Dear Friends,
I want to spend a bit of time looking at the current Aspen market through my lenses of more than thirty years of navigating through the various cycles we’ve endured – booms, busts, and bubbles. I’ll also share my perspective on where I believe this market is headed.
Some of my Aspen real estate contemporaries, particularly those who began their careers post-2010, maintain a bullish outlook on Aspen, predicting a burgeoning market exemplified by an influx of $100 million sales. While optimism in any sales industry is expected and “goes with the territory”. I find myself skeptical of these projections based on my experiences, particularly recalling the peak conditions like those of 2008, which taught us some harsh realities about unsustainable price growth.
Presently, our market is shaped by various factors warranting a careful, if not cautious approach. Interest rates remain elevated. Whether they will stay where they are or decline is a daily guessing game. But to the extent they stay elevated (a good bet), all those Adjustable Rate Mortgages hanging out there are set to adjust higher within the next two to three years, thus edging us toward more challenging conditions. Aspen’s real estate market has always been historically highly responsive to stock market fluctuations. While the stock market has held steady for now – a positive indicator for our market – I anticipate that higher rates will not only curb inflation as intended but eventually stifle growth. As we approach the peak season for real estate, summer, it’s uncertain how much our market will retract. It is known that sales declined since 2021 and 2022, particularly in the mid and lower segments of the market. I anticipate tougher conditions for listings on the MLS that have not sold in the last year. Moreover, the recent settlement agreement entered into by the National Association of Realtors (NAR), eliminating its rules on commissions, is poised to further complicate the landscape.
In Aspen, headlines often focus on high-end, off-market sales in prime locations, yet these transactions don’t necessarily reflect broader market conditions. Data from 2023 and early 2024 show a less fluid market, with properties often requiring significant downward price adjustments to attract buyers. While inventory levels remain low, new listings often come with aspirational prices reminiscent of the peak COVID-19 market surge. But despite the low inventory, data substantiates a looming market correction, especially for properties in need of extensive renovations. The combination of high interest rates, lingering construction costs from Covid, and exorbitant building fees imposed by local government is greatly impacting lot sales, new builds, and major renovations. Properties requiring substantial renovations are likely to see valuations dip below $2500 per square foot. Only houses with lots in the very best and unique locations will overcome the hurdle. Conversely, well-renovated properties in prime locations should continue to command prices above $3000 per square foot. Transactions closing at $4000 to $6000 per square foot will be exceptional and confined to only the most sought-after locations, with competition intensifying, particularly in inventory-scarce areas like renovated Core single-family/townhomes. Please note that the widely publicized sale on Willoughby Way to Steve Wynn, which received the most press as the highest dollar value single-family home sale in Aspen’s history closed at $4900 a foot. There are just a handful of off-market sales that exceeded that price per foot in the past year with the majority of sales closing well under $3500 a foot. Keep in mind that the house was over 22,000 square feet which is a rarity due to the general lot size in Aspen and no longer allowed per County Building Codes.
The implications of the NAR settlement are profound, suggesting that commission structures will face downward pressure, I believe far exceeding initial forecasts. This seismic shift will likely reshape our local brokerage landscape, favoring those with experience and adaptability. As commission structures evolve, the value proposition of buyer agents will also transform, particularly at the high end, where sophisticated buyers may increasingly engage directly with listing agents to economize on transaction costs. This condition was already percolating with Buyer’s believing they have full market knowledge by watching sites such as Zillow and Redfin. But remember these entities receive all their data from broker input to the local MLS. With more properties selling off market, there’s growing pressure to engage brokers with deep locale knowledge and access to insider information.
In summary, Aspen’s special and well-located, top-of-the-market properties will hold their appeal for very high-end Buyers looking to diversify. No matter the transaction, navigating this market demands a nuanced understanding and strategic flexibility. As your broker, I am dedicated to providing you with the most informed, flexible, and effective representation in this evolving landscape. Please feel free to reach out at your convenience to explore these topics in further detail. Below please find a link to the sales, which I believe offer a more accurate reflection of the market than what is being featured in the press or from national firms. In this dynamic environment, I am very proud to be Aspen’s top-selling Independent Broker for decades and I am confident that I am positioned where I need to be. Thank you for taking the time to consider my insights.
Warm regards,
Wendalin Whitman
Wendalin Whitman is a graduate of the University of Virginia, double majoring in Economics and Spanish Language.
Wendalin Whitman has been ranked 44th among real estate brokers and 14th among independent firms by RealTreands: The Thousand featured in The Wall Street Journal. Aspen’s most successful Independent Brokerage Firm established in 1996. Over $2 Billion in closed transactions in her career since 1990.