End of the second-home era for Aspen?
April 28, 2011
ASPEN – The era when large second homes are the economic driver for Pitkin County’s economy is likely a thing of the past, the former senior demographer for Colorado told local officials Wednesday.
Jim Westkott, who still consults with the demographer’s office, said the Great Recession has altered his outlook for the state’s mountain resort areas, like Aspen.
“The dominance in the economy of the super-rich and the large second homes is likely to weaken significantly,” Westkott said in an informal meeting with the Pitkin County Commissioners, Aspen City Council and planners with both governments.
“The ‘new’ economy is likely to look like that of 30 years ago when there was more activity related to destination tourists,” Westkott said. “New dimensions will probably include more moderate-sized second-home users and retirees.”
Before the recession, Westkott helped local officials understand the direct and secondary effects of large second homes and the needs of homeowners on the local economy. The demand for large homes obviously created an incredible number of construction jobs. Demands for services by homeowners, such as landscaping and cleaning, also directly accounted for numerous jobs.
A 2004 study the Northwest Colorado Council of Governments determined that second-home construction and homeowner spending accounted for 41 percent of the 19,204 jobs in Pitkin County. The workers who were dependent on the second homes created a secondary effect on the county’s economy, Westkott said. Even if they were commuting from outside the county, they created a demand for services from restaurants, grocery stores, gas stations and the like. And those demands for services created other jobs.
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The boom in the second-home market went bust after the recession hit in October 2008. “The people that were a very big part of your market lost a lot of money,” Westkott said. “It’s quite possible there [will be] prolonged difficulties, to say the least.”
Some of the prospective buyers who had Aspen in mind for retirement or part-time living before retirement can’t afford to come here anymore, he said. And some are unlikely to regain that type of wealth in a slow and uneven national economic recovery.
Westkott expects a decline in the development of “detached, very large, expensive” second homes. Destination business during ski seasons may also decrease because travelers have less discretionary income, he said.
But his outlook was far from doom and gloom. Westkott sees an increase in demand for “attached, large and moderate sized” homes. He also expects an increase in overall destination tourism, with increases in summers to offset losses in winters.
Prior to the recession, Westkott said the aging of the Baby Boomers would be one of the primary economic drivers for such resort areas as Pitkin County. He is sticking to that forecast.
“You are still very, very attractive,” Westkott said. “The Baby Boomers are alive and well.”
But the demands from retirees may be different from what Aspen has experienced in the past. He stated the obvious – that the need for assisted living will spike in coming decades as the tsunami of Baby Boomers advances in age. He made a rather startling prediction that there may eventually be demand to convert the 10,000-square-foot homes into duplexes, co-ops or some type of assisted living structures.
Westkott’s overriding point was that the aging population will create different planning challenges than the local governments have faced. Housing demand for the elderly will increase. The demand for doctors, nurses and other health care professionals will soar. Construction jobs will diminish.
Westkott said he doubts there will be a big, primary economic driver in the foreseeable future to assume the role that second homes had over the last couple of decades. Instead there will be “a lot of little pieces.”
Aspen mayor and demographics junkie Mick Ireland, a disciple of Westkott’s, challenged his mentor’s core assumption. Ireland said he’s not as sure there will be a big game changer for Pitkin County. National tax policy could result in extended cuts for the wealthy or even an overhaul of the tax rate. That means a concentration of wealth, Ireland said, and history shows that wealth finds wise places to invest, like Aspen.
Therefore, Ireland said he’s not convinced Aspen and Pitkin County is looking at a “new world order or a new normal.”
“We could easily see another speculative bubble,” Ireland said.
Westkott will discuss economic issues with officials again today from 11 a.m. to 1 p.m. at council chambers in Aspen City Hall. The brown-bag lunch meeting is open to the public.