Aspen City Council has recently discussed the need to upgrade the inventory of condos for rent to make Aspen more competitive with other major ski resorts. The last great Aspen condo building boom took place back in the in the 1960s and 1970s. The aging condo inventory may also be having a detrimental effect on the overall vitality of the Aspen real estate market. Of the 178 condos currently listed for sale, only 11 percent were built after 2000. At the same time, almost half (46 percent) of the condos currently for sale were built prior to 1980.
In the past year, there were 49 condo sales in Aspen. The most active slice of the condo market has been those valued in the $1 million to $2.5-million range. With 33 sales in the past year, this price range represents about 67 percent of the overall condo market. At the other end of the spectrum are condos valued under $1 million. In this price range, there are currently about 58 active listings — but only four sales in the past year, which represents an almost 15-year supply at the current absorption rate. One of the reasons why this segment may be so slow is that roughly 90 percent of all condos currently listed in this price range were built prior to 1980. In other words, most of this inventory is over 30 years old.
The aging condo inventory and the low level of new construction across all segments of the Aspen real estate market over the past five years may explain why, halfway through the 2013 calendar year, the Aspen real estate market has been relatively flat compared to the past few years. Through the end of April, the overall volume of real estate transactions in Pitkin County was roughly $303 million, a pace that is about 13 percent behind the same period in 2012. Many attribute the slower start to this year’s real estate market to the record pace of the Aspen market in the last month of 2012, when the total volume hit $270 million, or more than twice the volume of any December since 2007. The strong finish to the 2012 market was due primarily to the threatened changes to the capital gains tax rate.
However, the other reason for the relatively stagnate nature of the Aspen real estate market might be the aging inventory of condos and single family homes. It’s most obvious in the condo market because of the lack of available sites for new projects and the difficulty in getting government approval for major projects in and around the downtown Aspen core were the highest density of condo properties currently exist.
Whether you are buying or selling a condo, it’s useful to keep these thoughts in mind. Buyers continue to demand newer or newly renovated properties and tend to show less interest in older units, and particularly older units that haven’t been recently renovated. Older units that haven’t been renovated, or are in buildings that haven’t been renovated, will have the most competition from other similar units to get sold. Sellers of older units should consider a renovation before putting their properties on the market to get the highest price. Buyers, on the other hand, may want to look at older units on the market for the best prices and consider post-purchase renovation.
This opinion article is provided by William Small, JD, CCIM, managing director of Frias Luxury Estates, a division of Frias Properties of Aspen. Email him at firstname.lastname@example.org.