Aspen-area real estate brokers said that most sellers are in wait-and-see mode before deciding whether to lower asking prices in the midst of the COVID-19 global public health crisis, while buyers also are holding off to better assess the pandemic’s fallout, according to perspectives shared during an industry update discussion last week.
As such, the number of new real estate deals coming under contract has slowed dramatically since the March 15 ski area closure and the March 23 public health order mandating that tourists stay away and residents stay home. The order also prevents in-person showings and means that closings have to take place outside the title company’s offices, presenting new logistical challenges to which the industry is adapting.
Andrew Ernemann, broker associate with Aspen Sotheby’s International Realty, said on the April 16 webinar organized by Land Title Guarantee Co. that there were a total of 14 properties under contract in the Aspen market, with six in Snowmass. This time last year, there were 55 properties under contract in Aspen, with between 35 and 40 in Snowmass, he said.
There have been some high-dollar closings in the last few weeks, including a $12.2 million sale for a property at the base of Smuggler Mountain and a Stillwater Lane home for $21 million, both brokered by Carrie Wells of Coldwell Banker Mason Morse and negotiated before COVID-19 shutdown nonessential businesses.
Brokers on last week’s call reported that most deals that were supposed to close have closed, though some contracts fell through. Ernemann put the total number of Aspen-area terminated real estate contracts as a direct result of COVID-19 at 20 to 30, which is “significant,” he said.
Sam Augustine, a broker with Compass, said that most of the buyers he was working with before mid-March haven’t written off the notion of purchasing a home here, but they want to wait 30 to 90 days to see if prices drop. Meanwhile, sellers who don’t need to sell are holding firm on their pricing.
Ernemann concurred on sellers’ attitudes.
“Aspen/Snowmass is historically a place where sellers don’t need to sell. Very few have shifted to need mode. … Generally we saw this in the last recession. It takes more than a few weeks for Aspen/Snowmass sellers to show any desire to lower their prices en masse,” he said.
On the flipside, many buyers in the market right now are feeling they should be getting a better deal; Ernemann referenced the phenomena of the “COVID offer” of 30 to 50 percent off the list price.
Meanwhile, potential sellers are waiting to list their properties until society begins to reopen. Augustine said the common attitude is, what’s the point if it’s offseason anyway and you can’t show the home in person?
Said Ernemann, “We don’t have the runway behind us with new contracts and closings” to show the true impacts of COVID-19 on local real estate.
With that level of suspended animation, MLS services in some communities have paused the count of “days on market” attached to listings, until normal activity in terms of in-person showings can resume, said Brenda Wild, managing broker at RE/MAX Premier Properties. Given that pause in upstream activity, Wild bottom-lined the downstream impacts.
“If we do 60 percent of what we thought we were going to do in 2020, we are all in good shape,” she said.
The silver lining for those associated with the local real estate business is that the pandemic may accelerate a shift already underway where more urban dwellers pack it up and head for the mountains.
“People will realize that they don’t need to live where they are living because they can work remotely,” said Travis Cox, with Keller Williams Colorado West Realty.
Augustine noted that “home is more important now to most people than anything,” which could drive a choice to upgrade. In the long term, “the market is going to be fine,” but if a buyer’s intention is to purchase a home and hold it for a year, there’s more to worry about.
Wells, who was not on last week’s call, echoed the sentiment that the COVID shutdown could yield some long term benefits. Everyone involved in a transaction is becoming more adept in operating remotely, from closings handled electronically to virtual property showings, she said, inventing new methods that are improvements over the status quo.
While it’s safe to say that a state similar to offseason will run at least into July, there may be an uptick in the third and fourth quarters, she said. Wells also predicted a market correction on properties that weren’t priced right to begin with, which leads to a healthier supply and demand relationship.
Aspen’s natural setting and outdoor recreation access is also looking more appealing in light of beach and park closures that coastal city dwellers are facing, which could push a purchasing decision over the edge, she said.
“A lot of people will be making lifestyle decisions for their families if they can work wherever they want to be,” she said.