On 12/24/09, Colorado Public Radio interviewed Aspen real estate broker and blogger Tim Estin about recent trends in one of the wealthiest markets in the country. To listen to interview, click link: “AspenReal Estate Goes Through Peaks and Valleys” .. .This posting is derived from notes in preparation for that interview by Tim Estin mba, gri – Broker Associate/Mason Morse Real Estate Aspen.

National Economy

– Stock market UP +; National confidence UP +
– Not as scary as we thought it was. In Aspen, buyers are still spending a lot for the quality of product they’re getting
– Lots of good news, may be at or near bottom… Likely to be choppy moving forward
– Heard on news the other day markets have vastly improved in LA, SF and Las Vegas: over 50% of the inventory has been cleared out.
– Signs every month that market and conditions are improving

Aspen: Current Data

In Aspen, there’s been an uptick in sales activity due to an increase in marketplace confidence and comparatively from where prices have been. More negotiations are going on, less of a standoff between sellers and buyers, and prices are adjusting.
3 of last 4 months (July, Aug, Oct) were better than 2008, ending a string of 21 months of year over year declines (Pitkin co/Land Title)

Aspen single family home avg price year-to-date (YTD) is basically unchanged from 2008 at $6.1M. But the averages have been skewed by some very high priced and notable sales in 2009 (esp. $43M Willoughby Way, Red Mountain Aspen home sale)

Aspen residential sales Aug 1- Nov 30th (These 4 mos compared to same period 2008)
• Closed sales transactions +26%
• Under contracts +94% (MLS)…under contracts/Pending are an indicator of future activity
This yr sales high end sales stats:
• $7.5M and above: 23 sales in 09 YTD; 28 last year
$8M+ and above, this year 19, 25 last year;
• $9M and above, 15 this year, 17 last year.
Aspen still has sellers who want to sell in this market, and some are still happy – content? – if they bought before the peak and are relieved to have negotiating room and be able to sell.

Average sales price are “holding” but new expensive property sales have distorted the average and median prices.
The Aspen average home sale price:
2008 = $6.2M
2009= $6.1M

But values are dropping as witnessed with Median price stats.

Median prices: (better indicator because averages get so skewed by very high priced sales)
2008 = $5.8M
2009 = $4.76M (-18%)

Market wide volume and dollar sales decrease (Land Title):
2007 = $2.2B
2008 = $1.3B (-50%)
2009 = $1.07B (-18%)

Vacant land prices have dropped an average 25-30% from a year ago. Three most recent sales in Dec. ’09 were off 35-51% from original ask prices.

There has been significant listing price erosion led by builder/developers who want out of brand new properties at approximate range of $800-$1100 sq. ft.

Yet buyers are still spending a lot for the quality of product they’re getting.

What’s Selling?

Anything new, recently remodeled totally pressed out, and great values. Fundamentally, buyers are looking for value. How do they judge value? It’s a combination of BEST QUALITY AT THE BEST PRICE …high quality, high grade properties, A-Grade stuff, AAA locations. These are selling at strong numbers or at great deals.

In this buyers market, shoppers are looking for quality and value. For middle of the road properties, it’s been difficult and really tough. Pricing correctly is the single most important element to a successful listing. If one doesn’t have to sell, don’t; if one does, be realistic…do not be as the 11/23/09 New York Observer article stated, “The Last Swaggerers: Hearty Bunch of Sellers Price Like it 2007”.

Foreclosures

We still have foreclosures: this year in Pitkin County = 105 vs 35 last year. It is the most in 24 years according to a recent Aspen Times article. ..(the average is 40 per year). A big question mark is how deep the pool of distressed sellers is. National media indicates high end distress and foreclosures is a growing problem monthly (See 01/03/10 Denver Post and see 12/18/09 WSJ and 12/29/09 WSJ in the Aspen Real Estate Archives Section on this site), even as the lower end appears to be recovering albeit at vastly lower prices. The downturn is more severe than any we have ever experienced in our lifetimes.

Fractionals: Residences at the Little Nell (RLN) and Dancing Bear (DB)

RLN has been unfairly judged by their immediate and unsurpassed sales success out of the gate, when they started selling in summer 2006. By Sept 2009, they were 98% sold out, an unbelievable success. Offering prices doubled. Then fall 2009 hit and contracted buyers bailed.

Fact: they are almost 50% sold out now. The project opened opened in Feb 2009. The fractional industry in general forecasts selling out within18-24 months after opening, so many regard the RLN sales as still a success, but regretably it falls short of unrealistic expectations when compared to their sales boom of 2006-2008.

The product has always been about LIFESTYLE, not investment. It got skewed towards the investment side as offering prices increased, something a lot of buyers chose to overlook in past 3 years of wild “paper appreciation”. One thing is clear: if one wants to enjoy/own perhaps the ultimate Aspen ski-in/ski-out luxury experience, RLN and Dancing Bear (an in-town boutique experience that is a lower cost alternative to RLN but without ski-in/out) are the way to go.

