When it comes to local real estate and the global economy, all signs point to another strong year, according to two experts who spoke during the Aspen Board of Realtors annual market update on Thursday at the St. Regis Aspen Resort.
“Prices and values will continue to rise in virtually all Aspen and Snowmass neighborhoods,” said Randy Gold, a consultant with Aspen Appraisal Group who has 40 years of experience in the local market. He said that while some potential global issues like the threat of war, cyber crime and rising interest rates could affect real estate on a macro level, he expects total sales volume to reach $2 billion in Pitkin County in 2018. In 2017, total sales were $1.9 billion. The recent tax cuts and volatility in the stock market may encourage people to spend, he said, reallocating their money from stocks to real estate investments.
In Aspen, the sales of single-family homes showed the strongest performance in 2017, with 85 totaling $700 million, according to Gold, who complied statistics from Land Title Guarantee Company. While a record number of homes (five) sold for more than $20 million, Gold said that the supply for homes over that price point continues to grow dramatically and it may be oversupplied. At the end of 2017, there were 32 homes listed above $20 million.
That reflects a trend that Elliot Eisenberg, a national economist who also spoke during the luncheon, noted. “Builders cannot make money on entry-level housing so they’re building expensive homes,” said Eisenberg. While he noted that what was entry-level on a national level could buy “fractional ownership of a garage” in Aspen, he did caution that the trend to larger homes has meant that overall inventory is down for the 32nd straight month.
But that didn’t stop Eisenberg from predicting that the economy would be “gangbuster” for the next 18 to 24 months. When consumer spending and corporate investment is up, usually government spending goes down. That’s not currently the case, resulting in his optimistic forecast.
“This is why Aspen is doing so well, the rich are doing really well,” he said.
Snowmass continues to be a better value than Aspen, Gold said. The bulk of the sales are still below $1,000 per square foot, compared to Aspen’s average of $1,600 per square foot. Though Snowmass single-family home sales were flat in 2017, condominium and vacant lot sales were up. He said that developers’ recommitment to Snowmass, demonstrated through a reinvigorated Base Village, will bring more sales and a new energy.
Aspen’s commercial market continues to remain interesting.
“Because of the sweeping land use code changes in 2017, city council is sending a message that Aspen is a no-growth town for developers,” Gold said. That doesn’t mean properties aren’t moving, though. The Aspen Core building on the corner of Hyman Avenue and Hunter Street sold for $28 million this week. With the completion of two additional buildings on the same corner, what was previously considered a “B location” is finally seeing some interest. Gold’s feelings that the upward momentum would continue were echoed by Eisenberg.
“In 2018 we’re going to have huge growth. I think the chances of a recession right now are very low because of massive financial stimulus,” he said.
Unemployment rates are low and signs of consumer confidence can be found across the board, according to Eisenberg. More people are renovating their homes, purchasing big-ticket items likes boats, planes and RVs, and even visitor numbers to Las Vegas are up. Corporate investment is also increasing because of industries like a booming oil industry and manufacturing.
He cautioned that “there are problems down the road,” citing inflation as a cause for concern.
Neither Eisenberg or Gold wanted to delve into long-term economic predictions about a downturn and both stayed emphatically optimistic about current conditions. Even the beginning of 2018 has them happy; in Aspen there were already $160 million in closings in the first six weeks of the year.
“It’s looking like we’re having a pretty good year in 2018,” Gold said.