[REN #714] Shorter Ski Seasons Affect Home Values

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Image of a Ski Chair Lift for Real Estate News for Investors Podcast Episode #714

We’ve seen headlines about climate change and the threat of rising sea levels for homes along the coast, but what about businesses and homes in the mountains that depend on snow? A new study shows a dramatic decrease of snow in the western states since 1980 and a corresponding decrease in the length of the average ski season. Real estate experts say this could have a big impact on the value of ski resorts and snow homes.

The Journal of Geophysical Research Letters just published a study on snowfall changes in the western U.S. It found that the amount of snowfall we’re typically seeing today is about 41% less than it was in the early 1980’s. That has also shortened the ski season by an average of 34 days.
 

$20-Billion-a-Year Industry

Tourism and snow sports contribute a great deal to our economy, including luxury ski resort homes. CNBC says that researchers from the University of New Hampshire and Colorado State University have determined it’s a $20 billion-a-year industry. This year’s season is one of the best in years, but experts told CNBC that great ski seasons will be harder and harder to come by as the global climate heats up. And there’s already evidence of the financial impact on resorts like Vail in Colorado.

Vail reported better-than-expected quarterly earnings recently, but it also lowered its full-year guidance because of concerns about the snow. As CNBC reports, Vail experienced two years of poor pre-holiday conditions, and CEO Robert Katz says that guests are worried about future ski conditions.

He says that investors have also voiced concerns. They’ve told him, “If I’m going to invest in Vail Resorts, how do I know that you can consistently drive results, even though you are subject to the weather, the snowfall, the temperatures?” (1) Katz says the resort is addressing the issue by changing its business model. Of course, that includes a better plan for snowmaking to keep slopes covered during times of snow drought, He’s also doing that in a more energy efficient manner, with solar panels and low-impact snow making equipment.

The company already owns 15 mountain resorts in the United States, Canada and Australia, and is buying more properties to help offset the possibility of poor ski seasons at some resorts. It’s also introducing a pre-season life pass called the “Epic Pass” that will give skiers access to any Vail resort. That will help boost revenue ahead of disappointing weather conditions.

And finally, Vail is adding summer activities like zip lines and mountain coasters to help maintain profit levels. These are the kinds of things ski resorts can do to protect themselves economically, but it may not be as easy for snow country home owners to salvage their home values.
 

Ski Home Values at Risk

CNBC says that ski towns like Vail and Aspen have some of the highest home values in the country right now, but that climate change could bring them down. The article cites a study by the University of Wisconsin that predicts a 15% loss in home values by the year 2050 for properties near ski resorts. Researchers say the drop could be as much as 55% for lower elevations in Utah, Idaho, Nevada, and parts of California.

One real estate agent told CNBC that he was surprised by the poor ski conditions last year, and how they rippled through to the start of this year. John Lautenberg sells luxury homes in the Vail area and said, “That was the first delayed opening that I’ve seen since I’ve moved here in 1991. I think a lot of people were a little bit gun shy from last year. Deposits on hotels, and rental properties, and everything else.”
 

Climate Impact Will Vary

Scientists cited by a similar article in Climate.gov (2) say the impact will vary depending on where the ski resorts are located. Snow in California’s Sierra Nevada may be more at risk than the Rocky Mountains because of the lower elevations.

There’s already a big difference in the consistency of the snow. In the Sierra, the snow is often described as Sierra cement because of high water content that can freeze and create cement like ski conditions. Researcher Dan McEvoy says that kind of snow does have its advantages because it “sticks to everything” so you can ski on really steep slopes.

In the Colorado Rockies, where the elevation is higher and temperatures are colder, there’s more powder. Skiers there often boast about having superior snow called Colorado champagne.

Although Colorado may have a better chance at surviving the effects of climate change, the shrinking ski season is a concern at all ski resorts. McEvoy says, “I used to ski on Thanksgiving when ski resorts really got going. Now I’m lucky if I can ski that early.” And the season is getting shorter at both ends, jeopardizing both the holiday ski season, and the one during spring break.
 

60% Reduction in Snowpack

Various studies show that the risk is much greater at lower elevations. According to California’s Fourth Climate Change Assessment published last year, average temperatures will rise 6 to 9 degrees by the end of the century with snowpack reductions across 60% of the Sierra Nevada range. It also concludes that a solid snowpack below 6,000 feet will be unlikely.

Research scientist, Cameron Wobus, out of Boulder, Colorado, led another national study on how climate change impacts U.S. ski slopes. He used five climate models along with high- and moderate-emission scenarios. Under both scenarios, study results show the winter ski season could be cut in half in some places by the year 2050.

New England skiing may face the highest risk. Wobus says, “I was a little surprised at how dismal the results look in the Northeast where I grew up. By the end of the century, people will not be skiing in New England.” Researchers say the Sierra Nevada will be in better shape than the Northeast, and the Rocky Mountains will do even better, mostly because of the higher elevation. Much will also depend on how we deal with climate change going forward.

This is food for thought for skiers, mountain homeowners, and investors interested in those snowy slopes.

Links:

(1) CNBC Article

(2) Climate.gov Article

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