They often say "it's darkest before the dawn." However, another saying goes that "it's darkest before its black." One of these two phrases could well describe the current state of the Aspen/Snowmass real estate market.
Despite all the doom and gloom being reported from Wall Street, Washington, D.C., and here in the Roaring Fork Valley about the real estate market, there is growing evidence that the one-year slowdown in the Aspen/Snowmass may be reaching a bottom. One of the glimmers of hope which means that the market could be forming a bottom is the Snowmass single-family-home market.
Since the first of May, the inventory of Snowmass single-family-homes for sale grow from about 40 to a peak of about 68 near the end of July, about a 70 percent increase in just three months. By itself, that's not a very good sign. However, since peaking at the end of July, the market has absorbed enough excess inventory to reduce the current homes in the Snowmass Village market to about 60, a roughly 12 percent decrease in the past 60 days.
In the past 12 months, about 30 single-family homes have sold in Snowmass Village of which 20 have sold in the past six months. If this trend continues, the current inventory of homes in Snowmass Village could be sold off in 18 months compared to more than 36 months for the Aspen market.
What's most significant about the Snowmass single-family-home market is that some of the market indicators are starting to shift directions after almost a year of a downward trend. The median list price for homes currently stands at $4.2 million down from about $4.5 million at the end of April. This is a positive trend from the point of view of creating sales transactions and moving inventory.
The other positive trend in the Snowmass single-family-home market is the change in direction of the average days-on-the-market indicator. The 60 homes currently on the market have been on the market an average of 119 days. This indicator peaked mid-August at about 129 days and has slowly declining for the past six weeks.
Another indicator we watch is our Market Action Index. The Market Action Index is a leading market indicator designed to gauge whether prices will increase or fall in the future. This index measures available supply relative to the current level of demand and average days on the market for unsold properties. An index value above 30 indicates conditions favorable to sellers; whereas a Market Action Index below 30 indicates the market is getting more favorable for buyers.
Over the past nine months, the index has steadily trended down from about 27 at the beginning of the year. In late August the index bottomed out at 10. Since early September the index has moved up slowly to 12. It's hard to say at this point whether this is a pause in the downward trend or a true turn around, only time will tell.
Market recoveries often start at the bottom and work up the price scale. Since the Snowmass single-family-home market's median listing price is about 45 percent less then the Aspen market, this could be the early signal of the beginning of a recovery in the entire Aspen/Snowmass market.
Regardless of this new development, it's still a buyer's market. If the market has bottomed, it could be the best opportunity to buy a single-family home in Snowmass Village that we've seen in some time. Even though the market fundamentals may be starting to improve, it will not necessarily be obvious to the general market for several months. Smart buyers should start looking now and be ready to move once the market trend is clearer.
William Small, JD, CCIM is managing director of Frias Luxury Estates, a division of Frias Properties of Aspen that specializes in marketing luxury residential properties in the Aspen/Snowmass area. If you are interested in receiving a copy of William's monthly market report, you can reach him at 429-2419 or bill@friasproperties.com.
