Aspen Real Estate

Aspen area real estate brokers and others who work with the affluent need to be able to adapt quickly if they want to stay relevant in today’s marketplace, characterized by super savvy customers and rapidly changing technology.
 
That was the message delivered by BJ Adams, owner/broker of BJ Adams and Company, at the firm’s annual State of the Real Estate and Tourism Economy symposium on Friday afternoon. 
 
Adams’ observations on buying patterns and attitudes of the affluent are particularly relevant currently to Pitkin County, where one in four single-family homes sales so far this year have been over $10 million. The five-year average of $10 million-plus home sales is 12 percent. Because of this recent flurry, the Aspen/Snowmass area’s supply of ultra high-end homes has dropped from a nine- or ten-year supply last year to a three-year supply this year.
 
Leading off the symposium, Adams discussed some of the findings of a survey of affluence and wealth by the Harrison Group, a Connecticut-based research company. Interest in spending is up and the embarrassment of wealth is down among the affluent, said Adams.
 
“Today’s affluent customer doesn’t buy to become happy; they buy because they’re happy,” she said—and some of them actually like showing off their wealth again after the recession years when it supposedly wasn’t fashionable to do so.
 
Yet today’s affluent expect a better deal than in the past. The vast majority—86 percent—prefer to shop in a store that has great pricing; 74 percent wait for sales to buy; and more than half shop with coupons.
 
This awareness of value extends to real estate, said Adams.
 
“Properties must be priced at least 10 percent below the competition or they will ignore it,” she said. “The affluent don’t want to just feel like they’re receiving a discount; they want to feel they’ve made an immediate profit when they close.”
 
Sellers in today’s marketplace who keep these trends in mind, adapting to the new price expectations while still offering something special, said Adams, are like purple cows in a field of brown and black cows. “If you’re a seller your product cannot afford to be boring; you must be a purple cow.”
 
Another trend that extends beyond the affluent is rapidly changing technology that allows consumers to have more information at their fingertips than ever before—spades more than even a few years ago at the height of the real estate boom—as evidenced by the explosion of industry-specific websites and other Internet services, apps, and iPads. The Harrison Group found that nine out of ten affluent think they can find out something faster on the Internet than going to a supposed expert in the field.
 
Real estate brokers have survived better than others serving the affluent, Adams said, but they now “need to bring more knowledge and insight to the table, and they have to do it fast and intelligently.”
 
This is particularly true in today’s market, in which transactions are down 60 percent from their 2006 peak, said Adams. Out of 660 brokers who are Aspen Board of Realtors members (from Aspen to Glenwood), 400 haven’t made a sale in a year and 350 haven’t sold in two years. Last year, she said, 80 percent of the transactions were done by 20 percent of the brokers.
 
“If you’re not ahead of the curve you will be considered pretty much irrelevant or an unnecessary annoyance to get the deal done,” said Adams. “We have to be better. Consumers are now king.”
 
Myth busting and other stats 
 
In compiling statistics for the real estate symposium, Andrew Ernemann, a broker associate with BJ Adams and Company, found two widely believed myths about Aspen area real estate.
 
One myth is that listing inventory is way up, that the market is flooded with properties for sale. In fact, Ernemann found, inventory is down 11 percent in Aspen, even in Snowmass Village, and down 25 percent in Basalt, compared to 2010. Condos and townhomes in Aspen are down 19 percent, and land inventory is down 17 percent.
 
The second myth is that there are huge discounts to be had on real estate. Fewer than one out of 50 of sales are done with more than a 30 percent discount, Ernemann said—the average sales price discount is actually 10 percent below the asking price.
 
Otherwise, Ernemann’s data showed the beginnings of a slow recovery in the Aspen to Basalt area. In 2011 so far, sales volume is up 44 percent while dollar volume is up 32 percent in Aspen; and up 57 and 21 percent in Basalt. Snowmass Village sales are up 34 percent but dollar volume is down 9 percent. And there are 32 percent more properties sold or under contract now than last year.
 
But some challenges remain, said Ernemann. Average price per square foot is struggling: it’s flat in Aspen compared to the same time last year, and down 18 percent in both Snowmass Village and Basalt. July has actually slowed down quite a bit compared to the improvement in the first half of the year. And in many areas of the market, sellers’ chances of selling in the next year are well under 50 percent (although realtors will point out that makes for great opportunities for buyers). Single-family homes have a roughly one in three chance of selling in Aspen, Snowmass and Basalt, and land even less. Condos and townhomes have the best chances of selling, in Aspen (46 percent chance), and in Basalt (79 percent chance). 
 
Looking at the cycle of real estate over the last 10 years (which is typical), Ernemann’s local market index shows a curve that started flat after 9/11, then rose sharply, leveled out in 2006-2007, then sharply dropped in the recession years to the bottom in 2009 before flattening again and rising slightly this year. Ernemann market the curve with descriptive words such as “hope” and “excitement” during the rises, “euphoria” at the peak, “denial,” “fear,” and “panic” before the bottom, and “despondency” and “depression” at the bottom.
 
Ernemann characterized the three upper valley markets this way: “Aspen, I would place us on hope. Snowmass Village is just past depression, wanting to get to hope but not quite there yet. And Basalt: if you’re a seller you’re in depression right now, but there’s opportunity for the buyer.”