The overall viability of a real estate market is determined by a variety of factors. Obviously, there are some factors such as the supply and demand for homes on the market and the potential for economic growth within a community that impacts the market. Additionally, other basic factors, such as a market’s proximity to appealing areas, can either decrease or increase the popularity of a given real estate market. Perhaps one of the most important factors to consider when forecasting the health of a market is the demographics of the surrounding area and national demographic trends. A deeper dive into national demographic trends can give us a clue if we can expect continued future demand for mountain resort real estate in areas like Aspen-Snowmass.
The study of demographics is ultimately the study of people and the way their actions can impact society and real estate markets. Demographics can cover any number of topics including age, race, gender, income levels and other factors that allow experts to discern how groups of people will respond to certain variables compared to others. The four American population groups to watch to give clues on the future demand for real estate in ski resorts like Aspen-Snowmass are the baby-boomer generation born between 1946 to 1964, Generation X, born between 1965 and 1976, the millennials, born between 1977 and 1995, and Generation Z, born after 1996.
The baby boomers are roughly 74 million in number and are now between the ages of 57 and 75. Members of Generation X, only 49 million strong, are now between 45 and 56 years old. The millennial generation boasts 86 million and are now between the ages of 26 and 44. And finally, Generation Z makes up a record number of 86 million people from 25 years old and younger. Studies show that the peak age range for second-home purchases is between 45 and 55 years old — also the peak earning years.
The baby boomers, who have driven demand for resort real estate over the past 25 years, are now heading into retirement in record numbers. Their influence on ski resort real estate markets is likely starting to wane as they retire and start earning less. Buyers from Generation X are likely now and in the near future to be the largest segment of buyers purchasing resort properties since they are now in their peak earning years followed closely by millennials, who are now reaching their early to mid-40s. At the peak of their careers and able to work remotely, Generation X — followed by millennials — were the most likely groups to leave cities in large numbers in the last 18 months due to the pandemic and to relocate in resorts like Aspen-Snowmass. This is what has likely led to the huge recent demand for real estate in our local market.
Going forward, is this unprecedented demand likely to continue? The answer depends on several factors. As long as skiing, snowboarding and living in the mountains remain popular, and there is no indication that they won’t for the foreseeable future, Generation X and the millennial generation will likely drive demand for the ski resort lifestyle for the next decade. With the millennials being the second-largest demographic group in history, followed immediately by Generation Z, the largest generation in history, it seems reasonable to assume there will be a healthy demand for the mountain lifestyle well into the future. The only factors that might cause a pause in the demand for mountain resort real estate in the near future would be an economic recession and that Generation X, currently the most active buyers of resort real estate, is about half the size of the baby-boomer generation, which could foreshadow a slowdown in demand as we bridge that gap between baby boomers and millennials.
It’s still unclear what impact Generation Z might have on future ski-resort real estate demand. What we know right now is that members of Generation Z are strongly attracted to city life. Bloomberg recently reported that the trend of Gen Zs to want to live in a major city is strong, so much so that the trend has been dubbed “youthification” — that is, a new kind of gentrification that is age-specific. Another area where there seems to be a distinct difference from generation to generation is the popularity of short-term rentals and shared ownership. A recent study by Phocuswright, a leading travel industry research group, shows that travelers who are 35 years old and younger prefer short-term rentals and shared property ownership. This is the age group that has grown up during the trend of shared services such as Airbnb, VRBO and Uber. Due to their impact on communities and residential neighborhoods, short-term rentals and shared ownership of homes are becoming controversial in most ski resorts. From a demographic point of view, there is likely to be a growing demand for short-term rentals and shared property ownership in the near term, and the long-term outlook for ski-resort real estate looks promising as well.
Lori and William Small, CCIM are recognized luxury and commercial real estate experts with Coldwell Banker Mason Morse in Aspen. They can be found through their website theSmallsaspen.com or by email at thesmalls@theSmallsaspen.com.
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