From our friends at Fairview Lending. All opinions are that of the author. 


Ukraine impact on Colorado ski real estate

What a few weeks it has been.  The stock markets have been up, then down.  Interest rates have also spiked only to fall shortly thereafter.  I’ve been asked by several realtors in various ski towns, what is the impact of Ukraine and real estate prices in Colorado.  Will there be a surge in prices as buyers search for “safe places” and safe assets like we saw during COVID?

What has happened economically since the invasion of Ukraine?

  1. Fed on track for rate increases: the federal reserve has confirmed that rate increases are on track and they might need to have larger increases in subsequent meetings as inflation remains stubbornly high
  2. 10 year treasury declined / mortgage rates declined: It is interesting that the federal reserve is clear that they are raising rates, but at the same time interest rates are falling. Remember the fed only controls the short term markets and not long term treasuries, which mortgages are pegged off.  Treasuries are “set” by market forces, in this case, there is a huge flight to safe assets like US treasuries during times of war and uncertainty.  As more people buy treasuries their prices go up, and in turn yields (long term rates) go down.  This creates a whole new problem for the federal reserve and could force them to increase rates even more.
  3. Stock market has declined substantially: As mortgage rates went down due to a flight to safer assets, the stock market has also gone down substantially as investors are nervous about riskier assets.  As stocks go down, wealth decreases which at some point decreases consumer confidence.

Will there be a flight to “safety” in Colorado ski towns?

With everything going on since the Ukraine invasion, it makes me wonder if we will see another Covid type repeat in Colorado ski towns where there is an insatiable demand.  During Covid, there was a huge “flight to safety” as people wanted to be in smaller, safer markets.  This led to huge price jumps in every ski market in Colorado with some topping 50% increases year over year.

With the war in Ukraine continuing, will Colorado ski towns see the same response in real estate to the current crisis?  I think the factors today are a bit different, I don’t think there is the same perception of personal “safety” from the crisis in Ukraine but there is now a big push out of risky assets into safer assets which fits with Colorado ski real estate.

Will there be an increase or a decrease in Colorado ski real estate prices?

Although we will not see another huge increase in real estate prices in the mountains like the Covid bump, it will remain desirable as buyers look for safe places to park assets as opposed to the stock market.  This will keep Mountain real estate a desirable asset to own which will keep prices high albeit the appreciation rates will be slower than the past 3 years.



I don’t think that the Ukraine invasion is market moving unto itself for Colorado ski real estate, but the invasion does put further pressure on other assets which will drive high net worth individuals to diversify their portfolio into safer assets.  From a real estate perspective, mountain real estate will continue to be a “haven” for investors looking to hedge against downside risk.  Although I don’t think we will see the same appreciation we saw during Covid, the mountain communities look to stay at their highs with little respite in sight for buyers as prices look to increase a bit further.


What will cause Colorado ski real estate prices to fall

If you’ve been reading the news, it seems to be everywhere, complaints against vail resorts are plastered all over the media.  With Vail the largest owner of resorts in Colorado and the United States will this derail the real estate party in ski towns or is there something bigger lurking that will radically change the real estate trajectory.  Will we see a 2007 repeat in Colorado ski real estate?

Complaints about Vail resorts impact on ski real estate

I recently read a Denver post article about Vail resorts and the diminished guest experience.  It gave a scathing review of Vail resorts.  On top of that I have written prior that Vails stock is taking a beating as a result of their lackluster execution of the ski season this year.

  1. Epic pass sales are up 76% vs. the 2019/2020 ski season, meaning the slopes would likely be more crowded to start with regardless of any labor issues.
  2. With resort living becoming increasingly more expensing, MTN’s wages are allegedly not keeping up in their local markets
  3. A pandemic-triggered escalation of real estate prices has reduced the number of homes available to local workers for rental
  4. H2-B and J-1 international work visas, which ski resorts have historically used to fill employment gaps, are in especially short supply leading to continued labor issues.

It doesn’t take a rocket scientist to figure out what was going to happen this season.  Vail dropped the price of their passes by 20% to sell more and it worked.  They sold 76% more passes but unfortunately they did not add any new capacity.  This has led to a “diminished guest experience”.  How could any rational person not see that this would happen?

Unfortunately part of the issues are a result of Vails own making, but the overwhelming majority is well outside of their control.  For example in Breckenridge house prices have increased almost 40% in one year.  This has priced would be renter out as houses get sold.  Furthermore, the demand to visit/live in the mountain towns has skyrocketed creating even more demand for workers with less housing.  Unfortunately I don’ see a great solution to the issues facing Vail.

On a positive note, Vail’s performance or lack thereof will have no impact on real estate prices in the various resort communities.   This will definitely not be the impetus for any real estate pull back.

Will rising interest rates impact purchases in Colorado ski towns?

There is no doubt interest rates are rising on treasuries and in turn mortgage rates.  The federal reserve has telegraphed a more aggressive rate stance which will put further upward pressure on mortgage rates.  How will the increasing rates impact Colorado ski real estate?  Long and short, interest rates should have a limited impact due to the number of cash purchases.  In most major ski resorts in Colorado the number of cash purchases are between around 40% and 70%. This is a huge percentage of purchases that are not interest rate sensitive as they have no mortgage.  Here is a past article on this topic: Best Colorado ski town investments.  With such a large percentage of properties being bought with cash, a move upward in rates is unlikely to be the catalyst for a slowdown in ski real estate.

What is the real risk to ski real estate?

If mortgage rates and the performance of the largest ski hill operator are not going to slow down ski real estate, what will?  With appreciation averaging north of 25% per annum throughout the ski towns with some as high as 40%, the pace of increases is unsustainable.

Resort real estate is highly correlated to stock market performance. With the huge quantity of cash transactions, much of these funds were from gains on equities.  Furthermore, the demographics of various ski towns throughout Colorado are heavily invested in the stock market due to their net worth.  As the stock market is now beginning to correct, ski real estate will invariably slow.

Will there be a correction in ski real estate like the stock market?

With a high correlation between the stock market and ski real estate, will there also be a correction in ski real estate.  As of writing this the Nasdaq is off almost 15% for the year with the S&P down around 10%.  With a correction underway, what happens to real estate?

Fortunately, although there is a correlation between the stock market and ski real estate it is not a one for one correlation.  For example a 20% drop in the market, might lead to a flattening or possibly a loss of 2-5% in ski real estate.  Remember even if real estate values flatten this is after 30% gains last year in many markets so it is important to keep it in perspective.



Long and short, I don’t see a fire-sale coming with values plunging in ski real estate as the market corrects, but the market will flatten and there is a risk of a small give back in appreciation depending on how severe the correction is.  Fortunately there is zero excess inventory in the various resort towns and build prices are extremely high coupled with so many cash purchases, the downside risk in ski real estate is radically different than 2007.