bringing with them a gross annual income of $33.5 million, according to tax reports. From 2010 to 2018, California had the highest number of relocations to Colorado than any other state.
The authors of the migration report said that the survey results could probably apply to many resort communities across the Mountain West. Raleigh Burleigh of Carbondale, Colorado, says it’s true where he lives.
“Many of these second and third homes are huge and some remain empty for months of each year,” Burleigh said in an email interview. “I’d prefer to see reasonably sized homes for family ownership.”
Burleigh says that new construction in his community is renting units “far above what [his] peers can afford.” He said other apartments have followed suit, taking advantage of the opportunity to charge more for rent. But Burleigh considers himself lucky.
“I've faced several increases in monthly rent since 2020, but am currently living in a situation that is considerably lower than the market rate for new construction,” Burleigh said. “I credit this to my role in the community and relationships with people that care for the town's historic social fabric.”
Burleigh is the editor of the Sopris Sun, a local non-profit newspaper.
Affordable Housing Programs
All counties in the report have workforce housing programs that help year-round employees afford a place to live. Housing programs often remove certain units from the speculative market to relieve competition for full-time residents.
“We have a not-for-profit real estate company [in Eagle County],” said Williams. “We manage all of the restricted for sale inventory… Right now we have a buyer list of over 800 people. That’s much different from what it used to be. It used to be just 100 to 200 people. We are seeing a pretty big shift in demand in the last year.”
Williams said that Eagle County also enforces deed restrictions on some units, which are clauses that limit who can buy a property or how it can be used. In Eagle County, deed restrictions require certain units to be sold only to long-time residents. The housing authority in Eagle County also often subsidizes units to make them more affordable.
But these programs are still not sufficient to fill the housing demand. In 2021, the town of Aspen in Pitkin County received 75 applications for a one-bedroom home in one of the housing units set aside for the workforce.
“If I had one word of advice for other communities who may be moving in this direction, it would be to identify an early funding source,” Williams said. “There’s no way to achieve affordable housing unless you have the ability to subsidize.”
Are Newcomers a Blessing or a Curse?
Three quarters of residents in the six-county region who earn more than $150,000 per year are newcomers or part- time residents who work for employers outside of the county. While newcomers and part-timers create a demand for service and hospitality jobs, they are not the ones likely to fill them.
As wealthy newcomers outcompete in the housing market for people with lower wage jobs, these mountain communities run the risk of not having enough service industry employees to meet the demand, a challenge for many resort areas.
In Medora, North Dakota, home of the Theodore Roosevelt National Park, staffing shortages caused challenges during the summer of 2020. The Rough Riders Hotel delayed opening their high-end restaurant because there was no chef.
“There have been several business closures and a struggle especially for service industry jobs to pay a livable wage given the rising cost of everything,” Burleigh said. “It will be interesting to see what happens as services collapse due to the absence of a workforce.”
But the shift might not be all bad news. New long term residents might drive economic diversity and steer the resort towns away from an economy dependent solely on tourism. Because these newcomers often make more money, that means they can spend more money locally, further fueling the local economy, according to the report.
With a shift away from tourism dependency, some communities might spend more resources on providing a better quality of life for long-term residents instead of prioritizing the visitor experience.
Burleigh also attributed a higher cost of living to increased wages, even though it’s hard to tell how much is due to inflation and how much to economic growth.