The Aspen Times | By Rick Carroll | August 12, 2020
Out-of-state buyers have been gobbling up Aspen properties at what real estate observers are calling an unprecedented pace that not even the pre-Great Recession days can match.
This month alone helps demonstrate that. Eight property sales, each selling for more than $10 million, have gone through the Pitkin County Clerk’s Office since Aug. 1. Those eight deals combined for $119.8 million, including $22 million for an undeveloped residential lot on Red Mountain that was recorded Tuesday. By comparison, August 2019 generated $162.3 million in total sales for both residential and commercial real estate, according to property records.
Broker Melissa Temple of Engel & Volkers Aspen said Tuesday she expected to see a push in demand for Aspen property because of the pandemic, but not at these levels.
“I just knew we were going to have this influx, but I didn’t know it was going to be quite like this,” she said. “I didn’t realize the big whales would be flying in on their jets and snapping up those properties.”
With August not even halfway complete, the real estate community is still digesting what happened in July when sales were primarily fueled by buyers looking to escape to Aspen from the coronavirus pandemic and its daily impacts.
In its monthly tax report issued last week, the city’s Finance Department noted that real estate transfer tax collections in July were “substantial and appear to display flight from the urban areas to a more remote location.”
In Aspen alone, there were 43 single-family properties north of $20 million that went under contract in July, according to a report issued last week by Douglas Elliman Real Estate. Another 23 properties ranging from $10 million to $19.99 million also went under contract, the report said.
“We are moving onto what will probably be the biggest quarter ever,” said Randy Gold of The Aspen Appraisal Group.
Gold said that by his calculations, residential property — that includes undeveloped land, homes and condos — accounted for $226 million in closings between Aspen and Snowmass Village in July.
Another number-cruncher, broker Andrew Ernemann of Aspen Snowmass Sotheby’s International Realty, issued a report Tuesday saying that more than 180 properties with a dollar volume of $800 million in Aspen and Snowmass are under contract, compared to 22 with a dollar volume of $100 million on April 30.
“I think it’s unprecedented,” Ernemann said, noting home prices will keep rising with the dropping inventory.
Real estate sales within Aspen city limits generate a transfer tax that helps fund the city’s affordable-housing program and the Wheeler Opera House. In July, the affordable-housing coffer drew $885,546 in real estate transfer tax collections, 81% more than what the city originally budgeted and 131% more than $383,273 the city collected in July 2019.
As well, the Wheeler fund made $464,915 in RETT collections last month, which was 101.2% more than budget projections and 129.3% higher than the $202,796 generated in July 2019.
New local homeowners run the gamut, but Ernemann said they appear to be “pent up in cities and apartments where they live, and they are recognizing that’s not what they want. They want an office, fresh air, and they want to feel secure and safe.”
Temple said, “People have realized during the lockout that they can work from anywhere.”
The population surge, Gold and Temple said, will pressure the town’s infrastructure and strain its resources. While the Aspen School District enrollment surge is no secret, Gold said other resources from public safety to sewage also will be stressed.
“There will be a lot of impact on us, and I think that’s very real,” he said.
In the meantime, the market has become a seller’s one, with homes selling at a premium.
“There are a lot of sellers who have been unrealistic,” Gold said. “Now they are emboldened. They know what’s going on. Things are selling quickly at crazy prices. It’s wild out there.”
Buyers will eventually put on the brakes, Temple predicted, noting she expects listing prices will even be out of Aspen’s stratosphere. But for the next few months at least, she expects the buying frenzy to continue.
“I think the sellers are becoming a little bit greedy,”she said, “but I suppose that’s the nature of economics.”