Article by Rick Carroll of the Aspen Times:
Lap of Luxury
Sales of single-family homes over $10 million in Pitkin County numbered 23 in 2019, marking the third time more than 20 single-family homes topped the eight-figure mark. Here’s a look at the last 10 years in the high-end residential market.
Year Number of $10 million-plus sales
Source: Aspen Appraisal Group LLC
Lawrence Yun, chief economist of the National Association of Realtors, views the Aspen-area residential real estate market through a lens of tens.
“Very, very few markets in this country have this 10-10-10 market situation of where you have a (10,000) square-foot-house that costs $10 million for a home buyer who wants to use it only 10 days a year,” he told the packed ballroom crowd at The St. Regis Aspen Resort.
Yun’s remarks — while steeped in reality — attracted scattered chuckles from those at the Aspen Board of Realtors’ Annual Market Update Luncheon on Thursday. They also punctuated appraiser Randy Gold’s assessment of the local property market’s current status.
Overall property sales rung up in Pitkin County in 2019 — which include all types of real estate ranging from commercial to residential — amounted to just over $1.8 billion, down a tad from 2018, Gold said, basing his figures on data from Land Title Guarantee Co. Last year also was buoyed by 23 single-family home sales that topped the $10 million mark, falling shy of the record number of 27 eight-figure deals in 2015 and 26 in 2017.
Gold said the market was strong last year, based on his discussions with area property brokers, “and I think they feel that way because the single-family markets in Aspen and Snowmass did so well. But when you look at it realistically, and based on the numbers, it was a good, solid year, a little over $1.85 billion in sales, but that was actually down a little bit from the $1.863 billion we saw in 2018 and well below the $2.5 billion to $2.6 billion that was our highest ever in 2006 and 2007.”
A return to those mid-2000s seems unlikely in the near future, Gold said.
“Aspen is not immune to what happens nationally,” he said, noting fears of a national recession happening in 2020 or 2021, while having dampened last year, have recently re-emerged.
Some of that is because coronavirus outbreak in China, which will impact the global economy “if they don’t get their hands around this thing soon,” Gold said. Wall Street also has a role, as does this year’s U.S. presidential contest, he said.
Gold said he expects “another strong year for sales over $10 million” in Aspen, while he also predicted overall sales in Pitkin County to hover between $1.6 billion and $1.8 billion in overall sales volume.
“If 2020 finishes the way I’m forecasting, with little change or down modestly again, the Aspen-Snowmass market seems like it’s continuing slowly toward our next down market,” he said.
On the day after Wednesday’s haymaker-dominated Democratic debate — candidate Michael Bloomberg had to defend his wealth, while Bernie Sanders had to defend his ownership of three homes — and the same day that President Trump was stumping in Colorado Springs, Yum said there’s little doubting the election’s outcome will impact real estate sales.
“2020 is a presidential election year, and when I look at the data overall for the upper-end market (nationally), yes, there is a little hesitation,” he said. “(Home buyers) want to know for certain who will be elected before deciding on a major expenditure, because it could have tax implications or, say, right now Wall Street is at an all-time high, but the stock market community, I don’t believe they want Bernie Sanders as their president. … It will be interesting to see how the market digests the presidential election.”
There’s no questioning, however, that billionaires continue to wield powerful influence on the local market, both in the residential and commercial arenas, Gold said.
“Aspen has long been known for how many billionaires we have and their impact on the residential market,” Gold said, noting he came up with “around 60 (billionaires) that I can pretty positively identify.” That figure might be closer to 75 or more billionaires “that own single-family houses, commercial property, or both,” he added.
“That’s a pretty staggering number, when you think about it, for a market as small as Aspen,” Gold said, noting the figure doesn’t trail far behind such major cities as New York City, San Francisco and Tokyo.
To put a billionaire’s affluence in perspective, Gold broke it down in simple yet astronomic terms.
“If you have $1 million and you spend a dollar every second, you’re out of money in 11 days,” he said. “If you’re a billionaire, and you spend a dollar every second — $3,600 an hour — it takes you 32 years to spend your money.”
The wealthier the buyer, the more they can afford to overpay for property. The end result means property valuations increase, which translates to property taxes increase as well, Gold said.
“So for somebody who has a $10 million statement, a pretty respectable statement for most markets, that buyer can overspend $50,000 for a condominium. The guy who is worth $100 million, he can overspend $500,000. But the guy who’s worth a billion dollars, let alone $2 billion, or $3 billion or $5 billion, they can easily overspend by $5 million and it has the same relative insignificance, or significance, depending on your perspective.”