Resort Real Estate : Does Supply Prevent Appreciation?

This paper examines the behavior of ski resort property in a major New England market over the last 25 years. A constructed property price series reveals that nominal prices are quite volatile and only slightly higher today than in 1980. These fluctuations and trends are investigated with a time series VAR model. The findings indicate that (1) natural snowfall is crucial to business; (2) regional annual business is central to individual resort demand and hence price appreciation; and (3) resort supply responds so elastically to any movement in prices, that it effectively curtails any long-term property appreciation. Impulse responses reveal that positive demand shocks fail to generate any long-term (real) price appreciation because of excessive new development. This behavior could be typical of many other ski resorts