Aspen real estate: the slowdown effect

ASPEN Last week one of Aspens most prolific real estate agents, Rich Wagar, had to cut loose his nine associates, partly because of a local property market that is increasingly mirroring the national condition. I think it was a surprise to everybody, Shael Johnson, one of the casualties of Wagars restructuring, told The Aspen Times on Friday.Unsurprising, however, is that the local real estate market is underperforming when compared to the past few years. Call it a burst bubble, an industry recession, a slump, or simply a reflection of the national market, the real-estate landscape has proven that it is vulnerable, and businesses are having to adjust. Some real estate agents are being forced to take other jobs to make ends meet.For someone who goes from $40 million in total sales volume to $10 million [in one year], that can be pretty traumatic, said Craig Morris, a name partner with Aspen realty firm Morris & Fyrwald. Its the first time in 10 years Ive seen a number of people in the business really looking elsewhere to supplement their income.Statistics show that theres just not enough to go around like there was last year. Last month valley-based Land Title Guarantee reported that the first four months of this year generated $493.52 million in total sales volume. The same period last year brought in $959.53 million. And earlier this month the city of Aspen, in its monthly sales tax summary, reported percentage drops in the double digits for its real estate transfer tax collections.From January through May, the city reported that it had collected $2,520,615 in real estate transfer taxes (RETT) for its affordable housing coffers, a decline of 38 percent compared to the same period in 2007. Likewise, the city saw a 38 percent drop in real estate transfer tax collections for its Wheeler Opera House account, bringing in $1,359,776. City finance director Don Taylor offered a measured analysis. Both of the RETTs are currently reflecting a 38 percent year-to-date decline from 2007. And, while they are also down from the stellar years of 2006 and 2005, they are still reflecting respectable increases from the comparable [year-to-date] figures for 2004 and prior years These trends appear to be due to an exceptionally high rate of real estate sales in the years 2005 through 2006, and the local as well as national decline in real estate sales in 2007 through the current period.But its not that Pitkin County hasnt seen any jaw-dropping real estate deals this year.Russian oil tycoon Roman Abramovich made headlines in April by plopping down $36.375 million for Leon Hirschs Wildcat Ridge estate. And some 11 weeks earlier, he paid $11.8 million for a home in Snowmass. (See chart below.)While property brokers are looking to adjust, the same can be said for sellers. There are the patient sellers who will stand firm on their home price for a year or two if they have to, but the ones trying to move their property within six months are being forced to reduce their prices, Morris noted. Otherwise, their home will sit still, he said.There are plenty of transactions taking place, he said, but the transactions being done are the properties that are priced right, and theyre priced right relative to todays market, not last years market.In the past, people could price their property at or above the market value, but they cannot now. There are many sellers that chose the price of their house on their own and they typically have an inflated opinion of value and their property sits on the market and doesnt sell.The answer, Morris said, is quite simple: Lower the price. Morris noted that he has one property listed for $7.995 million that he considers about 15 percent above its market value.If that property were to come down $1 million it would be very sellable, he said.On the flip side, Morris said he is the listing agent for a property that was advertised for $18.5 million and generated little interest. But when the price was slashed to $15.995 million, it attracted an abundance of suitors. Now, the property is under contract for more than $15 million, Morris said.The [overpriced homes] contribute dramatically to the slow-down effect, Morris said. rcarroll@aspentimes.com

This article is a feature of Inside Business, published Tuesdays in The Aspen Times.

The combined total of Pitkin Countys five most expensive property sales (both commercial and residential) in the first half of 2007 was 60 percent higher than the five biggest deals for the first half of this year. The five most expensive deals for the first six months of 2007 totaled $142,775,679, compared to $85,675,000 for the five most expensive transactions through June 20 of 2008. Heres a breakdown:FIRST HALF OF 20071. Property: Hotel JeromeAddress: 330 E. Main St.Price: $52,222,200Seller: Oklahoma PublishingBuyer: Elysian Worldwide LLC and Lodging Capital Partners LLCDate recorded: May 24, 20072.Property: Elk Mountain LodgeAddress: 45 Rooney CirclePrice: $26,455,479Seller: David Middleton, Ellen Randall TrustBuyer: Elk Mountain Lodge LLC, William KochDate recorded: May 11, 20073. Property: Popish Valley RanchAddress: 1551 Wildcat Ranch (Snowmass Village)Price: $26 millionSeller: Sandra LloydBuyer Harvey Armstrong of California, Clear W. Ranch of NevadaDate recorded: May 14, 20074.Address: 3224 Castle Creek RoadPrice: $23.5 millionSeller: Perry Leff, Abbe Lane LeffBuyer: 3224 Castle Creek Corp.Date recorded: June 28, 20075. Property: Mill Street Commercial CenterAddress: 465 N. Mill St. and 557 N. Mill St.Price: $14.6 millionSeller: John Provine and Ron SoderlingBuyer: Ron Garfield, Andrew Hecht, Douglas Ostrover, Nikos Hecht, Mill Street Capital Partners, Korenvaes Capital Partners of Dallas, and the Hecht Childrens TrustDate recorded: June 19, 2007FIRST HALF OF 2008 (through June 20)1.Property: Wildcat RidgeAddress: 1200 Ridge of Wildcat Drive (Snowmass Village)Price: $36,375,000Seller: Leon C. HirschBuyer: Roman AbramovichDate recorded: April 29, 20082. Property: La Fave Block buildingAddress: 405 S. Hunter St.Price: $14.6 millionSeller: Stein Ericksen Family Partnership LLLPBuyer: Perryton Holdings LLCDate recorded: Feb. 22, 20083. Address: 303 Aspen Way (Snowmass Village)Price: $11.8 millionSeller: Steven SandlerBuyer: Roman AbramovichDate recorded: Feb. 4, 20084.Address: 385 Pinecrest Drive (Snowmass Village)Price: $11.5 millionSeller: Terry A. McKay TrustBuyer: Lorenzo J. Fertitta TrusteeDate recorded: March 175.Address: 640 Moore DrivePrice: $11.4 millionSeller: Jeffrey SofferBuyer: Moore Ski Properties LLC of MiamiDate recorded: March 14

SOURCE: Pitkin County Assessors Office, Inside Business research