Aspen Real Estate

ASPEN, Colo.—Despite signs of recovery in the real estate market including strong activity in the ultra luxury category, the city of Aspen’s real estate transfer tax (RETT) that benefits the housing program ended 18 percent down from 2010.

“2011 marks the worst year for real estate transfer tax collections since 2003,” city Finance Director Don Taylor wrote in his memo introducing the report.

The city assesses a 1.5 percent RETT on all free-market real estate sales within city limits, with 1 percent going to an employee housing development fund and a half percent into a fund for the Wheeler Opera House. The Wheeler RETT ended the year 16 percent down.

The RETT for the year collected $5.2 million for the housing fund and $2.8 million for the Wheeler, reflecting roughly $663 million in Aspen real estate sales in 2011.

The high for RETT collections was in 2006, when the two funds received a combined $17.4 million. RETT collections in 2010 were a combined $9.7 million.

Part of the reason RETT collections are down can be attributed to the fact that most of the 22 high-end sales in 2011 that fueled the local real estate market were in Pitkin County, not the city, according to the finance department’s Michelle Holman. Taylor also noted that there were more foreclosure sales in 2010 than in 2011, which could be boosting the 2010 numbers.

According to real estate broker Andrew Ernemann, the big drop in RETT collections for 2011 says very little about the overall market.

"RETT collections are a reflection only of real estate transactions within the city of Aspen," Ernemann noted in an email. "Furthermore, RETT collections include all sales (including commercial sales, fractional sales and all residential sales), so some of the larger transactions in a given year can greatly skew the collection figures. In 2010 we saw some significant commercial real estate sales in Aspen (i.e. Lift One TH’s site, St. Regis, Limelight, etc.) that would make RETT figures misleading if someone wanted to use those numbers just to look at the residential real estate market."

Ernemann, who recently published "The Big Red Book" annual real estate report, believes that studying just Aspen can useful, but not for understanding the overall trends of the Aspen/Snowmass residential real estate market.

"A perfect example is that Red Mountain is not including in RETT collections, and Red Mountain is pretty darn close to town," Ernemann wrote in an email.

Though perhaps not a clear indicator of the overall market, RETT collections does have a significant impact on City budgets.

Because the RETT has been declining since 2008, the city has “had time to adjust our budgets and come up with new programmatic plans,” said Taylor. The Wheeler fund, he said, had built up a substantial balance prior to the recession, “so it’s fine,” and budgets to “reflect the current reality” have been put in place for the housing fund.

Meanwhile, real estate transfer tax collections in Snowmass Village were up 35 percent through November 2011, according to a report from the town finance department. The 1 percent tax has collected $2.1 million for town coffers year to date, reflecting $211 million in real estate sales.

Snowmass’ RETT has fluctuated wildly compared to 2010, down by double digits six months of the year and up by triple digits in February and July—762 and 356 percent, respectively. (The July numbers reflect the late June sale of the Silvertree Hotel complex and conference center for $38.75 million.) Still, the RETT is the highest it’s been since 2008, when it collected $3.65 million for the full year.