The future of globalization has been a hot topic in political and economic circles in recent years. Over the past few decades, the world has become more interconnected as the result of trading alliances and treaties such as the European Union and NAFTA. Advances in technology, communications and social media have increased capital flows and trade around the world. Certain segments of American society, such as those involved with technology and finance, have benefited greatly from the trend to globalization, while other segments of society involved with, for example, manufacturing appears to have not. Regardless of your views about the pros and cons of the globalization trend, the direction of that trend could impact the Aspen Snowmass real estate market. 

In the past few years, political trends around the globe have put the brake on globalization. Some have referred to this as de-globalization. Most commentators say this effort to de-globalize, started with the rise of nationalism as evidenced by Brexit, the referendum in the United Kingdom to leave the European Union, and by the election of Donald Trump as President of the U.S. in 2016 on a platform of restricting immigration, ending our renegotiating existing trade agreements, trade wars and ending U.S. involvement in the Paris Climate Accord. All these events seem to have the goal of de-globalizing by reducing international trade and protecting domestic industries. 

Key international financial centers such as New York, London and Hong Kong have benefited greatly from globalization. These centers have financial, human and physical infrastructure required to service business across international borders. Secondary cities like Miami, and to some degree resort areas like Aspen Snowmass, have also benefited from liberal immigration policies allowing foreign buyers to more easily buy real estate in the U.S. As a result, real estate values in these international financial centers have exploded over the past decade. But the reverse is also likely true. If the political trend is turning nationalist with barriers to immigration and trade, it’s likely the international appeal of certain international real estate markets could be diminished which could impact international resort markets like Aspen. 

London has seen a 59 percent drop in real estate transaction volume since the Brexit referendum and a 14 percent drop in real estate values. New York has likewise experienced a 10 to 12 percent reduction in overall real estate sales volume primarily in the upper end segment of the market with a reduction of sales to international buyers. South Florida, a major market for international real estate buyers, has also seen a market slowdown with a reduction of sales to international buyers from 21 to 19 percent in the past year. 

The Aspen Chamber Resort Association reports that over the last few years roughly 8 to 10 percent of visits to the Aspen Snowmass area are international. Local title companies report that over the past five years, roughly two percent of real estate sales in the Aspen Snowmass market are to international buyers. On the face of it, the Aspen Snowmass area seems immune to the trends in globalization versus nationalism. However, if international real estate markets like New York and Miami are feeling the impact, its possible markets like Aspen Snowmass could experience a secondary impact. If property markets in New York and Miami are experiencing slowdowns, that could impact buyer’s decisions to buy properties in international resort markets like Aspen Snowmass. If international buyers lose interest in buying properties in the U.S., even a small 1 to 2 percent decline in Aspen sales could have some impact. 

It may be too early to predict how this battle between globalization and nationalism will play out. A great deal could depend on the 2020 Presidential elections. If President Trump is reelected, then the trend toward nationalism, greater trade barriers and restraints on immigration could continue moving the country toward a less global economic system. On the other hand, if a Democratic President is elected, it’s likely the recent constraints on immigration could be reversed, the U.S. would likely rejoin the Paris Climate Accord and the country would move back to more global friendly economic and trading policies.          

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.

Lori can be reached at Lori@LoriSmall.com and William can be reached at William.Small@ZenithInvestment.com