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August 26, 2007

Interesting Take on Aspen's Lack of Rental Properties

A recent letter to the editor in the Aspen Daily News makes a good point about the spiral of escalating real estate prices at Aspen:

This resort town desperately needs more hot beds to revitalize and support the shops in the commercial core. Your stores and your community are suffering due to the increase in real-estate prices that are causing landlords to ask for higher rent and many residential properties are being removed from the rental pool. If you don't provide more hot beds that will bring new and more visitors to this town, then you will create a situation where this town and its citizens may not be able to support themselves. As real estate prices continue to rise and the existing residential real estate gets sold at higher prices, the rental income cannot and will not support the investment made by the purchasers. As these units change hands, they are being gutted, rebuilt and for the most part they are being taken off the rental pool. The new owners can afford to carry their investment without the income.

Property values continue to rise because of a lack of new building. So wealthier and wealthier folks are all that are able to buy at Aspen and they immediately gut places doing remodels. They don't want to or need to rent their units, so these former rental units are off the market. The rising real estate prices also cause a rise in commercial rents for businesses.

But if units, instead of having renters packing them throughout the year, are now in the hands of folks that no longer rent them out and who also only spend a couple of weeks a year at the resort, there are gradually fewer and fewer people in town at any given time. This decreases revenue for locals that own businesses who are already stung by rising rents for their businesses. Effectively this guts the commercial core because folks can no longer afford to live at Aspen and their businesses no longer make money. This is a scary trend as the baby boomer population continues to age and retire.

I look at my unit at Brian Head and that is exactly what I did. I bought a former rental unit that was a POS and completely gutted and remodeled it. You think I would rent the place out? Not a chance. And as prices rise, your average owner becomes more and more affluent becuase the sport becomes more and more expensive. If you got the money, why have a trash heap of a condo and why rent the place out to make $2000-3000 a year off of rental income and have somebody destroy your place? And if I am not up there and my place does not have someone in it, it means there are less people buying stuff at the resort. Brian Head is mostly a "daytrippers" resort, but Aspen is not. Daytrippers have other choices that are less expensive and closer.

Posted by Justin at August 26, 2007 12:04 PM