The Mountains Are Calling: What’s the Forecast for Ski Resort Real Estate?

With fresh snow falling throughout the U.S., the ski season is well underway and buyers are looking to score a lift to the top of major mountains’ real estate markets.

With some effects of pandemic lockdowns still lingering going into the 2021-2022 ski season, outdoor lovers were getting onto the slopes and into cozy resort area homes and condominiums in record volumes, resulting in an all-time high mark of 61 million visits, according to the National Ski Areas Association.

But now what? Is an overcooked market melting the snowfall? Or is it all beginning to ice over?

By the October onset of the 2021-2022 ski season, resort real estate was in the thick of the perfect storm (pun intended). Demand was frenzied; interest rates were low; the stock market was raging; and business valuations were off the charts. Many knowledge workers were able to work from anywhere and could stay at vacation properties for extended periods. These factors, when combined, changed the cost-benefit equation of ownership.

However, in spring 2022, the perfect storm started to calm, along with the rush to buy. By November, Utah’s Park City Board of Realtors summarized its forecast for the current season. “The wild price and sales swings that buyers and sellers have witnessed over the past two years seem to be moderating as the market returns to a more normal seasonal pattern.” The median sale price for single-family homes in the area’s Summit and Wasatch counties was up 3% year over year through September 2022, compared to a 50% increase during the same period the year before. Meanwhile, the total rate of sales and overall dollar volume both dropped 30% from fall 2021 to fall 2022.

Prices and sales trends were similar in a few other favorite mountain destinations, including California’s Mammoth Mountain and Lake Tahoe and Colorado’s Aspen Snowmass and Telluride. Home and condominium prices at those locations are still around all-time highs, but have flattened over the last six months. Like home sales nationwide, transactions declined when comparing late 2022 with late 2021.

The peak in resort home sales coincided with the peak in primary housing markets throughout the U.S., according to John Burns Real Estate Consulting. In March 2022, the Burns Home Value Index, a measure of all home values nationwide, was up 20% year over year. By December 2022, the index was up only 4%. Meanwhile, total home sales declined through 2022.

Jeff Brown, the owner of Truckee, California-based Tahoe Mountain Realty, described 2022’s market as being composed of “two chapters neatly divided into six-month increments.” The first chapter, he said, “was the continuation, and the apex, of frothy conditions defined by excessive demand coupled with historically tight supply resulting in outsized price gains and unprecedented rates of absorption.”

The second chapter, Brown continued, “was defined by moderation. The absence of distress or an overhang of listings has caused pricing to recede only from the absolute peak while maintaining nearly all the gains from 2020 and 2021.”

While it’s too early to tally skier counts in the 2022-2023 season, mountain resort real estate likely peaked last ski season. Although home prices have begun to decrease in many metros, that’s not yet the case in top ski areas, where the fundamentals are different. But if the ski-area frenzy has descended, why are prices still sky-high?

Reasons are generally two-fold.

The first is lack of supply. It’s difficult and expensive to build in mountain resorts. Developers face all kinds of hurdles, including snow-load engineering, lack of labor, lack of developable land, regulations, and NIMBYism. It can take a decade or more to get approvals for new resort builds.

"There doesn't seem to be much institutional-level investors consolidating portfolios of homes and condos in ski areas. Buying vacation rentals, listing them on short-term rental sites and placing them in the hands of local management companies is more of a play for individuals or smaller investors."

Chris Dorociak, John Burns Real Estate Consulting

Aspen Snowmass provides an unapologetic example of this. In late 2021, to protect long-term community values, elected Aspen officials decided to address a development boom they saw coming. The result was an eight-month moratorium on all development to slow things down. City officials did indeed slow down construction, and in doing so, helped prop up astronomical prices ($18 million on average for a single-family home in 2022). While this action benefits property owners, it must be infuriating prospective buyers who represent the next generation of Aspen’s ski community.

You also won't see much of the growing trend of build-to-rent communities in these markets. Gondola Vista in California's Heavenly Mountain Resort represents one example of built-to-rent in a ski area, but it's not common. Build-to-rent development is concentrated in high-growth areas, typically with readily available land. Ski areas are the opposite — slow growth, tough to build.

The second difference in pricing ski area real estate is the discretionary nature of resort homes, which are a lifestyle purchase. There’s a psychological aspect of buying a luxury good like second-home real estate. If you feel rich, you’re more likely to pull the trigger on that sweet ski-in/ski-out condominium. And if you don’t feel rich or start feeling uneasy about the future, you won’t. Your gut will say it's best to rent the ski-in/ski-out unit and reconsider next year.

Ski resort real estate is discretionary for sellers, too. Owners may list their property and wait for their price to be met. That’s where it differs from a primary home. When most of us decide we want to buy a different home to live in, we must sell the one we have. The owner of a ski-area property may list and hold their property indefinitely. Rental operators abound in these areas, and with rental income typically covering ongoing costs, there’s not much urgency to sell.

Many buyers pay cash for resort homes, so interest rates don’t have a direct influence. But, having discussed resort real estate with brokers for nearly two decades, it’s clear that business owners are consistently a prominent buyer segment. Interest rate hikes have ripped through portfolios and business valuations. These portfolio and business values often matter more than home loans.

So, what should prospective buyers do in this market?

Apply as much logic as possible to the idea that these homes are typically discretionary purchases. The value we place on mountain recreation and our time with friends and with family is unquantifiable. But consider buying into long-term lifestyle benefits instead of short-term investment. As prices flatten, the chances of selling your property at a substantial margin above what you paid are lower than they were a year or two ago.

The vacation rental market is also much more competitive than it used to be. The surge in ski-area real estate purchases over the last two years means more vacation rentals than ever. Take a more conservative approach to calculating potential vacation rental income. Rental income can still help offset your ongoing costs but consider buying if you can afford to own over the long term.

At John Burns Real Estate Consulting, we advise our clients in primary and resort housing markets similarly. Sell the long-term benefits of ownership and expect fewer investors. For ski areas, emphasize four-season appeal so buyers will factor in year-round use (skiing in winter; hiking and biking in summer).

There doesn't seem to be much institutional-level investors consolidating portfolios of homes and condos in ski areas. Buying vacation rentals, listing them on short-term rental sites and placing them in the hands of local management companies is more of a play for individuals or smaller investors.

You also won't see much of the growing trend of build-to-rent communities in these markets. Gondola Vista in California's Heavenly Mountain Resort represents one example of built-to-rent in a ski area, but it's not common. Build-to-rent development is concentrated in high-growth areas, typically with readily available land. Ski areas represent the opposite: slow growth and tough to build.

Based on extensive research by John Burns Real Estate Consulting’s New Home Trends Institute, we recommend designing homes for remote work. This is a game changer for housing markets nationwide. For resort real estate, the more a potential buyer can justify using the property longer than several weekends a year, the more likely they are to buy. The idea of lapping a few bluebird runs after morning emails is a great selling point.

Also, consider multigenerational and flexible layouts. Think lock-off suites for family, friends, and potential renters. Negotiate hard with land sellers, labor and suppliers. And finally, realize that the price of the property is what the market will bear, not what it costs to build.