Go where there is no path and leave a trail.
– (paraphrased) Ralph Waldo Emerson
Affordability vs Availability
According to HUD, Eagle County’s 2021 Rounded Median Family Income (MFI) Estimate computes as $98,300, or 100% Area Median Income (AMI). At 80% AMI ($78,640), or 120% AMI ($117,960), the fact remains — buying a home in Eagle County will require a lot of luck (and a lifetime of saving) with such little supply of residential offerings available under $1M. Thus, how do the majority of future Eagle County residents expect to realize home ownership in a market plagued with high cost and minimal choice for valuable workforce residents?
Moreover, what does the next wave of homeownership truly look like for markets, like Eagle County? And, how will Fortius Capital and its partners forge the way for affordable housing in 2022 and beyond?
The Road to Homeownership: Cutting Against the Grain
When considering the average single family home price in Eagle County saw a 69.5% increase, year over year from May 2020 to May 2021 (peaking at 21’ YTD $1,575,000), and with only 12* units actively available under $1M in Eagle County, it is clearly evident an affordable housing project of scale is long overdue. In fact, Eagle County is poised to realize a projected affordable housing deficit of nearly 8,000 units (7,970) by 2030.
*Source: MLS – as of 9:30 AM MST, January 27, 2022, all residential units that were actively For Sale in Eagle County.
Essential Workforce & Quality of Life: Doors Calm the Storm
As Millennials continue to step into their purchasing power, one trend is apparent — quality of life is more important than square footage. With “tiny” trending, homeownership for millennials across income categories is moving away from the dream of a hillside mansion toward off-the-grid, green living. With such nomadic trends on the rise, paired with an affordability crisis, Fortius Capital believes the new “affordable” should position toward a traveling millennial and price-constrained buyer.
However, to bring affordability and availability to essential workforce within Eagle County, creative partnerships must come to fruition. Investors, developers, large corporations, municipalities and current residents should work together to unlock affordable housing opportunities in a timely manner.
Fortius Capital’s upcoming development project in Eagle County, for instance, took 7+ years to realize full entitlement. And, unfortunately, based on Eagle County’s current housing deficit, the municipality does not have time to wait. Nor can it purely lean on currently available housing programs to dig us out of this deficit. For example, the Vail InDEED program hopes to realize 25+ transitions from short term housing to deed-restricted, long-term housing per year. But, even if 25+ units per year are achieved, we’re a long way from denting, let alone solving, the current housing deficit. A diversified blitz of tactics is required to realize notable progress.
Resort Operators: Driving the Needle for Workforce Housing
While the new “affordable” looks cleaner, greener and perhaps, nomadic, the facts remain — if all stakeholders of a given municipality do not step up, together, then a culture shock is not far off the horizon. And, possibly, a storm of relocation for valuable workforce with it. As Vail Resorts is realizing, firsthand; even as one of, if not the best operator of ski resorts in North America, by not investing in its workers, epic staffing shortages can destroy the beauty of a record snowfall in December, and put simply — operational hell can break loose.
Our team is confident that Vail Resorts can play a monumental role in providing affordable housing for its essential workforce, promoting a healthy work environment with housing benefits as a prime value-add for lift operators, avalanche control and other essential mountain service professionals. However, like municipalities, Vail Resorts requires a housing partner capable of providing affordable rooftops for Vail Resorts employees with speed and agility. Skico’s recent development, The Hub at Willits, increased the company’s housing inventory by 20%, investing $18.5M for 43 doors (150 total bedrooms capable of housing nearly 50% of all new hires). We commend such a project, and hope to see capital continue flowing in the direction of our resort workforce housing across all major resort operators.
The bottom line — when the housing problem becomes a legitimate priority, capital allocation will be considerable. While such time and money diverted to housing is not as attractive to shareholders as a new series of multi-million dollar lifts, nor does it bode well with quarterly earnings in the short term, such allocations go back to the source and pay dividends in the long run. By investing in your key assets, in this instance — employees, long term value is realized and culture maintained. When it comes to solving the housing crisis and elevating the quality of life for our essential workforce, we like to reference a mantra that we’re sure Kevin Costner and Shoeless Joe would appreciate, “if you build it they will come”.
Food for Thought
But, if building “it” takes 7-10 years due to municipalities dragging their feet on entitlement, we have a problem. If public leaders are more concerned with the opinions of a few, rather than the housing opportunities available to the many, workforce housing will remain overlooked. Like many resort markets, Eagle County has far too talented a staff for this little to be getting done, and that’s also a problem.
So, it’s time to reconsider how we do business, and certainly, how we decipher which projects are prioritized; i.e., a 200+ unit workforce housing development, or another $10M+ modern mountain mansion? It’s time we prioritize our workforce as much as generational money. It’s time for us to build a quality of life that offers opportunity and satisfaction for our essential workforce. And, while we’re happy to spark these necessary conversations (continuing to directly invest in Eagle County’s workforce housing supply), we require buy-in, budget allocation and the removal of any NIMBY politics associated with resort market municipalities, like Eagle County, and the associated development of workforce housing, thereof.
Hope Begins with (Affordable) Housing
Maslow’s Hierarchy of Needs paints a simple picture; if our basic needs are not met, we’re unable to rise, to revolutionize, to prosper, because we’re always fighting for our most basic needs. Surviving is not thriving, in this instance.
This concept is highly applicable to the culture of mountain communities. Without our essential workforce, culture leaks like a pin-hole in a hot air balloon. It oozes away, eroding like the top soils of a winded, sandy beach. How does one stop workforce-related erosion?
Simply, hope comes with a home. Whether as owners or tenants, a safe place to lie your head is the essence of hope for Eagle County’s community. But, the law of large numbers as it pertains to scaling Eagle County’s affordable housing supply, will not play nicely. Rather, the opposite, as “building our way out of this crisis” requires a multi-faceted approach; one that Fortius Capital intends to continue leading in 2022 and beyond.
They say, “go where there is no path and leave a trail”. In 2022, we intend to do just that, planning 265 rooftops for development in 2022/2023, with several other affordable housing projects in the final stages of underwriting, or moving through the vigorous stages of entitlement. In fact, Fortius Capital’s upcoming project has the potential to increase Eagle County’s supply of homes currently available under $500k by more than 4,200%**, upon construction completion (assuming similar availability upon completion). The project represents a short- and long-term solution vital to the sustainability of Eagle County.
**Source: MLS – as of 9:30 AM MST, January 27, 2022, based upon all units actively For Sale under $500k (4), relative to 172 park model units associated with Fortius Capital’s upcoming affordable housing project in the heart of The Vail Valley (breaking ground this Spring).