News
ENLARGE
ASPEN — Brent Waldron has been in the Aspen real estate business since 1972 and was a name partner in one of the powerhouse firms in town for 31 years before he was hit by the abrupt changes sweeping through the industry this year.
Coates, Reid and Waldron’s real estate sales branch was sold by its owner, Resort Quest, in January and Waldron was faced with the tough decision of starting up another company or hooking up with a different firm.
Waldron, 61, was recruited by Chaffin and Light Real Estate to manage and strengthen its Aspen office. It took only a couple of talks with Jim Light, a name partner in the firm, and president Mark Overstreet, for him to realize it was the right step.
He considered himself “in the right place at the right time” to join Chaffin and Light, just like he was when he hooked up with Nick Coates in the mid-1970s.
“This is just a great fit for me,” he said of his new position. He was convinced that Chaffin and Light is committed to a long-view future in Aspen. “You’ve got to make an investment in your company during a recession to be a player when the recession ends,” Waldron said.
Now that Waldron has settled into his new position, he sat down for an interview last week to discuss changes in the Aspen real estate scene, how the recession has affected property values and when he sees a recovery.
Inside Business: What are some of the biggest changes that stand out in the Aspen real estate industry during your career?
Brent Waldron: The biggest change is the incredible growth in the number of realtors in Aspen. I don’t have access to how many realtors there were in the 1970s when I started, but it was literally a handful of offices. Everybody knew everyone. It was a very congenial, everyone working together kind of environment. Small offices. Everyone basically owned their own company. Just a great camaraderie.
That all changed as prices went up and there was significant growth in the ’70s and ’80s. Snowmass came on line and became a major player. The number of people here that elected to make real estate a part-time or full-time career just exploded.
So, it’s a lot more competitive, obviously. It’s more of a business environment, which is fine, rather than a very close, personal relationship back like we had in the ’70s. That’s the biggest change in terms of the business.
The other part is it’s obviously become big business. It’s a very different thing selling somebody a $50,000 condominium, even though that was a lot of money back in the ’70s, compared to the millions of dollars we’re talking about per average transaction now. There’s a tremendous amount of emotion and passion still involved in these sales, but it’s become a major business transaction now.
IB: When did Aspen reach that point where real estate sales and development was more a center point of the economy than tourism?
B.W.: You know, I don’t actually know that that’s a true statement. I think this is still and always will be, first of all, a community, and second of all a tourist resort. And real estate is just a byproduct of that. Without all of the wonderful things that go into making winter here and all the wonderful things that go into summer we wouldn’t have the real estate market we have.
To answer your question more directly, although I don’t agree with the premise, when we transitioned from a primarily winter economy to a summer and winter, when those two seasons became more balanced, that’s when a change occurred. People recognized that Aspen was as desirable in June, July, August and September as it is December through March, that’s when we transitioned into more of a real estate economy. Our best real estate months are the summer, not in the winter. Our third quarter is always our best real estate sales quarter.
(Waldron said the ability of people to live in Aspen and still operate businesses elsewhere because of the communications advances also led to the boom in the single family home market.)
IB: Is there a period when you would say the changes were more evident or pronounced?
B.W.: We’ve had a lot of booms. We had the first real surge in the single family home market in the early ’90s. We went from what you’d call vacation homes to luxury homes. When that market took off a lot of people got in that business and that kept compounding.
We had some condominium booms in the ’70s and ’80s. The single family thing really took off, and we saw these luxury homes coming onto the market, in the early ’90s. Obviously we had the unprecedented run up of really top end luxury homes from 2002 to 2006. That’s the single biggest boom period we’ve ever had in single family homes, in terms of price run up and quality. It was just an unparalleled period.
IB: And why was that?
B.W.: It was a very affluent period in the United States. People had a lot of money. People had a lot of disposable income. A lot of companies were selling. A lot of that money found its way here. We became, obviously, the place to be in the United States if not the world for wealthy people and people of success.
IB: What is the recession telling us about Aspen’s economy and real estate’s role in it?
B.W.: Well, historically, a lot of people felt Aspen was recession-proof. And I think that bubble burst. Clearly we are not recession-proof, particularly when you get a recession of the magnitude and depth of the current recession. So I think what it tells us is this is a real economy, it has real ups and downs, we are impacted by the national economy and stock market. Certainly the national financial crisis is one of the biggest impacts here. The lack of capital in the United States for real estate and investment properties has had a major impact here.
There have been five major recessions (since he started selling real estate). Historically, inventory builds up and prices level off. There are always exceptions. We’ll talk in generalizations. Values have leveled off. Inventory has built up. Well, this time for the first time there is real depreciation in the market. We might as well acknowledge that. There is a certain credibility gap here in the real estate market if you don’t really acknowledge the fact that values have dropped. That’s a simple function of supply and demand. For the first time in my career, supply exceeds demand here. That’s new ground for us, and prices are dropping. List prices are dropping and the sales that are occurring are at significant discounts from the original list price and the current list price. It is a window of opportunity. Our values have rolled back now to values we haven’t seen here for four or five years.
