About 20 percent of properties listed for sale in the Aspen Snowmass real estate market are priced over $10.0. This segment of the market represents a significant portion of the overall sales volume. Is there any evidence that this segment of the market has started to slow? Perhaps, but let’s take a closer look at the numbers.
Of the 611 properties currently listed for sale in the Aspen Snowmass market, 77 are under contract representing roughly 13 percent of the total market inventory which is historically a strong ratio. Of the 117 properties listed at prices over $10.0 million, about 6.8 percent, or 8 properties, are currently under contract. This is about half of the overall ratio of pending property sales. Is this level of activity relative to the overall market a sign of a changing trend in over $10 million segment of the market?
In an effort to answer this question, it’s helpful to review the results of past year’s sales.
In 2017 and 2018, pretty robust years for real estate sales, the Aspen Snowmass market saw 29 homes in 2017 and 23 homes in 2018 sell for prices in excess of $10.0 million. But in 2016, a particularly slow year for the Aspen Snowmass market with overall volume off nearly 32 percent from 2015, there were only 12 sales of properties over $10.0 million. In 2015, the strongest market since 2008, there were 30 sales of properties over $10.0 million. The slowdown in 2016 was likely caused by political uncertainty leading into the 2016 Presidential election since the market rebounded in 2017 to a level similar to 2015.
Market has slowed for properties over $10.0 million
From these statistics, we can conclude that a good market in recent years produces an average of 27 sales of properties valued at $10.0 or greater. In contrast, in just the past three months there have been only five (5) closings of properties priced over $10.0 million, about 25 to 30 percent off the pace for of 2018, 2017 and 2015 and slightly above the rate of these property sales in 2016.
If a slowing trend is unfolding in the $10.0 million plus market segment, there could be several reasons. One explanation could be that it’s just seasonal. But when we look at previous years during this same period from December 1st through the end of February, with the exception of the end of 2015 into the beginning of 2016 and the end of 2016 into the beginning of 2017, where there were only five and four sales respectively, the market has generally produced an average of six to seven sales in this price segment. Another possible explanation could be that prices throughout the Aspen Snowmass market in most segments reached all-time highs in 2018. Basic economics teaches us that as prices rise, demand generally declines.
Various reasons may be the cause
Another possible reason could be changing demographics. Properties priced over $10.0 million have in many cases been large homes purchased as family gathering places for high net-worth families. Many of the buyers of these types of properties over the last decade, not only in the Aspen Snowmass area but in other areas of the country, have been baby boomers with children and grandchildren that wanted large multi-room homes in resort areas for family gatherings. As the baby boomer population has grown older along with their children and grandchildren, the interest in these types of larger properties could be waning.
Higher end markets have slowed nationwide
If this segment of the market is truly slowing, it’s likely being caused by a combination of factors including the ones cited above. It also may be part of a general slowing of existing property sales across the country. The National Association of Realtors recently reported that sales of existing homes had declined in the West 2.9 percent in January and 13.8% from a year earlier. In the Hamptons, another luxury real estate market, Bloomberg recently reported that the inventory of homes for sale had increased 82% to the highest level in 12 years with sales declining to their lowest since 2009. Manhattan, another expensive market, has also been experiencing for over a year declining sales volume, increasing inventory and declining prices. Although there is some evidence that the $10.0 million plus market in Aspen and Snowmass may be slowing, it’s far from conclusive. Only time will tell if this is the beginning or a trend or just a pause in an otherwise healthy market.
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