ASPEN - The fantastic finale to 2012 in the Pitkin County real estate market has given way to a sluggish start in 2013.
The total dollar volume of all real estate sales in January was down $15.15 million, or 15 percent, from January 2012, according to deeds filed with the Pitkin County Clerk and Recorder's Office.
The sales slump continued in February, with dollar volume down another $9.1 million, or 20 percent, according to deeds filed.
For the two months combined, the market is down $24.25 million, or 17 percent.
Realtors said Friday that the surge in late 2012 and the slump in early 2013 are connected. A flurry of activity in the fourth quarter of 2012 was driven by changes in the capital-gains tax laws. Sales that would have been completed in January and February of this year were fast tracked in December.
"Buyers and sellers were doing back flips to get closings done in the last days," said Carrie Wells, a leading real estate agent with Coldwell Banker Mason and Morse Real Estate in Aspen. Work in December for real estate agents, title insurance companies and real estate attorneys was like "running a marathon," she said.
Wells said she represented the buyers in one transaction in which an offer was made for a home on Christmas Eve with a closing on Dec. 27. The buyers knew they would benefit from a discount, so they agreed to a deal that skipped many of the due-diligence steps, and they allowed the sellers to remain in the property for six months, she said.
Buyers aren't willing to jump through hoops like that now, and sellers don't have the incentive to reach an agreement because of higher taxes, Wells said. Therefore, activity has sagged.
In January, all sales totaled $81.50 million compared to $96.65 million for January 2012. It was the worst performance for the month since 2010.
This February was the worst in at least a decade. Sales totaled only $36.26 million compared to $45.36 million in February 2012 and $115.92 in February 2011.
"It's a little slower than we were hoping for," said Craig Morris, a partner in Aspen Snowmass Sotheby's International Realty, the upper valley's biggest real estate firm.
Like Wells, he said the 10 percent increase in the capital-gains tax spurred so much activity in late 2012 and affected activity to start this year. "Buyers knew that sellers would be a little more motivated to sell in December," he said.
Total sales volume soared to $269.56 million in December, making it the strongest month of 2012. Sales were up 247 percent from December 2011.
Morris said that if you took sales for the last three months and divided by three, it would produce three average months.
One glaring development so far this year is the lack of big sales. In January, there was one sale for more than $10 million. The next-highest sale was $6.3 million.
February featured a high sale of $7.5 million and three above $3 million.
In contrast, there were four single-family-home sales of $11 million or more just between Dec. 20 and 26.
"The inventory has thinned out quite a bit" in the $10 million-plus range, Morris said. There are 62 properties currently listed for more than $10 million in Aspen and Snowmass Village in the Multiple Listing Service. He estimates that is 30 percent less than the inventory of one year ago.
Both Morris and Wells anticipate activity picking up this year. The good news for the real estate industry in Aspen is January and February are the two slowest months, so decreases in dollar volume can be offset. Wells said she expects a strong summer with activity matching traditional levels.
The "feeder markets" for Aspen - major metropolitan areas where many buyers come from - are seeing strong real estate activity, she said. That typically translates into purchases in Aspen and other mountain markets. The major feeder markets include Los Angeles, Chicago, New York and Miami.
Morris said the number of showings is strong there, indicating that people are interested in buying. He has a $50 million house in Wildcat under contract for later this spring. He said he had five showings of properties priced at $10 million or more on Saturday.
Those indicators lead him to believe that 2013 will compare favorably to last year.
"I think it's going to be similar," he said. "I'm optimistic it's going to be slightly better."
Sales totaled $1.49 billion in Pitkin County in 2012, or an increase of 17.5 percent over 2011. Last year was the best since 2007.