It’s interesting that so many of the people who have been looking for buys, opportunities, ‘deals’ in the last four or five years are not stepping up to the line when the deals exist now, and deals do exist. The question is where is the support level, where is the floor and when we do we come back from this? I think the decline in values has been surprising across the board — the bankers are surprised, the real estate community has certainly been surprised by the magnitude of some of these price adjustments. We’re really in new waters here.
IB: Are you comfortable talking about what amount you think values have dropped?
B.W.: As long as it’s clear that there are going to be exceptions to all these generalizations. We have seen sales in the last few months in this market at discounts from their original list price - admittedly they might have been optimistically or unrealistically priced - 65 percent of the original list price and about 80 percent of their current list price. There seems to be fairly good activity at those kind of discounts. We’re seeing more offers at those kind of discounts but sellers not taking them. So I think we’re getting a sense that we’re reaching a floor. There is some sense of stability now. If we’re not at the floor, we’re certainly approaching it.
When buyers are assured we’re at the bottom or near the bottom or we see a lot of these discounted sales being sold, then the cash will reappear. I think the cash is out there. I think it’s available. I think a lot of people who have historically had a tremendous amount of confidence in the stock market and have had a great percentage of their assets in the stock market, I think are going to be looking to place their cash in tangible assets, primarily in real estate. I think we’re sitting in a great position to benefit from the transfer of wealth from equity markets to assets, and assets being primarily real estate focused.
The combination of the loss of confidence in equity markets and the need to protect wealth and resources is going to bode very well for us when this market turns around. At these price levels I think there is great confidence that values are secure and we’re in for another period of strong appreciation when the economy corrects and our market adjusts. We’ve never seen a stall result in these type of price adjustments. But the mere fact that we’re seeing that is going to create opportunities we haven’t seen here for years. The greater the adjustment in this period, the greater the opportunities that are going to result from it. We’re going to come out of this, and almost the worse it gets, almost the better it’s going to be because of how many opportunities this market is going to create.
IB: Do you think this summer we will see an increase in the number of people looking?
B.W.: I think real estate is going to have some false starts between now and the real recovery. We’re going to see these bargain sales, these discounted sales occurring. People are going to realize these are real opportunities. The real recovery is more dependent on factors outside the market than inside the market right now. When we get a sustained economic stabilization; the financial markets loosen up, which I think they’re going to do this summer; there’s some financing available, some credit available; we have some consumer confidence return, that’s when things will change here. I think that will begin to happen this summer.
I think the recovery is going to begin this summer. I think it’s an unanswerable question as to the strength of it right now. There are too many unknowns out there, to be honest.
scondon@aspentimes.com
Coates, Reid and Waldron’s real estate sales branch was sold by its owner, Resort Quest, in January and Waldron was faced with the tough decision of starting up another company or hooking up with a different firm.
Waldron, 61, was recruited by Chaffin and Light Real Estate to manage and strengthen its Aspen office. It took only a couple of talks with Jim Light, a name partner in the firm, and president Mark Overstreet, for him to realize it was the right step.
He considered himself “in the right place at the right time” to join Chaffin and Light, just like he was when he hooked up with Nick Coates in the mid-1970s.
“This is just a great fit for me,” he said of his new position. He was convinced that Chaffin and Light is committed to a long-view future in Aspen. “You’ve got to make an investment in your company during a recession to be a player when the recession ends,” Waldron said.
Now that Waldron has settled into his new position, he sat down for an interview last week to discuss changes in the Aspen real estate scene, how the recession has affected property values and when he sees a recovery.
Inside Business: What are some of the biggest changes that stand out in the Aspen real estate industry during your career?
Brent Waldron: The biggest change is the incredible growth in the number of realtors in Aspen. I don’t have access to how many realtors there were in the 1970s when I started, but it was literally a handful of offices. Everybody knew everyone. It was a very congenial, everyone working together kind of environment. Small offices. Everyone basically owned their own company. Just a great camaraderie.
That all changed as prices went up and there was significant growth in the ’70s and ’80s. Snowmass came on line and became a major player. The number of people here that elected to make real estate a part-time or full-time career just exploded.
So, it’s a lot more competitive, obviously. It’s more of a business environment, which is fine, rather than a very close, personal relationship back like we had in the ’70s. That’s the biggest change in terms of the business.
The other part is it’s obviously become big business. It’s a very different thing selling somebody a $50,000 condominium, even though that was a lot of money back in the ’70s, compared to the millions of dollars we’re talking about per average transaction now. There’s a tremendous amount of emotion and passion still involved in these sales, but it’s become a major business transaction now.
IB: When did Aspen reach that point where real estate sales and development was more a center point of the economy than tourism?
B.W.: You know, I don’t actually know that that’s a true statement. I think this is still and always will be, first of all, a community, and second of all a tourist resort. And real estate is just a byproduct of that. Without all of the wonderful things that go into making winter here and all the wonderful things that go into summer we wouldn’t have the real estate market we have.
