Tuesday, February 12, 2008

Barrons article on Vail demand - how Mtn properties are different

Here are some quotes from an article in Barrons about Vail stock with many interesting references to their clientele and real estate market. Steamboat is different than Vail in many regards but close if not the same in regards to supply demand and the credit quality of our buyers. Our prices are also about ½ of Vail’s and we have a much better story for improvements going forward. They make some points that have a lot of basis beyond Vail about how mountain resort real estate is sold to a clientele that is less sensitive to the national market because they recognize that the supply of prime ski area property is limited especially given the number of people looking to own or retire here and are willing to buy quality. Vail is different from Steamboat in many ways but the same in the desire of successful people that have visited to own or at least retire here. Something about mountain towns and the lifestyle they provide access to keeps a large place in people's hearts to the point many people aspire to live here. I should know, it happened to me and I meet people that feel the same way all of the time.

The "housing crisis" we have in mountains as mentioned in the article below is more based on how the lack of supply, buyers with great credit or cash, and demand that looks to continue to outstrip supply come together to make it more difficult for low to moderate income people to purchase in mountain resort communities. Sort of the opposite problem from the 5 states that are driving 80% of our national housing crisis that isn't really national.

Clips from the article in Barrons: "the surging ranks of the world's wealthy -- is relatively insulated from economic slumps. Heavy snowfall in the past two months, meanwhile, has been whetting the appetites of both skiers and a new breed of young visitors: snowboarders. Perhaps most important, a number of promising residential developments by Vail are starting to come to fruition. The company is developing hundreds of townhouses and condos in its area, and demand is proving remarkably strong.

"The pricing was done with a full awareness of what was going on in the global real-estate market," he says. With a limited number of residences being sold -- a total of 90 in the first building -- "buyers are confident they're getting something that may never be available again," he adds. "Even in soft years for the country, they keep growing," he says, mainly because of the limited supply and growing global demand. "It's surprising to me how many people will buy a $2 million vacation home and use it for three weeks out of the year."

Donnelly also found little to no correlation between economic changes and skier visits at Vail Resorts, including income growth for the top 20% of the U.S. population. That is, even when incomes of the affluent slip, they still manage to get away on ski vacations.

Here is full article in Barrons. It is worth reading. Back to the Steamboat Springs blog main page for more.

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