Across the country, second-home real estate markets are booming. Story after story has emerged in the past couple of months of record demand for homes located in areas outside major cities and resort areas around the county.
Whether it’s beach communities, like the Hamptons and Cape Cod, or mountain resorts from Colorado to Wyoming, traditional second-home communities are seeing an unprecedented demand for long-term rentals and properties for sale. This demand seems driven by the desire of city dwellers to relocate to suburban and rural areas to ride out the coronavirus pandemic.
The reasons for living in cities such as the social interaction, live sporting events, entertainment, theater and plenty of bar and restaurant opportunities have, for the time being, disappeared due to the pandemic. City dwellers have figured out that the pandemic’s impact on city life is likely to last much longer than originally thought and are seeking to live in areas that offer a quality lifestyle less dependent on large social gatherings.
The Aspen Snowmass real estate market has been a beneficiary of this migration, which seems to have no end in sight. When the year began, it appeared the local market would experience another good year with the total sales volume at or above the 2019 volume. Three months into the year, the coronavirus hit the market like a brick bringing the number of real estate transactions to a virtual standstill for almost three months.
By mid-May, it looked like the local real estate market was in for a serious slump as the phones of local real estate offices went silent. But soon after, the phones of local real estate offices started ringing off the hook with clients from around the country looking for long-term summer rentals. This early wave of renters was soon followed by a flood of buyers looking to relocate to the Aspen-Snowmass area to escape the heavily pandemic hit cities.
Across the country, second-home markets are seeing record numbers of properties going under contract and record closing activity. In the Aspen-Snowmass area, the real estate market is experiencing record numbers of properties going under contract and a surge in new listings. In the past three years, the average number of residential properties that would go under contract in a given month would be in the 35 to 45 range for the entire Aspen Snowmass market. In April and May of this year, during the peak of the pandemic shutdown, that number dropped to 12 each month.
In May, the number of pending listings increased to 22. By the end of June, the number of pending contracts increased dramatically to around 64. At the end of last week, the number of pending contracts stood at 115, a number of pending sales not seen since the height of the market back in 2005 and 2006. If all these pending sales close, the third quarter of 2020 will likely be a record quarter for sales of over $600 million in the Aspen-Snowmass market.
At the same time properties are going under contract at record pace, the number of new listings is also surging. In 2019, the average number of new listings coming on the Aspen-Snowmass market averaged about 52 per month. In the first quarter of 2020, the available property listings in the market dropped 12% as sellers withdrew their listings due to the pandemic. But in June the number of new listings increased dramatically to about 104 as sellers relisted properties that had been withdrawn. Just in the first half of July, 65 new listings have come on the market.
If that pace continues, July could set a record for new listings coming on the market. With both sales and listings surging, the market slowdown in March, April and May will be a distant memory.
If this “escape the city” trend continues through the remainder of the year, the local market could see total real estate sales for 2020 exceed the $2 billion mark, a total sales volume not seen since the height of the 2006 to 2008 market making the current Aspen Snowmass market one of the strongest second home markets in the country.
Lori Small is a luxury real estate broker associate with Coldwell Banker Mason Morse. William Small, CCIM is the Founder and CEO of Zenith Realty Advisors, LLC, a commercial-investment real estate advisory and investment firm. Lori@LoriSmall.com and William.Small@ZenithInvestment.com