To answer your question more directly, although I don’t agree with the premise, when we transitioned from a primarily winter economy to a summer and winter, when those two seasons became more balanced, that’s when a change occurred. People recognized that Aspen was as desirable in June, July, August and September as it is December through March, that’s when we transitioned into more of a real estate economy. Our best real estate months are the summer, not in the winter. Our third quarter is always our best real estate sales quarter.
(Waldron said the ability of people to live in Aspen and still operate businesses elsewhere because of the communications advances also led to the boom in the single family home market.)
IB: Is there a period when you would say the changes were more evident or pronounced?
B.W.: We’ve had a lot of booms. We had the first real surge in the single family home market in the early ’90s. We went from what you’d call vacation homes to luxury homes. When that market took off a lot of people got in that business and that kept compounding.
We had some condominium booms in the ’70s and ’80s. The single family thing really took off, and we saw these luxury homes coming onto the market, in the early ’90s. Obviously we had the unprecedented run up of really top end luxury homes from 2002 to 2006. That’s the single biggest boom period we’ve ever had in single family homes, in terms of price run up and quality. It was just an unparalleled period.
IB: And why was that?
B.W.: It was a very affluent period in the United States. People had a lot of money. People had a lot of disposable income. A lot of companies were selling. A lot of that money found its way here. We became, obviously, the place to be in the United States if not the world for wealthy people and people of success.
IB: What is the recession telling us about Aspen’s economy and real estate’s role in it?
B.W.: Well, historically, a lot of people felt Aspen was recession-proof. And I think that bubble burst. Clearly we are not recession-proof, particularly when you get a recession of the magnitude and depth of the current recession. So I think what it tells us is this is a real economy, it has real ups and downs, we are impacted by the national economy and stock market. Certainly the national financial crisis is one of the biggest impacts here. The lack of capital in the United States for real estate and investment properties has had a major impact here.
There have been five major recessions (since he started selling real estate). Historically, inventory builds up and prices level off. There are always exceptions. We’ll talk in generalizations. Values have leveled off. Inventory has built up. Well, this time for the first time there is real depreciation in the market. We might as well acknowledge that. There is a certain credibility gap here in the real estate market if you don’t really acknowledge the fact that values have dropped. That’s a simple function of supply and demand. For the first time in my career, supply exceeds demand here. That’s new ground for us, and prices are dropping. List prices are dropping and the sales that are occurring are at significant discounts from the original list price and the current list price. It is a window of opportunity. Our values have rolled back now to values we haven’t seen here for four or five years.
It’s interesting that so many of the people who have been looking for buys, opportunities, ‘deals’ in the last four or five years are not stepping up to the line when the deals exist now, and deals do exist. The question is where is the support level, where is the floor and when we do we come back from this? I think the decline in values has been surprising across the board — the bankers are surprised, the real estate community has certainly been surprised by the magnitude of some of these price adjustments. We’re really in new waters here.
IB: Are you comfortable talking about what amount you think values have dropped?
B.W.: As long as it’s clear that there are going to be exceptions to all these generalizations. We have seen sales in the last few months in this market at discounts from their original list price - admittedly they might have been optimistically or unrealistically priced - 65 percent of the original list price and about 80 percent of their current list price. There seems to be fairly good activity at those kind of discounts. We’re seeing more offers at those kind of discounts but sellers not taking them. So I think we’re getting a sense that we’re reaching a floor. There is some sense of stability now. If we’re not at the floor, we’re certainly approaching it.
When buyers are assured we’re at the bottom or near the bottom or we see a lot of these discounted sales being sold, then the cash will reappear. I think the cash is out there. I think it’s available. I think a lot of people who have historically had a tremendous amount of confidence in the stock market and have had a great percentage of their assets in the stock market, I think are going to be looking to place their cash in tangible assets, primarily in real estate. I think we’re sitting in a great position to benefit from the transfer of wealth from equity markets to assets, and assets being primarily real estate focused.
The combination of the loss of confidence in equity markets and the need to protect wealth and resources is going to bode very well for us when this market turns around. At these price levels I think there is great confidence that values are secure and we’re in for another period of strong appreciation when the economy corrects and our market adjusts. We’ve never seen a stall result in these type of price adjustments. But the mere fact that we’re seeing that is going to create opportunities we haven’t seen here for years. The greater the adjustment in this period, the greater the opportunities that are going to result from it. We’re going to come out of this, and almost the worse it gets, almost the better it’s going to be because of how many opportunities this market is going to create.
IB: Do you think this summer we will see an increase in the number of people looking?
B.W.: I think real estate is going to have some false starts between now and the real recovery. We’re going to see these bargain sales, these discounted sales occurring. People are going to realize these are real opportunities. The real recovery is more dependent on factors outside the market than inside the market right now. When we get a sustained economic stabilization; the financial markets loosen up, which I think they’re going to do this summer; there’s some financing available, some credit available; we have some consumer confidence return, that’s when things will change here. I think that will begin to happen this summer.
I think the recovery is going to begin this summer. I think it’s an unanswerable question as to the strength of it right now. There are too many unknowns out there, to be honest.
scondon@aspentimes.com
This article is a feature of Inside Business, published Tuesdays in The Aspen Times.
