Discounts needed to spur Aspen home sales
ASPEN – The recession has brought “unprecedented” discounts on real estate prices in Aspen, according to veteran brokers.
Single-family home sales prices are about 30 percent off their peak asking price from earlier this decade, while condominium prices are down about 20 percent, according to Brent Waldron, managing broker of Chaffin Light Real Estate in Aspen. That adjustment is “unprecedented” in Aspen, said Waldron, a 33-year veteran of the local real estate industry.
Examples of deep discounts abound. A five-bedroom, 8,302-square-foot luxury home called the Estate on Castle Creek sold for $17.5 million last week. It had been on the market for $25 million, so the sale price was 30 percent below the asking price. The property sold for $23.5 million in June 2007 when it was listed for $25.5 million, according to public records.
The discounts aren’t just a recent development. A house at 10 S. Riverside Ave. in Aspen sold in April for $9 million – 35 percent off the $13.75 million asking price.
Sales prices were only discounted an average of about 5 percent from asking prices during the boom years of 2005 into 2008, according to Andrew Ernemann, a broker associate with B.J. Adams and Co. “All of a sudden in ’09 that exploded. It got much bigger,” he said.
The good news for the local real estate industry is sellers are facing the new reality of the market and adjusting their asking prices accordingly, multiple sources in the industry said. Sales activity slowed to a trickle last fall, a trend that continued this year. That forced “motivated” sellers to drop their asking prices.
Buyers have found the adjusted asking prices a lot easier to swallow. As a result, activity has picked up the last two months.
“Sellers being realistic helps buyers feel good about pulling the trigger,” said Craig Morris, a partner at Morris and Fyrwald Real Estate in Aspen.
Waldron said the adjustment “isn’t necessarily bad news for us.” Adjustments of 20 to 30 percent are spurring sales activity in Aspen-Snowmass. That’s not the case in all resorts, he said. The market is forcing discounts of 40 to 50 percent elsewhere, he said. That demonstrates the ongoing strength of the Aspen market, he said.
The Roaring Fork Valley is actually experiencing two types of discounts. One is a deep discount from the original asking price – the amount set by the seller when the property first when on the market. In many cases, the original asking price was set before the full effects of the recession were felt.
The second is a less drastic discount from the current asking price – the adjusted prices set by sellers.
Ernemann undertook a detailed analysis that demonstrates the difference in the discount rates. He compared all residential sales prices in Aspen and Snowmass Village in 2009 to the current and original asking prices. One-third of all sales were discounted by 30 percent or more from their original asking price. However, only 6 percent of sales were discounted 30 percent or more from the current or adjusted sales prices.
The gap is closing considerably between buyers and sellers, Ernemann said. His analysis showed that more than 40 percent of this year’s sales have been discounted less than 10 percent from the current listing price.
“Some buyers are willing to get back in the market,” he said. Investors who were waiting on the sidelines for a year or so are now starting to stir. The activity is affecting the market.
“We’re starting to hit that point where it’s not going up, but it’s stabilized,” he said. Ernemann wants to see what happens this winter before he’s willing to say prices aren’t falling further.
Waldron said there is “no question” that Aspen is emerging from its trough. Sellers are realistic, and buyers recognize prices have hit bottom. And even with the unprecedented discounts, Aspen remains a high-end market. The median single-family home sales price is $5.05 million through Nov. 9 this year. The average sales price of 48 home sales is $6.97 million.
“Those are still solid numbers,” he said.
At the same point in 2007 the median sales price was $5.55 million, and the average was $6.07 million after 91 sales.
Morris said that the annual property appreciation during the boom wasn’t sustainable and an adjustment was necessary. In late 2006 and early 2007 he asked himself, “Who the hell is going to pay these prices?” he said. “Not everybody is a $10 million buyer.”
Pricing adjustments in the middle and lower valley are similar to the upper valley. Wendy Lucas, owner of a real estate company bearing her name, agreed that prices came down 30 percent off their peak. However, her analysis of more than 100 sales of single-family homes, condos, townhouses and duplexes in Basalt, Carbondale, Glenwood Springs and Missouri Heights shows average sales are 86 percent of original asking prices and 93 percent of adjusted asking prices.
The low discount is probably because most of the properties that are selling are priced below $500,000. “It’s the low, low end of the market,” Lucas said.
Like other real estate agents, she believes the local market is emerging from the trough and there are signs of recovery. There were times in the last year when she didn’t accept new listings because she didn’t feel sellers were willing to price their property realistically.
“Now I’m telling them this is it, don’t drop your price any lower,” Lucas said.