Over the Horizon Line | Column By Hal Rothman

The New West, New Retirement Destination

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Retirement|Real Estate|Western Demographics|Hal Rothman|

If you think the boom in Western real estate is nearing its apex, think again. It is only just beginning. Even as publications bemoan the disappearance of affordable mountain paradises, the parade of communities that are beginning to feel the pressure of rising land and housing costs grows and grows. What was once a coastal phenomenon has become ubiquitous. Land all over the West has gotten pricey and the process is only just beginning.

The reasons are more complicated than the truism, "buy land because they aren't making any more of it," would suggest. Ever since California went haywire in the 1970s, an enormous tidal wave of people and capital has been building in the Golden State. Every time California's economy, never less than the fifth largest in the world, had a downturn, people fled to safe havens in the interior. On the countless occasions when California's social climate seemed crazier than most could bear, even more found new homes in the mountains. From Coeur D’Alene to Bozeman, Sedona to Santa Fe, every third person once lived in California.

Even more, it seems that every other person in such towns hails from New York. The West has always been a place of refuge for people from the East, and they have a disproportionate impact. "Neo-natives," people who come to a place for its qualities, but inadvertently change it into the place they left behind, are the characteristic feature of the New West.

They are not only Californians and New Yorkers. The Sun Belt is filled with so many people from so many places that it sometimes seems that a giant took the United States in 1960 and tilted it to the south and west, producing the demographic shift that has made California, Texas, and Florida three of the top four in population. More people means more demand for land.

And of course, the semi-empty resort towns serve as the symbols of what's gone wrong. Aspen has become so elite that mere mortals can not afford a room at the inn. Such towns run on a logic all their own. Caretakers are the sole inhabitants of enormous palaces 50 weeks of the year. Still, they seed the expectations of the rest of us, offering an Entertainment TV vision of what life can be.

But that only gets us to now. The real pressure in the future is already evident in the warmer states, Arizona, Nevada, and to a lesser degree, New Mexico. Retirement is the future.

Today’s retirees are the wealthiest generation in human history, the beneficiaries of the Great Aberration of prosperity that stretched from 1945 to 1974. The baby boomers will be even wealthier. They will have their own money and will also benefit from the greatest cross-generational transfer of wealth in human history from their parents. They will have time and better health than any predecessors, they will live considerably longer than their parents and grandparents, and they have such a penchant for experience that I have come to think of them as the “curious generation.” As this elephant has done throughout its passage through the boa constrictor of time, retiring baby boomers will again revolutionize American life as they approach life’s exit.

In the next three decades, this trend will reshape the West toward retirement. The oldest and most affluent of that enormous cohort, of the glimmer of diamond sheen atop the iceberg, has already made the transition, but their castles, tennis courts, and pools do not typify what will follow. The first to settle down to the eternal routine of travel, golf, and dinners out are the wealthiest strata, the people for whom cost is not an object. Most of the retirees to come will have to manage on a budget of one kind of another.

The West is being reshaped to meet their needs. Phoenix began the trend with Sun City in the 1960s, and ever since, Arizona has become a retirement Mecca. Of late, demand has changed the structure of the regional real estate market. The dramatic increase in housing prices in the past two years in Scottsdale and other parts of the Valley of the Sun owe something to the Del Webb Co.'s gamble in the desert so long ago.

In the shadow of California, Las Vegas has morphed a retirement hot spot, the result of good quality of life, until three years ago reasonable living costs, no taxation to speak of, and the range of amenities - like the ever more expensive golf - it offers. The almost 25 percent of the greater Las Vegas population that were retired in 2005 are the crest of a remarkable wave that continues to reshape life in Sin City.

In Las Vegas, retirement has already altered the economic structure of the real estate market. From 1985 to 2002, the average home cost roughly $150,000, making the community a wonderful choice for middle-class retirees, civil servants, federal employees, military and otherwise, and union workers from the Rust Belt.

Since then, housing costs have doubled-the spread of the coastal disease of perceived scarcity accounts for much of the increase-and who the retirees are has changed. No longer blue-collar, they have become professional class, owners of stocks and bonds who manage their own 401Ks. The demands this constituency makes on social services, local government, and infrastructure is considerably greater then their less affluent peers.

In Rio Rancho, New Mexico, just outside of Albuquerque, a similar transformation has already taken place. With roughly 10,000 people in 1980, Rio Rancho is now home to more than 62,000, and made CNNMoney.com’s 2005 list of the best places to retire. One-quarter of the population is already retired, and retirees make up the largest contingent of newcomers. Rio Rancho still provides a haven for the less affluent. The mean home price, about $135,000, is well below regional norms and helps account for the continued popularity of the town.

The retirement economy mirrors the patterns of visitation in the West. Like visitor dollars, retiree money is part of a transfer-payment economy. The dollars that buy their houses, pay for their medical care, and otherwise sustain them were not earned inside the local wage scale. Dollars earned elsewhere spend well anywhere, contributing to local prosperity at the expense of the places from which they originate while at the same time, forcing prices upward in their new communities.

Western land and homes will get more expensive, changing the real estate market and the makeup of communities. More communities will have the momentary cachet of hip, only to be transformed into retirement communities, replete with faux diners designed to remind their patrons of the post-World War II era. All tourist markets ultimately become real estate markets; the only question is what kind of real estate market you’ll be. The West will supplant Florida as the nation’s leading retirement destination; this transformation will evoke the Western past, but will certainly not be of it.

Hal K. Rothman is Professor and Barrick Distinguished Scholar at the Department of History at the University of Nevada-Las Vegas. Considered the one of the nation’s leading expert on tourism, travel, and post-industrial economies, he is the award-winning author of countless books, including the widely acclaimed Neon Metropolis: How Las Vegas Started the 21st Century (2002), Devil’s Bargains: Tourism in the Twentieth Century American West, (1998 ), Saving the Planet: The American Response to the Environment in the Twentieth Century (2000), which received the 1999 Western Writers of America Spur Award for Contemporary Nonfiction, and many others.

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