ASPEN - A frenzy in the upper end of the Aspen-area real estate market wasn't enough to sustain a rally in 2011 over 2010.
Realtors said 2011 will be remembered most for strong sales in the $10 million to $20 million range. But it also could be remembered for things that might have been.
The market looked like it was storming back to life during the first half of 2011, but it fizzled in the second half. A poor performance in December left 2011 essentially flat compared with 2010 in total dollar volume. The Pitkin County real estate market had particularly rough months in July (down 47 percent from the same month the prior year), October (down 54 percent) and December (down 38 percent).
Property transfers of all types totaled $1.27 billion in sales in 2011, according to deeds recorded in December at the Pitkin County Clerk and Recorder's Office and a report on sales through November compiled by Land Title Guarantee Co. There was $1.26 billion in sales in 2010.
The number of transactions increased 10 percent to 756 in 2011 from 689 the prior year.
Realtors examine statistics in a lot of different ways, so assessments of 2011 performance vary. Some just look at free-market residential property in Aspen and Snowmass Village rather than property sales of all types throughout the county. Looking at countywide statistics from one year to the next provides a glimpse at the big picture.
The total dollar volume for the first half of 2011 was up 24 percent over 2010, lining up the real estate industry for its best year since 2007. But the uncertainty over the U.S. debt crisis and ongoing economic turmoil around much of the world, particularly in Western Europe, cooled activity, said Brian Hazen, vice president for Coldwell Banker Mason Morse.
Nevertheless, there were signs of strength in the Aspen and Snowmass Village part of the market, especially in the $10 million to $20 million range, Hazen said. His analysis showed that during calendar year 2010 there were 13 sales of homes in that high-end price range for a total of $182 million. Last year there were 18 sales of homes between $10 million and $20 million for a total of $278 million.
Steven Shane, owner of SDS Real Estate, said sales of unique high-end properties continued to "flourish" in 2011 "if [sellers] have adjusted their pricing to a certain extent."
Buyers are out there, he said, but they are doing their homework, and they are determined not to pay more than what they believe the market dictates.
"They didn't get to that level by being stupid," Shane said.
Sellers are generally responding with discounts. There is enough inventory to maintain a buyers market. Sellers who have the financial wherewithal to hold steady on prices will likely see their property sit for some time, Shane said.
The Aspen-area real estate market remained challenging in 2011 in the sense that "buyers continue to have a sense of entitlement," Shane said. Many buyers come from markets that were hit harder than Aspen by the recession, so that feeds their expectations for discounts. Aspen-area prices generally fell by about 30 percent.
Brent Waldron, broker associate with Chaffin Light Real Estate, said generalizations really don't apply to 2011. There were record sales early in the year but also incredible discounts necessary to move property, he said.
Waldron said the first half of 2011 was bouyed by a handful of record price sales. That made it appear the market was stronger than it really was, he said.
"I think it was a false rally," Waldron said. "There were some remarkable sales that really weren't indicative of the market."
Hazen said there has been a "slight appreciation" recently in the prices for the best properties in the high-end market, thanks in part to good absorption of inventory.
"It certainly has bottomed out - probably a year ago, frankly," Hazen said.
Many distressed sellers scrambled to unload their property in 2009 and 2010. In 2011, there were 47 bank sales of property in Pitkin County through November, accounting for $32.3 million in sales, according to Land Title Guarantee Co.
Shane said the best of the "value sales" are long gone. Sellers still need to offer discounts to complete a deal because buyers have so many options.
"Whatever seller wants to play ball is the one that wins," Shane said.
Another development is the lack of new home inventory. Shane said spec builders put the brakes on development after the recession. But the new home inventory has evaporated, and spec builders are taking note. He expects some new spec homes to come on the market before 2012 is over.
Shane said most of the buyers he encounters are "superstars of the financial world." There is a perception that Aspen is attracting a lot of buyers from specific international markets, but he thinks that is more myth than reality.
Even with the strength of the high-end market, the average and median prices of single-family homes in Pitkin County fell in 2011. Through November, the average price was $4.21 million or a decrease of 3 percent from the average price in 2010, according to Land Title Guarantee Co.
A median price of $2.84 million for single-family homes in Pitkin County was down 11 percent through November compared with all of 2010.
Shane and Hazen both said they see the potential for further recovery of the upper-valley real estate market in 2012. Annual sales dollar volume won't return to the $2.5 billion level from pre-recession years, Shane said, but it could easily increase from $1.27 billion racked up this year.
The key for successful brokers is to be creative, he said.
"It's not business as usual. It's business as unusual," Shane said.