The Aspen area’s real estate market may be heading into its next down cycle and sellers of high-end homes will likely have to adjust their prices to more realistic levels, a local appraiser said on Thursday at the annual Aspen Board of Realtors luncheon.
That said, don’t expect anything as drastic as the 2009 downturn, said Randy Gold of the Aspen Appraisal Group to over 300 people associated with the real estate industry assembled in the St. Regis ballroom.
Gold predicted that overall dollar volume and number of transactions will dip slightly in 2019, coming off of 2018’s decline from 2017.
“If 2019 finishes the way that I am forecasting … then our real estate market will be moving decidedly into the next down market,” said Gold, whose company has conducted over 24,000 appraisals over almost 41 years in business.
However, he expected that property values overall will remain stable, albeit with some softening at the upper end.
“At some point, unrealistic sellers will have to come back down to earth,” he said.
The softest sector of the market in 2018, according to Gold’s analysis, was in Aspen single family homes. Sales in that category were down 26 percent with a 37 percent dip with dollar volume.
The drop off was particularly acute in properties priced over $10 million, which saw a 40 percent decline.
There is currently an almost three-year inventory of Aspen single family home listings, Gold said. More than a year’s worth of supply indicates a softening market, he said, while an inventory of less than a year indicates a good market for sellers.
Snowmass also saw tepid sales of single family homes, particularly in the over-$10 million range.
Upper-valley wide, there is a five- to six-year supply of $10 million-plus homes.
Part of the problem, Gold said, is sellers with unrealistic expectations.
“There are a lot of people that are dreaming with these kind of listings,” he said. Too many sellers “have no idea that their properties are not worth what they are asking.”
Despite the gloom in the single family home market, other sectors, including land sales and condo sales in Aspen and Snowmass, performed well, even excellent, in 2018, Gold said.
The brightest sector was Snowmass condos, which were up 53 percent in number of transactions and 45 percent in dollar volume, driven by sales at the Viceroy. The average price was $875,000.
Aspen condos also had a great year, posting another dollar-volume record reaching $322 million. The average price topped $2.5 million. There were 21 sales priced at over $2,000 per square foot. One buyer shelled out $3.9 million for a 750-square-foot condo in the downtown core, for an eye-popping $5,200 per square foot.
Land sales in Aspen remained strong, with the average vacant lot going for $4.9 million. One 6,000-square-foot lot on Bleeker Street sold for $7.1 million, which Gold noted “is a lot of dough” for a property of that size.
A feeling among brokers that 2018 was not a great year is likely driven by the poor performance in Aspen single family home sales, but in reality, overall the market did pretty well, Gold said.
In the commercial sector, rents and occupancies remained stable. He noted that there is little development activity coming down the pipeline thanks to Aspen City Council’s 2017 downzoning of the town’s commercial areas that has made most new building “largely infeasible.”
“City council sent us all a message that Aspen is effectively a no-growth town for commercial developers,” he said.
That may be a good thing considering all the construction that is already approved and waiting to begin, Gold said, including numerous commercial projects from developer Mark Hunt, including the Crystal Palace, the Red Onion/Mountain Plaza project and Conoco corner.
Gold also commented on the phenomenon of shared office space making its way to Aspen, with one such business set to open soon — Alt Aspen, on Cooper Avenue — and a WeWork outpost planned to the redevelopment of 517 E. Hopkins Ave., anther Mark Hunt venture.
Gold wondered whether there will be a market for the prices these facilities will ask to rent a desk or a private office. At $150 a day for shared work space or $250 a day for a private office at Alt Aspen, young entrepreneurs may be priced out, he said, while second homeowners will likely have office facilities in their luxury homes so they will not need to rent space in town.
Then, of course, there is the Lift One corridor, narrowly approved by Aspen voters on Tuesday. However you feel about it, Gold said, it will become a reality. He termed it as an exciting development that will add an interesting new dynamic to that side of town, thanks to a new chairlift coming into the downtown core, where the existing lift to be replaced is three blocks up a steep hill.
“Anyone who has a condo between the Mountain Queen and South Point” — two developments near the new lift site — “is a pretty happy camper in terms of value,” Gold said.
He added that the developer who bought the penthouse on the Dancing Bear phase two is also likely happy about the project.
The sale price on a recent $21.9 million single family home closing at 135 E. Cooper Ave. was also likely driven by promise of the closer chairlift, Gold said.