How long can this last? That’s the question I’m hearing more often these days regarding the Aspen Snowmass real estate market. What’s interesting to me is that simple question can be interpreted to apply to several aspects of the current real estate environment.
There’s the obvious dilemma, how long can we see a sustained market of limited inventory, strong buyer demand and risking prices…that seems to be a common theme in dozens (if not hundreds) of resort real estate markets around the world these days. In short, it’s clear that strong buyer demand coupled with low available listing inventory pretty much always translates to rising prices. It’s always the next level down that tells the real story, you have to dig deeper to understand why this “good market” is similar and/or different from the last real estate run.
Between 2005 and 2008 the Aspen Snowmass real estate market experienced an unprecedented rise in prices, and many people failed to notice during that time that the actual number of transactions (i.e. sales) was dropping every year. The total dollar volume of sales was persistently strong because 20%+ per year price increases more than made up for diminishing sales activity.
Well, so far this year there’s been a noticeable drop in sales activity compared to the start of 2021 (a 10%-40% drop depending on the particular area); I’m the first to say it’s hard to judge a market based on limited data, and the first two months of any year in the Aspen Snowmass real estate market don’t typically give nearly as much insight at the following few months (this is primarily because of the normal seasonality in our market).
I do think it’s important to pay attention to the stats under the surface and take note. In addition to an early warning sign about sales slowing down there’s the more prominent trend of price increases that seems to be in (or at least approaching) unsustainable territory. The following chart shows the annual price appreciation for all Aspen homes, townhomes and condos:
Those are impressive returns for just about any investment. A home purchased ten years ago in Aspen has more than doubled in price during that time. In the current market environment Aspen home prices are on pace to double every 3-5 years – that is not a sustainable pace.
So, “how long can this last”? It’s likely the local real estate market will see slower price appreciation in the future, if not in the coming months or so then almost certainly in the next 12-18 months (just my guess). There are so many local forces that drive the Aspen Snowmass real estate market and ultimately it’s also the macro forces (i.e. things like the side effects from the war in Ukraine, interest rate changes, stock market sentiment, etc) that have historically shown that local real estate trends can and do change quickly. Stay tuned!