Owners reputedly love the RLN product: its location at the ski epicenter of the “world” and level of service and amenities are simply unmatched and incomparable. Yes, I am a fan, financing for their product is now available. Call or email me directly for info, 970-920-7387.

Total Aspen Snowmass Fractional Statistics (Land Title)

– Oct 2009 = +101% to $11.9M from Oct 2008
– 2009 YTD = total fractional dollar sales are $173.8M, +314% from same time last year.
– Units Sold = 246 sold units, + 27% over same time 2008.

Future: where are we headed?

2010 is likely to be similar to 2009. I am cautiously optimistic: There will be some great deals, there will be some properties selling for very big $ numbers, importantly the number of transactions are increasing.

We know that in all price ranges we may not have reached bottom and that it cuts across the board and depends on the property, seller circumstances, motivations, etc.

Aspen is like a lot of places throughout the country. The real estate values and economy were not immune to global and national declines, Yes, some businesses failed but new ones are coming in here. We have new restaurants art galleries and retailers opening regularly.

But Aspen is NOT just about Real Estate: we are a four season destination resort offering unmatched recreational, arts and cultural amenities and that’s what’s going to pull us through all this.

Aspen Ski Co is a private family owned company that continues to invest in the quality of the ski experience. It’s put in approx.$130MM in past 6 yrs in capital improvements. This year it’s maintaining the same level of guest services as last year (staffing and hours of operation on or near mountain).

Even though inventory of properties for sale has swelled, there is still relatively little product available in Pitkin County. 92% of the land surrounding us is publically owned( USFS, BLM, Open Space and conserved land).

Bottom line: there’s only one Aspen – think sports, arts and culture offerings: short term, yes there are challenges and businesses will be choppy because as mentioned, we have found we are not immune from national and global economic events as previously thought. Aspen offers a small town community with world class amenities within a highly restrictive zoning environment that for the past 40 years has has successfully protected its unique beauty and historic charm. There is every reason to believe that in an over-crowded and somewhat homogenous resort fair, Aspen’s unique attributes will be in ever-increasing demand in the future.

Buyer Opportunities

1. The best deals are on properties in which there is significant financial stress on sellers. These are new development projects, spec homes, property owners who bought at peak and may be highly leveraged, where loan pressure is motivating a sale. Buyers are looking for quality at the best price and these new build and remodel projects being sold by motivated sellers represent excellent quality at historically reduced prices.

Read: The Estin Report interview in 11/16/09 Aspen Daily News

2. Ability to obtain beautiful and unique homes seldom available. This is an uncommon period in which buyers can obtain Grade AAA properties in stellar locations – the Best Properties – and/or with unique circumstances that cannot be reproduced and are irreplaceable due to changes in Pitkin County land use codes.

3. Window for Buyers: Great Quality/Great Price = Great “Deals” will be gone before one knows it…by the time one does, it’s too late.
There is a “window” of opportunity for buyers to purchase quality and uniqueness at the best price = Great Values. But the inventory of buyer opportunities suggested above are finite and limited. When they’re gone, they’re gone and buyers will have less high quality choices. Even though prices may still be down, the quality of what is available will be less. The Great Quality/Great Price =Great “Deals” will be gone.

For those market timers, one will not know or see the turn in the market until it has already occurred.

Why Care about Aspen Real Estate?

Aspen real estate is probably more interesting from a human interest point of view than real estate specific interest. Of course it’s always interesting to hear about the wealthy and what’s happening on their lives. It makes most regular mortals feel better, I guess.

But what happens in Aspen is certainly important for the Roaring Fork Valley …ripples in the pond theory: what happens here creates waves as one travels down-valley. The closer to Aspen, the higher the real estate prices, the greater the economic impacts. A lot of people who work in Aspen or own businesses here live outside the immediate area, so their jobs and businesses and livelihood depend on the Aspen economy.

Other than that, probably no reason for the national media to really care. But they do. Our market is watched, and people do appear to be paying attention.

Disclaimer: The statements made in The Estin Report represent the opinions of the author and should not be relied upon to make real estate decisions. Information concerning particular real estate opportunities can be requested from Tim Estin at 970.920.7387 or at testin@masonmorse.com. A potential buyer is advised to make an independent investigation of the market and of each property before deciding to purchase. To the extent the statements made herein report facts or conclusions taken from other sources, the information is believed by the author to be reliable. However, the author makes no guarantee concerning the accuracy of the facts and conclusions reported herein. For reproduction use of any parts of The Estin Report, the author requests direct attribution to him as, “By Tim Estin, The Estin Report, at www.EstinAspen.com” or please contact him directly. All rights are reserved and the articles and blog posts are copyrighted.