The summer of 2020 has been a crazy summer for the Aspen-Snowmass real estate market.
As of the end of August, the real estate market had set all sorts of records for sales, with the activity likely to carry over into the fall. So far this year, the market has recorded a total residential sales volume of $1.43 billion, an impressive 48.6% increase over the total sales volume of residential sales at this time last year. In August, the number of sales transactions hit 102, which was twice the number of closings as in July, the record month prior to August.
This summer has been, by all measures, a record three months in the history of Aspen-Snowmass real estate. If this pace continues, we’re likely to record an annual sales volume of residential properties in the Aspen-Snowmass market in the low $2 billion range, which would be 30% greater volume than the market experienced during the last real estate boom of 2006- 07.
The Aspen-Snowmass market is not alone for historic levels of real estate sales. Home buying interest across the country has soared as a result of underlying demographic trends, record low interest rates and urban flight spurred by the COVID-19 pandemic. Nationally, new home sales spiked by 13.9% in July. Existing home sales have also increased by 14%, the biggest jump in 14 years. This has been against a backdrop of a lack of inventory nationally.
However, lack of inventory hasn’t been as much of an issue here in the Aspen-Snowmass market. Sellers have taken advantage of this summer’s hot market. While the number of sales has set records, so have the number of new listings.
In June, July and August, an extraordinary number, 376 new listings, came on the market keeping the active number of listings in the mid-400 range, which is low but not as low as it was in 2005 when it was in the mid-200s for more than a year. The percentage of listings under contract, which normally averages in the 4% to 6% range, is now at a remarkable 12%.
All this real estate activity is, however, taking place against a backdrop of economic distress nationally. While existing and new home sales across the country have risen dramatically, the index of consumer confidence has fallen to 84.8, the lowest figure in six years, and unemployment now hovers around 11%, which raises the question of how long can this real estate boom last?
There seems to be a great disconnect in the real estate market that’s similar to the stock market. While stocks on Wall Street are hitting all-time highs, businesses on Main Street are suffering. Most economists feel that both the real estate market and the stock market are benefiting tremendously from the aggressive Federal Reserve monetary policies that are supporting record-high financial asset prices; and the Federal government’s fiscal policies supporting businesses through PPE and workers through the CARES Act.
The Aspen-Snowmass real estate market is highly dependent on the affluent consumer. Upper income spending is most clearly tied to conditions in the financial markets. If the financial markets stay strong, upper-income households should continue to spend robustly on real estate here in the Aspen-Snowmass area. If, however, the financial markets start to weaken, expect a pullback in demand for expensive homes. It’s likely the local real estate market will slow as the urban flight market force starts to run its course. However, as long as the Federal Reserve’s actions keep the stock and bond markets healthy, we should expect to see a healthy real estate market in this area, although likely at a pace we’ve experienced in the past two to three years.
Lori Small is a luxury real estate broker associate with Coldwell Banker Mason Morse; and William Small, CCIM is the Founder and CEO of Zenith Realty Advisors, LLC, a commercial-investment real estate advisory and investment firm.