Speculative builders are sniffing around the Aspen-area real estate market again after all but disappearing for five years during the recession, according to real estate agents.
The demand for new homes and high-end remodels has been reignited among buyers in the upper Roaring Fork Valley, according to Tim Estin, a broker associate with Aspen Snowmass Sotheby’s International Realty. The inventory of new homes is low and prices are high, he said. Developers are “definitely aware” of that void in the market and on the hunt for vacant land, according to Estin.
After record-setting years in the dollar volume of sales in the mid-2000s, the Aspen-area market suffered through some comparatively lean years from 2009 to 2011. Patient buyers were able to find bargains in all price ranges so new residential construction evaporated.
Now that inventory is disappearing, prices have stabilized and started to climb, in some cases, and demand for new product has returned.
Craig Morris, a partner in Aspen Snowmass Sotheby’s International Realty, said many buyers are willing to undertake extensive remodels rather than tear down the houses they purchase and start from scratch. They can save substantial amounts on mitigation fees and affordable-housing requirements, he said. Plus they can save money. A detailed remodel might run from $200 to $400 per square foot, while new construction, with various mitigation fees added in, could run around $1,000 per square foot, according to Morris.
A “slight uptick” in new construction and a shrinking inventory could be a major factor influencing Aspen’s real estate market in 2014, Morris said. Buyers are willing to pay a premium for new homes, he said, and that brings the prices up for other homes on the market.
Estin’s research shows there were 41 sales of vacant land in Aspen and Snowmass Village in 2012 and 40 sales in 2013, compared to just 21 and 24 in 2010 and 2011, respectively. In many cases, investors were buying the land when prices were lower and waiting until demand increases before developing.
Aspen is experiencing its usual seasonal lull in construction activity this winter, but word in the real estate industry is that several builders are cranking up projects in the spring, Estin said.
Construction activity in Aspen increased 37.4 percent in 2013 from 2012, according to the community development department. The valuation of projects in 2012 totaled $148.1 million. That increased to $203.5 million in 2013 and was expected to increase slightly when all numbers were crunched, The Aspen Times reported on Dec. 29.
Commercial activity such as the Benton Building redevelopment and the Aspen Art Museum construction dominated the valuation in 2013. If the real estate agents’ hunches prove accurate, residential activity will pick up in 2014.