With economic storm clouds looming overhead, even the resilient, celebrity-saturated Aspen market is feeling a bit of a chill. Sales are slower than normal, though area realtors noted they aren’t too concerned yet.
Thanks to the area’s restrictive growth policies, which keep supply limited and exclusive, the über-rich continue to pay tens of millions for their mountain hideouts.
“Aspen real estate is a finite commodity being chased by the world’s wealthiest people,” said Gary Feldman, managing partner at Joshua and Co.
Brokers are even so bold as to use the economic crisis as a selling point. “With the financial turmoil that Wall Street’s having and the uncertainty that develops, it becomes very comfortable for people to put their money in a very isolated market where they can’t build anymore,” said Bob Ritchie, a broker with Coates Reid & Waldron in Aspen. “There’s no new supply. This is a kind of place where 85 to 95 percent of our sales are for cash. Most of our property owners are lenders, not borrowers, so they are on the other side of the economic ladder.”
While deep-pocketed buyers can easily splurge in a market where the average listing price is $7 million, if they want to flip a house, it can sit on the market for long stretches. But many are not under any pressure to sell and can hold out — even for years — for the price they want, market observers say.
That’s exactly what Ritchie is seeing now. Those looking to sell for lifestyle reasons won’t take lower prices, because the slowdown doesn’t affect their lifestyle. Instead, they’re rejecting offers, resulting in a lower number of overall sales.
The volume of sales was about $1.8 billion for the first half of the year, compared to $2.65 billion for the same period last year. That $1.8 billion includes a couple of $35 and $20 million homes, and a few dozen in the $10 to $15 million range.
Prices are up about 5 to 15 percent over last year, which is lower than Aspen’s usual average growth of 20 to 25 percent on a year-to-year basis because of the lack of new supply.
Aspen and nearby Snowmass allow no growth except in limited areas, which leaves very few vacant building sites. In fact, there have been just five lot sales so far in 2008.
With the downturn in the economy, local banks have also been reluctant to fund new speculative homes.
Still, it’s not exactly a seller’s market. Ritchie is advising people that they can sell their Aspen homes in the next six months if they want to, but only if their value-to-price ratio is strong compared to other homes on the market. Right now, pricing for a new, exceptional property is from $2,000 to $3,000 a square foot.
“We know at the end of the day that Aspen will always be in demand,” said broker Joshua Saslove of Joshua and Co. “Great Aspen properties are not a bad asset to own.”
He should know, because he sells many of them. Saslove and his firm have closed on some of Aspen’s highest-end sales this year, including the two priciest. The first was a 200-acre, 14,300-square-foot home with 11 bedrooms and 12 baths that sold for $36.375 million in April. Then the Ponds (on Willoughby Way, which is one of the most prestigious addresses in Aspen) sold for $20.75 million in August. The home is 11,500 square feet on 2 acres nestled just a five-minute walk from downtown, at the base of Red Mountain and overlooking Aspen Mountain.
The most expensive home for sale in Aspen is also listed by Saslove, a $60 million, 15,000-square-foot house on 44 acres on West Buttermilk Road. The house comes with a separate stable and caretakers’ buildings, and boasts a wine cellar, theatre, home gym, extensive fireplaces, and decks and terraces with panoramic views.
Already, Saslove says, condominium and hotel reservations and lodging are up substantially, which is a sign of good things to come this winter. “The mountain peaks already have some snow,” Saslove said. “Things look like they’re blowing our way. In spite of what people think is going on in the economy, Aspen continues to be sought after by the international community.”
Saslove said Aspen’s cultural offerings and outdoor activities make it very attractive to buyers. In addition to arts festivals, “there are all these beautiful mountains and all these activities: hiking, biking, skiing. Run a river through it with great fishing, and you’re done.”
It’s the kind of place where it’s not uncommon to see 100 or so private jets lined up at the airport and run into the McCains or Clintons at a conference. Not to mention movie stars. “It’s a place where celebrities hang out and nobody makes a big deal,” Saslove says.