Bill Stirling: Aspen real estate prices will continue to drop
December 29, 2008
Though it took longer for the economic downturn to reach Aspen, each ensuing quarter is beginning to manifest lower statistics.
Since so much of the worldwide financial meltdown was tied to the national primary housing market and shoddy lending practices, Aspen felt the effects a bit later than the rest of the country.
Total sales volume and dollars are down by 50 percent as compared to 2007. We have fewer buyers, who are cautiously searching for a good value. Until Sept. 15, most sellers had their heads stuck in the sand of the 2006 market.
We have a recession in market activity, but the average sales price for single-family homes is ahead of 2007. Before Sept. 15, we even had a couple bidding wars for unique, irreplaceable properties in Aspen’s West End.
Many listed properties have been priced above recent sales, demonstrating how sellers still have an unrealistic expectation of the true market price. The total number of condo sales is down by 63 percent, compared to last year. The Gant has seen only three sales in 2008. We are beginning to see a few half-duplex and condo sales at 20 percent below the asking price. We are just beginning to see realistic price reductions and creative financing tools offered by some sellers.
Bear in mind that most asking prices in the Multiple Listing Service (MLS) are still above the true market. In virtually every situation, a motivated buyer can flush out a motivated seller by making offers in line with the real market.
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Recent events are swelling the MLS listings, which is reflecting a 40 percent increase in inventory. For the first time since 2002, our market is becoming a buyer’s market. With prime virtually at zero, and long-term rates at or below 5 percent, we are seeing many refinancings.
There are dramatic discounts to be had in the rental market. Any buyers with some protected cash and borrowing ability can virtually have their pick of attractive properties, and probably at surprisingly reduced prices.
My fearless forecast is that pricing will drop dramatically in 2009. Aspen real estate is always a good, safe place to park money, especially in these volatile times. You can use, rent and resell real estate. It can be depreciated. It is a dynamic commodity, and with the recording of comparable sales, it is a very transparent commodity.
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