Housing News and Vail's Growing Pains

On page A1, the WSJ covers January new home sales, down 14.3 % from December and 37.8% from January 2006. Consumer spending has remained unfettered, despite a surge in delinquent payment among subprime loans. Some economists don't find this segment of loans to be significant enough to become a "macroeconomic event", unless late payments spread to other loan types. Dave Seiders of NAHB now believes that the cut in residential investment will shave one percentage point from inflation-adjusted growth this year.

In a semiannual monetary report issued both on 2/14 and 2/15 before Congressional committees, Ben Bernanke looked favorably upon the housing market's "tentative signs of stabilization":

New and existing home sales have flattened out in recent months, mortgage applications have picked up, and some surveys find that homebuyers' sentiment has improved. However, even if housing demand falls no further, weakness in residential investment is likely to continue to weigh on economic growth over the next few quarters as homebuilders seek to reduce their inventories of unsold homes to more-comfortable levels.

Bernanke said that the biggest risk, or downside, to the FOMC's forecast for 2.5 to 3.0 percent GDP growth in 2007 is is "the ultimate extent of the housing market correction" and any "spillover effects from developments in the housing market onto consumer spending and employment in housing-related industries."

Moving on from the dismal science, the blogging phenomenon is growing in the residential real estate world, providing ground-level intelligence in what has traditionally been the information-constrained business of buying and selling homes. Some blogs take on shoddy home construction while others sing the praises of particular neighborhoods. Realtors, meanwhile, are providing more numbers to consumers striving to be well-informed.

The NYT reports Solaris, a $250m mixed-use development in Vail that, on its face, doesn't sound too controversial: 75 mountain-view condominiums, a two-story lobby, a Japanese restaurant, shops, three cinemas, a bowling alley and a public plaza. "The controversy is an Alpine lodge building that will be constructed of steel, wood and stone. Though its style is more indigenous to the area than the faux-Bavarian style of Vail, the proposed building was criticized for not conforming to the prevailing architecture." At 113', the building would become Vail's tallest.
The developer, a Long Island transplant, wants to make Vail Village a better place for families and others to shop, dine and "conduct business", citing Edwards and surrounding areas that have had the benefit of more room to grow relative to Vail Valley's lack of elbow room. Sixty percent of the condos sold within 6 weeks, with prices ranging from $2.2 million to $18.6 million. Knobel won a 4-3 decision from city council after two opponents to the project lost their re-election bids in November. A special election in July of last year in which a vote was taken on the project showed that a resounding number of voters supported the project: 1,100 of 1,577 voted in favor, revealing a rift between the older vanguard of Vail and the growing younger families who want more retail and entertainment, but perhaps, as opponents, content don't care to preserve Vail's identity, or at least to allow the Village to grow more slowly.

Knobel's foes also claim he's feeding his ego. Here's his statement on the Solaris website:
I want to create effortless mountain living with metropolitan convenience, unsurpassed quality, amenities and service. Most importantly, I want to do it in a way that enhances Vail's pristine beauty and feels world's apart from sterile urban environments.

Are "metropolitan convenience" and "sterile urban environments", though, two sides of the same coin? Regardless, Vail is evolving, and, perhaps, this is what the (majority of) people want.

There has been a lot in the press recently, including many mountain towns that ring uber-expensive ski resorts, regarding the (un-)affordability of housing. Witness this story from the NYT on a presumed ski/ride bum renting out a closet for $200 a month. Once he came out of the closet, literally, after a year, the couch-occupant took the closet-dweller's (more privacy?), um, space. Big Sky, the MT ski area, is a sometimes treacherous 32-mile drive on a two-lane road to the nearest community of signficant size, Bozeman, where many of those who work at Big Sky live. While ski bums from Chicago might willingly live in sub-standard living conditions for a year or two, immigrants from outside the U.S. are flocking to resort communities that face labor shortage.