Lori and William Small

Two months into the new year and the Aspen-Snowmass real estate market continues at a healthy pace. Not quite at the level of activity we experienced the summer and fall of 2020, but still a respectable level of activity compared to prior years.

During the past two months, there were 82 closings totaling $336 million in sales averaging 41 closings and $168 million in sales per month throughout the Aspen-Snowmass market. In comparison, during the second half of 2020, the market saw an average of 81 closings and $458 million in sales volume per month. By comparison, during 2018 and 2019, the total Aspen-Snowmass market saw an average of 37 closings and $111 million in sales volume monthly.

Starting 2021, we’re not seeing quite the level of sales activity we experienced in the last summer and fall, the period of the pandemic boom, but strong activity compared to the more normal years of 2018 and 2019.

One of the primary reasons the market is unlikely to continue at the pace of the second half of 2020 is the low level of inventory of available properties for sale. The number of overall property listings in the Aspen-Snowmass market inched up to 311 at the end of February from a low of 302 in January. In comparison, the number of active listings a year ago in January and February 2020 was around 500, so this is a roughly 40% decline in active listings in one year. This compares to a record low number of listings in the range of 277 to 333 in the last market boom during the three years of 2004, 2005 and 2006. During the depths of the Great Recession in the spring of 2009, the number of active listings hit a record high of 1,072. The current inventory levels near record lows will likely keep a cap on overall sale transactions and sales volume for 2021.

Despite the low inventory, we see a healthy number of pending contracts as we head into the spring selling season. During the height of the market frenzy last summer and fall, we saw the number of monthly pending contracts ranging from 90 to a high of 140 with monthly closings routinely in the 80 to 125 range. In comparison, at the height of the 2005 to 2007 boom, the number of monthly closings was around 40 to 60.

During the 2018 to 2019 market timeframe, we experienced on average 37 closings per month across the Aspen Snowmass market area. So far this year, the market has seen an average of 41 closings each month similar to the levels we saw in 2018 and 2019. The market started this year with about 44 pending contracts and ended February with 87 pending contracts, a clear sign that buyers still have a healthy appetite for Aspen and Snowmass real estate.

Another indicator of market health is the percentage of pending contracts versus active listings. When inventory is low like it last was from 2005 to 2007, this ratio reached highs of 14% to 16%. When the market was weak and inventory was high like it was during the post Great Recession years of 2009 to 2012, this ratio was only in the 2% to 4% range. In the past three months, this ratio has averaged a record high of 20% meaning on average one out of five active listings on the market at any one time were under contract to sell.

Other key indicators to look at to see which direction the market is heading are the 90-day, 180-day and 270-day moving averages of total volume of closed sales. In the second half of 2020, the 90-day moving average was routinely at twice the level as the 270-day moving average indicating an accelerating level of property sales. In January, the 90-day moving average of monthly sales dropped below the 270-day and 180-day moving average indicating that the market is currently in a decelerating phase, most likely due to the near record low inventory.

As we move forward into the spring and summer selling seasons, the key indicators to watch are the direction of the stock market, the trend in the 10-year treasury bill rates and inflation expectations. Historically, the level of activity in luxury home markets like Aspen and Snowmass tends to follow the direction of the stock market. When the stock market is trending upward, that usually means the real estate market will follow.

The direction of interest rates both impacts the stock market as well as the real estate market. Interest rates have been trending upward in the past few months which pushes mortgage rates up making real estate more expensive. The last item to watch is inflation expectations. When investors anticipate more ­inflation, they sell bonds which have the opposite effect of increasing interest rates. These three factors could foretell how the Aspen Snowmass real estate market will perform for the remainder of 2021.

Lori and William Small, CCIM are recognized luxury and commercial real estate experts with Coldwell Banker Mason Morse in Aspen. They can be found through their website theSmallsaspen.com or by email at thesmalls@theSmallsaspen.com.