Cities might be back, but Aspen real estate is still booming

New York

IF you go by the numbers, Aspen's luxury real estate market did not have a great third quarter.

The average sales price in the top 10 per cent of the market slid 4.6 per cent from the same period in the preceding year, according to a report by appraiser Miller Samuel.

Its entry price threshold - the number at which the top 10 per cent of the market begins - fell 11.8 per cent, from US$17.35 million last year to US$15.3 million in 2021. Average square footage, median sales price, and number of closed sales fell, too.

But the reality is very different. "To brokers on the ground, the market is moving about four times faster than normal," said Jonathan Miller, president and chief executive officer of Miller Samuel. "The market compared to a year ago has slowed, but it's still very fast compared to historic norms."

Aspen brokers agree, with one exception: It is not that demand has diminished, they say. It is that the inventory necessary to meet demand simply is not available.

"It's unlikely that 2021 is going to eclipse 2020," said Jennifer Banner, an agent at Christie's International Real Estate Aspen Snowmass. "What's slowing things down is lack of inventory across the board."

Brokers are literally "knocking on doors looking for sellers", she said, and when something does come up, buyers jump.

"I listed a US$12 million property 48 hours ago," said Compass broker Steven Shane. "I received an offer - a very good one - this morning, and I have someone else who's highly interested."

Aspen's ongoing appeal runs counter to the rebound in urban areas, where the market has come roaring back; earlier this month, Bloomberg reported that third-quarter apartment sales in Manhattan were the highest for any quarter since 1989. In theory, demand for one market should cannibalise from another, but it turns out the market is not a zero-sum game.

"It's fascinating to see the legs this market has," said Erik Berg, a broker with Engel and Volkers in Aspen. "People are just realising: 'I don't need to be in NYC or San Francisco or Los Angeles 12 months out of the year.'"

And so, amid a hangover of people who are still part of the much-hyped "urban exodus" of high pandemic buyers, a group of second- or third-home buyers is suddenly reentering the market.

"The Covid panic is over," said Lucy Nichols, a broker with Aspen Snowmass Sotheby's International Realty. "That was just sheer terror; people were buying sight unseen, and they just wanted out of wherever they were."

Now though, Nichols continued, "what I saw a lot of this summer were friends and family members of people who'd moved here during Covid, who visited and were surprised by what they found."

These were not necessarily people desperate for a lifestyle change, she said. They were just people who, with the flexibility of remote work and the liquidity of a few very profitable years, suddenly decided that Aspen was a viable place to spend time. "The buyer pool," she said, has "just gotten deeper and broader".

The only thing that has changed, brokers say, is that some buyers are looking further afield.

"There's been a slight shift to people looking for more open space," said Shane. "In the past, demand was weighted very much to the central core, the West End, and Red Mountain. Now there's a slight move to the surrounding areas, which provide more acreage, open space, and privacy."

This was a boon to the large estates and ranches that before Covid had sat on the market.

"It was very hard to sell a significant property 20 minutes from downtown. It would be on the market for at least two years," said Nichols.

A year later, "I do sense people are now OK with living a little more densely," she said, meaning the market could be slowly moving back.

Still, brokers caution against reading too much into recent trends. People can only buy what is for sale, and "with inventory down", Banner said, "there just aren't as many choices." BLOOMBERG