The December 2012 dollar volume of $269.7 million was up 247 percent over the same month the prior year, and the number of transactions (90) saw a 61 percent increase, according to a report by Land Title Guarantee Company released Wednesday. That makes December 2012 the strongest December in terms of dollar volume since May 2007 and one of the strongest months in the last decade.
When you look at number of sales, however, December (and 2012 in general) was good but not particularly dynamic, said Randy Gold of Aspen Appraisal Group during a presentation at the Aspen Business Luncheon on Wednesday. During the boom years of the mid-2000s, he said, 100 to 150 sales were regularly taking place every month—compared to the 90 properties that changed hands in December 2012.
The total number of transactions in 2012—749—was actually a slight decrease (less than 1 percent) from 2011, according to Land Title. And they were much lower than in 2006 (1,879), 2007 (1,379), and even 2008 (828), when the market made a sharp downward turn.
Despite 2012 dollar volume being well below the $2 billion plus levels seen from 2005 to 2007 “when the market was on fire,” last year marked the third year of improvement in the Aspen market, Gold said.
Some market fundamentals are trending very closely to those in 2003, said Andrew Ernemann, president of the Aspen Board of Realtors and co-presenter with Gold at the Aspen Business Luncheon. For example, Aspen single-family homes sales versus listings were almost exactly the same in 2012 and 2003. Those two metrics, which demonstrate the pace of the market in any given time period, are important ones to watch, Ernemann believes, and in 2012 they showed “a healthy market entering a growth phase again.”
Similarly, the average inventory of single-family homes in Aspen throughout 2012 was just under a two-year supply. A healthy range is between one-and-a-half and two years, said Ernemann, a broker with BJ Adams and Company.
Gold and Ernemann highlighted three major factors that boosted the 2012 numbers: sales of homes over $10 million, land sales, and commercial building sales.
Of the 16 residential sales over $10 million in 2012, five closed in December, noted Gold. It wasn’t the strongest year for high-end sales in recent memory—2011 and 2007 share that distinction—but it was “a big year.”
Some segments of the upper market are not doing as well, however. There’s been a large drop in sales in the $5 million to $7 million range, said Gold, with just 10 such sales last year. And the over $20 million market “still has a lot of weakness,” he said, with at least a seven-year inventory.
Land sales took a huge leap in 2012, with 37 lots changing hands in Aspen, compared to 11 in 2011, according to Gold. And it’s worth noting that many of those were on the pricey side—the average price of an Aspen lot in 2012 was $3.4 million, compared to $1.9 million the year before. The most noteworthy land sale last year was a 2.3-acre lot on lower Red Mountain for $15.5 million. Increasing land sales are a major sign that the market is improving because they tend to signal a long-term, time-intensive commitment to the area on the part of the buyer.
The large number of commercial building sales in 2012 also skewed toward the upper end—and the end of the year. Four commercial building transactions were recorded in December alone, two on the last day of the year.
In terms of price per square foot, the highest price was paid for the Volk Plaza, or Paradise Bakery, Building—at $17.25 million, it fetched nearly $1,779 per square foot.
The $22 million paid for the Mountain Plaza, or Bidwell, Building and the $13.25 million paid for the Gap building (by the same investor) represented “huge numbers,” said Gold, “and they were just land sales.”
Gold was referring to plans to demolish and redevelop both of the properties. In fact, of the 11 commercial building sales in 2012, only the Volk Plaza Building was bought for income from the existing structure and its tenants, said Gold.
Looking at the main standard used to calculate the value of a commercial building, the capitalization rate (which is based on yearly income divided by sale price), “those buildings do not make sense,” said Gold. Yet such a phenomenon demonstrates that buyers are willing to invest in and go through a redevelopment process for the buildings for their long-term appreciation potential.
Pitkin County transactions 2012
- December dollar volume: $269,713,558
- December number of transactions: 90
- Increase over December 2011 (dollar volume): 247%
- Increase over December 2011 (transaction volume): 61%
- 2012 dollar volume: $1,491,364,705 (17.5% increase over 2011)
- 2012 transactions: 749 (0.9% decrease from 2011)
- December bank sales: 5, $2.4 million
- 2012 bank sales: 46, $38.7 million
- Average single-family home price: $4,196,941 (up 2% over 2011)
- Median single-family home price: $2,800,000 (even with 2011)
- December fractional sales: 8 (four at Hyatt, two at Residences at Little Nell, one at Ritz-Carlton, one at St. Regis)
- December fractional dollar volume: $4.3 million (40% increase over December 2011)
- 2012 fractional sales: 140 (33% decrease from 2011)
- 2012 fractional dollar volume: $55,262,019 (38% decrease from 2011)