2 second homes: mountain getaways key to local economies.

• Author: Lewis, David
• Position: Northwest Council of Governments' report, The Social and Economic Effects of Second Homes

Colorado's mountain, second-home market made a recovery in 2003, and then re-launched itself into the stratosphere in 2004. So what's that mean for the market in 2005? The ionosphere?

Second homes are the biggest single pillar of the mountain-resort economy; their sales comeback certainly stimulated the whole high-country mountain real-estate market and, just possibly, the entire high-altitude economy.

And yes, you read that right:

Second homes are the biggest single pillar of the mountain resort economy.

There's proof. Remember just a couple of years ago, when mountain-resort, real-estate values were falling faster than an Aspen avalanche?

Just a bit more than a year-and-a-half ago, Enron exchairman Kenneth Lay sold the last of his four Aspen properties--for $125,000 below what it brought just four years before. And a year before that, then-Army Secretary and former Enron Vice Chairman Thomas White sold his Aspen mansion. The price was not disclosed, but White had offered the manse for $7.25 million; it had cost him $7.7 million a year earlier. And a few months before White bought that house, Priceline.com chairman Richard S. Braddock bought Aspen's Peak House for $22 million, $5 million less than the asking price.

[ILLUSTRATION OMITTED]

Now, fast-forward to February 2004, and a big second-home deal that garnered even less of its original asking price than the Peak House sale did--but still cost a cool $46 million.

That hefty sale by Hollywood mogul Peter Guber signaled a turnaround in the mountain market. Guber--producer of "Flashdance," "Rain Man" and "Batman"--sold his 650-acre Mandalay Ranch to the chairman of mortgage company Ameriquest Capital Corp., Roland Arnall, and his wife. For the Aspen area, the $46 million transaction was a real record residential sale (as opposed to the sale of residential property for development). From that point on, "the market went nuts," said one Aspen real estate agent.

Now, "We're just starting on the way up," said Robert Ritchie of Coats Reid & Waldron, the agent for the Guber transaction. Ritchie predicted the town's residential real estate prices in 2004 would rise between 30 percent and 50 percent (depending on how many closings hold over until early 2005).

"A certain psychological change came about when that (Mandalay Ranch) sale occurred," Richie explained. "It ended a long flat market. The market didn't have a lot of impetus, and that sale gave it a lot of credibility to people on the fence"...