A Shift in the Market?
Rapid Resets Aren’t Unusual in Aspen (Lately)
Now that a second full summer of real estate sales in Aspen Snowmass after the COVID “reset” is wrapping up I’ve been thinking about where the market has been and of course where it is heading.
There seems to be a general sentiment amongst potential real estate buyers in the Aspen area that the market has been on a runaway train, and surely the train is going to come off the tracks at some point in the relatively near future. I’m the last person (or at least pretty far down the line) to try and predict when the local real estate market will make its next dramatic shift, whether that’s further up or changing course and moving downward.
I am someone who studies the local real estate market intensely, and I look for patterns, trends and general sentiments that might give insight about what lies ahead (not to mention trying to make sense of today and the recent past). So, with that lens I find it interesting that without question the Aspen Snowmass real estate market has experienced a pretty intense upward shift over the past 15 +/- months…but in reality the upward pressure on prices is not without comparison.
The average price per square foot for all Aspen area real estate sales has gone up 26% over the past two years – this factors in all price points, neighborhoods, etc. (there are significant differences depending on location, style, size, price point, etc). The “big jump” was last year when prices moved up nearly 20% year over year, but that pace of increase has tapered quite a bit already this year; and interestingly Aspen real estate prices have been going up every year since 2012.
Looking back to the few years prior to the Great Recession, Aspen real estate prices went up 62% over the span of three years – exactly double the price increase over the past three years. During the Great Recession prices in Aspen dropped 30% over the span of four years (roughly equivalent to the gains over the most recent three years), and in the first year of Aspen price declines the average sale price per square foot dropped 19%.
So, what does this all mean? I see some parallels in today’s Aspen Snowmass real estate market trends to the “crazy” times just prior to the crash of the Great Recession…but the intense pressure on the local real estate market has only been taking place for just over a year. In my opinion it will take a more sustained time period of 10-20%+ year-over-year price increases OR a major external market/demographic change before we could reasonably expect a major correction in the Aspen area real estate market (and I’m certainly not ruling out the latter as a possibility).
There really isn’t great pricing data for Aspen real estate going back prior to 2005, and the fact there has now been three pretty significant price shifts (two upward and one downward of 30%+ over a span of 3+/- years) in the past fifteen years is certainly interesting. My opinion is we are much too early in the current shock to the market to know what happens next, and the fact that price increases have already slowed quite a bit gives just a hint of hope the recent price jumps are just a “reset” of Aspen real estate prices to a higher baseline – stay tuned over the coming months and beyond to find out!
The graph above gives a nice visual of the upward and downward resets the Aspen real estate market has experienced over the past 15 years. I’ll leave you with a fascinating fact – since the “low point” of the Great Recession in 2012 the average sale price per square foot has exactly doubled (i.e. gone up 100%)…that equates to an average 8% price increase per year, which is a very nice return but certainly not in the territory of completely unsustainable. It’s always important to keep a long-term view, especially when the short-term is so “noisy”!