ASPEN - Vacant land for single-family homes in the Aspen area was the first segment of the real estate market to get smacked by the recession, and it's been one of the slow areas to recovery, but it's finally turning around, according to sales data.
Twenty-six vacant lots in Aspen and surrounding neighborhoods sold in 2012, far exceeding any of the prior four years, according to an analysis by Andrew Ernemann, of B.J. Adams and Co. Only 11 vacant lots sold in the same geographic area in 2011.
The level reached last year essentially matched the pre-recession level of 25 lots sold in 2007, Ernemann's report showed.
He said his personal experience and chats with other real estate agents indicate that most of the sales are to end users - people who want to build and live in the homes. There are also signs of some interest from investors, he said. Investors are typically spec builders who invest the money in land and construction on the assumption the houses will sell. Spec building disappeared, for the most part, when the recession struck the Roaring Fork Valley in late 2008.
Ernemann said it's tough to generalize about vacant land, but prices tended to drop around 50 percent during the recession.
"It was by far the worst segment of the market in terms of drop-off in activity and in prices," he said.
Prices have stabilized, but land is still discounted to a higher degree than existing homes to close deals, the report showed.
The surge in Aspen-area land sales indicates confidence among buyers, according to Ernemann. They are willing to make huge financial commitments, not only buying land but hiring architects, engineers as well as contractors and interior designers. When land gets sold and houses get planned, it's a tremendous boost to the economy, he said.
Steve Hansen, owner of Hansen Construction, agreed that most of the vacant-land sales right now are to end users. However, he senses that investors are looking for opportunities once again in the upper Roaring Fork Valley.
"In a couple of years, I think the spec market will be strong," he said.
Despite the dip in construction during the heart of the recession, Hansen said his company managed to stay busy. Last year was a record year for his firm, which has been in the business longer than 33 years. He said being in business so long benefited him. Loyal clients from prior years hired him for new residential projects.
Hansen said he is optimistic the construction industry will continue its recovery in 2013 and predicted that the cost of building will start going up after being stable through the recession and recovery. Contractors narrowed their margins and reduced their labor costs in recent years, he said.
Ernemann said he believes sales of single-family home lots will continue to be strong in 2013, though maybe not as strong as last year. Land sales in Snowmass Village remained "cold" in 2012, according to his report. Only three vacant lots sold in 2012, compared with five the year before.
Ernemann said Snowmass Village's real estate market recovery is lagging roughly 18 to 24 months behind Aspen, but he said he expects that market segment to do better in 2013.
In the Basalt vicinity, 11 vacant lots sold in 2012, same as the prior year. Only two lots sold in and around Basalt in 2008, and just one sold in 2009, so the market is bouncing back, though not close to pre-recession levels. In 2005, while construction was furious at Willits, 51 lots sold.
Overall, sales of vacant, single-family-home lots from Basalt to Aspen lag well behind pre-recession levels. There were 69 sales in 2006 and 55 the following year. There were 40 combined sales last year, dominated by the Aspen area.
The strong sale of vacant lots in the Aspen area signals that the best values among existing homes have been taken advantage of by buyers, Ernemann said. Now buyers are looking at what's available on the market and comparing prices with what they have to spend to buy land and build a home.
"The prices aren't so different now," Ernemann said.