Wow. I’ve read some fascinating threads on this site but in some respects this one takes the cake - even if there are both good and bad connotations/impacts to what’s being discussed.
I have been poking through posts this morning as I was looking at some of the feedback/resorts for mountains I hadn’t skied and/or might not know quite as much about such as Taos or Telluride (although I know about their clinics) Whitefish, maybe Bend (although I knew about the tech impact out there) etc..
My wife and I have been talking about a home on the slopes - offset initial 5-7 years in renting - but ideally one we would live in part of the year (as I’ve always worked remote anyway). So I needed some mountains to consider outside of the obvious Tahoe, Summit Cty, Utah, even Bozeman was on the list. So I guess in some ways I’m part of the problem (Even if I’m coming from East coast vs the west).
Over the last few hours I’ve literally read through every post - dreary rainy day. IF you break all the items down you sort of hear our economy at scale:
- Increasing housing creating more wealth but also wealth disparity and this is happening everywhere not just ski towns
- Soaring tuition rates creating downstream impact on the younger generations but also many of their parents
- Changing talent dynamics - not only the obvious WFH - which has been growing dramatically over last decade and now only accelerated while also increasing wealth divide - but also “The Great Resignation” 50% plus of americans switching or leaving jobs in next year, all of this while employers are struggling to keep positions filled or even hire. Hell Apple just offer $180k stock bonuses ot keep engineers from leaving and while thats on the extreme end it’s not an uncommon practice to see employee perks/bonuses soar in white collars space.
- Many 55+ folks exited work all together as well which has shrunk the skilled labor pool.
- Probably worth pointing out WFH has also shifted not only second homes but modifications to existing homes treating the boom in craftsmen work also.
- Younger generations struggling to get started, build wealth, or as many in this thread put it to get ahead what was once considered normal.
- As a separate note it’s also worth calling out that the greatest wealth transfer in American history is about to happen with the passing of boomers. So despite everything else that alone is reason to suspect none of what’s going on is likely to slow down anytime soon.
All of that amounts to essentially a shrinking / and also more spread economically middle class. Too hefty of a topic but all that leads back to WFH. I’ve worked from home near a decade now and also sales/consulting with big enterprises. I’ve watched this trend grow each year and one of the primary hold backs was legacy leadership concernes about productivity. Well the pandemic has forced that change and productivity has not been hit and thats with childcare being an issue. As childcare solutions are solved (covid hurt this) you’ll see that trend even get better.
Collaboration some may think are an issue but for those who have worked from home for a long time will tell you it’s just a skill and a skill that can be taught / learned. I’ve introduced more people at our HQ to each other than has ever happened ot me, and even consulting with big companies you quickly learn half the time they don’t know people in their own company or even among their own teams they’ll be spread out across Atlanta, NYC, Columbus, Charlotte etc…. So it’s not like they are working side by side anyway.
We are two years into the pandemic, behaviors have been set, workers want/demand flexibility (one of the top if not number one reason cited when leaving jobs lately) and with the great resignation going on WFH isn’t like to change soon. After 3-5 years of WFH it’s then a norm. Which leaves one prime issue left to solve with WFH. Innovation - this is probably the toughest to solve but given the previous facts companies will figure it out.
On the housing side in and out of ski towns there are a lot of similarities:
- Housing starts in November/decemebr were down but inventory is still low. If this continues maybe the obscene growth stops but it doesn’t appear likely To reverse course and values drop. This especially true with mortgage rates where even if the went from 3.25% to 5% - which is highly unlikely and a big jump at that - it still wouldn’t cause a large enough shift out there.
- Also worth noting even outside of ski towns houses are going obscenely quick, cash offers (yes some private equity firms) but many investors from the middle/upper lower class who have less potential places to put that cash and earn a return than they did some years ago. Real estate at large has become a key focus for investments everywhere.
- In ski towns, yes SRT has created a bigger growth in this but even if SRT benefits were cut 30% in profits, it’s still beating LTR benefits and people aren’t likely to find an alternative source that could match that, at least as safely. It also seems unlikely towns kill SRT completly because it could really destabilize home prices which would hurt the local economy in entirely different ways. And more candidly if you look at the east / west coasts and how zoning laws work you can see the older generation, those in office and in power, tend to be loath to completely kill there own wealth.
- Finally those expecting a crash like 08. Something to keep in mind we don’t have the crazy lack of underwriting occurring then, the subprime market was out of control, on top of the individual market you also had mortgage back security compounding the issue, and lets not forget fun balloon payments. During the Great Recession median housing prices nationally fell 9.5%, some areas hit harder but those areas like Naples rebounded more quickly. None of that is occurring now so it’s unlikely to be near as big of a crash. And bluntly speaking lets say 10% correction in ski towns, does that really solve affordable pricing issues for people on a 750-1million home for those that can’t afford?
I realize this probably too hefty post (overly thoughtful I guess today as I look to my own middle age plans in the future) but it’s sort of a long winded way of saying even if a correction does come it’s unlikely to solve this problem for ski towns or frankly for the younger generation - weird saying that as an older millennial - with lots of little changes that hopefully lead to some type of workable solution. It’s a complex enough problem, and not a localized issue when you really look at everything nation wide, to realize it’s unlikely to be a silve bullet fix or even a quick fix.
It saddens me that I’ll likely be part of the problem but my parents are snowbirds - I have no desire to live in Florida in the winter. Mountain ski home with fresh air keeping me alive longer on the other hand…..
Anyway apologies for the crazy long, heavy post. For whatever reason this thread really stuck me in a lot of ways this morning. Wish I had seen it earlier this year. But with ski season being demolished last year iH ave to admit I was not on here As much.