Scott Bayens: The real estate monster under the bed: real or imaginary? |

Scott Bayens: The real estate monster under the bed: real or imaginary?

Scott Bayens
Deeded Interest

Lately, it seems the more we talk about the U.S. and world economies, the further down the rabbit hole we tend to go. Every such conversation spawns speculation, uncertainty, anxiety and even fear. News coverage of the negative yield curve, overnight fed repurchase operations, trade wars and rate cuts is endless and frankly, stressful.

I’ve written before about the PTSD we all suffer as a result of the Great Recession and subsequent housing crisis, especially around here. I get it. I got my butt kicked too. Since then, I’ve worked hard to jettison away from the negative, morph to the pragmatic and now perhaps, have a more optimistic outlook.

And there’s a part of me that doesn’t want to waste time on what for some is a foregone conclusion. And I certainly don’t want to participate in what could become a self-fulfilling prophesy. After all, consumer confidence has a lot to do with psychology.

I recently read a piece in an online publication which laid out nine reasons why a housing crash isn’t imminent. But further down the column, the author listed five conditions that could cause collapse. For the record, most financial experts don’t think we’re in a bubble or on the verge of disaster. Be it a “minor” recession, correction, or slowdown, it’s a fact that major markets like Manhattan, Los Angeles, Chicago and Dallas are seeing fewer transactions than in 2018.

At first, home prices didn’t fall. Instead, they gradually slowed their increase. Many home sellers were disappointed they couldn’t get the same high prices their neighbors got a year earlier. They were reluctant to lower their prices, and so sales slowed. No one wants to be the canary in the coal mine. In areas where that occurs, the mentality shifts quickly from “I’ll get what I want if I wait long enough” to “Get out fast today with whatever we can get.”

Another reason for the nationwide slowdown is because average incomes haven’t kept up with home prices. Per capita income rose 25% between 2011 and 2018. Home prices rose 48% during that period. If you’re making $50K to $100K a year, you likely can’t afford a $500,000 home or the $50,000 down payment. In an ironic way, this data point is a healthy indication as prior to the crash these types of buyers did end up purchasing homes they couldn’t afford using the sub-prime lending market. We all know how that turned out.

There are a lot of great benefits to home ownership both for the buyer and the overall economy. That’s why we’re watching and wooing those millennials so diligently. Unfortunately, those 22- to 37-year-olds who are college-educated, working professionals generally can’t afford anything over $500,000. That kind of stagnation, with qualified buyers left on the sidelines, is never healthy.

Comparatively, those with more to spend, many looking for second homes, are much more active and have kept local brokers very busy this summer. And for now, the luxury home market upvalley continues to break records. Randy Gold, a partner with Aspen Appraisal Group who specializes in the Aspen-Snowmass market, who predicted lower dollar volume this year than last year, now says with a giggle, “Now it looks like we’ll be up!” Sales under $5M remain strong, which includes condos and townhouses in the core. Gold described the market in Aspen’s West End as “its own little world” with 11 sales since January, some selling for more than $2,000/SF.

However, he says he is seeing some “buyer resistance” on Red Mountain, for example, where prices for new inventory are often more than $3,000/SF. He also says he worries about the amount of inventory on the market now over $10M (which numbers over 100) but concedes, with 19 sales since the beginning of the year in this category, for now, his concern has so far proven to be unfounded.

With all that in mind, we might as well take that crystal ball and crack it over our knee. After our last debacle, we all know we aren’t immune to market shifts and national trends. Housing affordability for first-time homebuyers remains a concern. The same goes for the supply and absorption on the other end of the spectrum. But for now, with historically low interest rates, the stock market hanging in there, and demand for local properties still high, the monster under the bed might be real but has yet to rear its ugly head. But we’ll all be watching.

Scott Bayens (GRI, ABR, CNE) is a Realtor and top producer with Aspen Snowmass Sotheby’s International Realty. Learn more by visiting his website at