| "My Steamboat Connection" Real Estate Blog |
Steamboat seems to be keeping up in this trendBruce Carta of Land Title Guarantee says: "Attached is a copy of an article from the 12/26/06 Aspen Daily News. I know we are no Aspen, but with my experience in that area and the fact that High-end sales pace big year for real estate
Tue 12/26/2006 09:00PM
That the local real estate market is on track to break yet another record in 2006 is no surprise, and judging by this year's trend, analysts predict real estate sales in Pitkin County will surpass the $2.5 billion mark. But taking a closer look, one glaring factor stands out: the number of properties sold for more than $5 million has increased dramatically this year. According to a survey of home sales in the upper Roaring Fork Valley conducted by Aspen Appraisal Group, 63 sales have eclipsed the $5 million mark as of Dec. 1. That's up from the 37 recorded in 2005 and 29 in 2004. Prior to that, there were fewer than 10 on average in the late 1990s and around 20 in the early 2000s. The upper echelon of those sales has made perhaps the greatest leap -- there have been at least one dozen sales of $10 million or more this year, three times as many as in 2005 (but just two more than in 2004). And if that's not enough to shake your head over, get this: as of Dec. 1, there have been seven closings over $15 million, plus two pending. The first week of December marked the second time this year a $20 million-plus sale was recorded in Pitkin County, and five home sales surpassed the $5 million mark in that one week. "The market is back stronger than ever with regard to high-end home sales," said Aspen Board of Realtors President Rod Woelfle, who is also a broker at Aspen Land & Homes Sotheby's International Realty. He was referring to the last major spike the local real estate saw in 2000, when Pitkin County sales surpassed the $1 billion mark for the first time, and the subsequent three-year dip spurred by the high-tech bust and 9/11.
This year shows, however, that every indicator of health in the high-end market is going through the roof, and local real estate observers credit everything from dwindling supply and increasing demand, to excessive liquidity in the world, to increasing expectations to the price of teardowns. The first $10 million plus sale in the upper Roaring Fork Valley was in 1997, according to the Aspen Appraisal Group's chart. With at least one every year since then, it took less than a decade to reach 12 (as of Dec. 1, 2006). In that same time period, the number of $7 million to $10 million home sales went from one to 20; and the number of $5 million to $7 million sales went from two to 31. But it's really in the last three years (with the exception of the year 2000) that it's looking like the sky's the limit for high-end homes. Dollar volume doubled between 2003 and 2005 in Pitkin County. And this year in particular, the definition of "high-end" continues to change as prices rise. Local realtors agree that the price per square foot of an Aspen home is increasing, so it's not unusual to see a sale for more than $1,500 per square foot, according to Woelfle. Bob Ritchie, a broker with Coates Reid & Waldron, predicts that within a few years the average price per square foot will be between $2,000-$3,000 per square foot -- within the realm of luxury Manhattan properties. "If people are shocked at the prices now, wait three years," said Ritchie. In part due to much more expensive materials going into homes, the price per square foot is also affected by the increased cost of construction and the fact that homes can't get much bigger (due to downzoning in the county and lot size constraints in the city). Average single-family home prices in Aspen are also on the rise, from $3.69 million in 2004, to $4.3 million in 2005, to $5.38 year-to-date in 2006 (according to Woelfle's survey of the Multiple Listing Service for Aspen). So in less than a year, the average home price has risen more than $1 million. Several factors are converging into a perfect storm of rising high-end property values in the Aspen area. One obvious factor is supply and demand. With its restrictive land-use codes that just this year got even stricter with the county's 15,000-square-foot home size cap, people aren't able to build the sprawling mega-mansions they once could. So existing monster homes become more valuable, and builders increase the level of luxury rather than the square footage.
The land squeeze also makes teardowns more valuable, said Ritchie, giving the example of a $6 million lot with a $1 million teardown on it, which immediately bumps the value of the lot up to $7 million. Anything under $5 million now, Ritchie added, is probably a teardown. With higher real estate values also comes a higher-caliber buyer, which in turns feeds real estate values. "There is just an expectation for a certain level of luxury that we didn't have four years ago. There's no question expectation has gone up," said Brent Waldron, managing broker at Coates, Reid and Waldron. Waldron also pointed to the positive effect the building flurry of fractional ownerships units has had in the last few years. Since all the fractionals are luxury products, they bring a certain type of new clientele to the area, many whom then decide they like it and soon decide to buy high-end condos or, more often, luxury single-family homes. "We have a whole new generation of buyers from the interval market," said Waldron. Upgrading is another common phenomenon in the local second home market, noted more than one broker. Families who start with a small in-town condo decide they want a little more room, upgrading to larger townhomes or single-family homes -- and finding that they also make a good return on their investments. And very few of the local clientele are getting priced out by the rising real estate market. "Once you get into that certain level of clientele, it's more what they want to do with their money than do they have it," said Woelfle. "They go after the home they want." Several external factors also contribute to Aspen's attraction to the uber-wealthy. As the rich are getting richer, their wealth is also getting more liquid, said Ritchie. "The world is awash in liquidity ... and that'll raise prices because (the wealthy) can do whatever they want with their money," he said. Gun shy from the stock market crash in 2000, more investors are putting their money in real estate, Ritchie said, and Aspen has proved to be a more than safe bet. Add to that the depressed real estate market elsewhere in the country, and the increasing number of natural disasters in the world's coastal areas -- prime building areas for luxury second-home communities -- and mountain property looks even more desirable, said Woelfle. "Someone with something on the ocean in Florida or California gets tired of worrying about markets going up and down, so they end up putting some money here," he said. "It's like the Hamptons or Beverly Hills-type properties, but with less risk." Meanwhile, other mountain resort towns with much more lenient land-use regulations are getting overbuilt and overcrowded, said Ritchie, decreasing their desirability to people who want everything exclusive and private. "They don't want to go to Vail or Breckenridge, those places aren't even on the radar anymore," said Ritchie. "They come here for the quaintness. The wealthiest, most successful people in the world come here because it's comfortable, it hasn't changed much, and you get all the services." But on top of all of these trends and theories, said Ritchie, the local real estate market is simply in the same 10-year cycle it has been in for the last four decades. The '70s, '80s and '90s have all seen the same pattern with a real estate peak at the end of each decade, and a flattening at the beginning of the next one. The second half of the decade that we're in right now, said Ritchie, is a time of rapid appreciation and even more significant price increases can be expected in the next few years. For example, in 2005 appreciation in Aspen was 15-20 percent, and 25 percent in Snowmass, according to Ritchie. This year Aspen appreciation is 27 percent and Snowmass is 31 percent.
"If prices again triple from the beginning to the end of the decade the market will experience a doubling of the current price structure by 2010," Ritchie wrote in his latest client newsletter. "So guess what -- it's going to get real expensive," he said. Catherine Lutz - Aspen Daily News Staff Writer lutz@aspendailynews.com Printed From: http://www.aspendailynews.com/article_17428
5:18 AM - Jan. 4, 2007 - comments {0} - post comment
|
Description The source for what's happening in Steamboat Spring's and surrounding areas, real estate, fun stuff and more! 
HomeUser Profile Archives Blog Manager Recent Entries - House-Price Gains Predicted for Western Resort Properties - Barn Village Lots snapped up over weekend release! - Steamboat Ski Area Remains in TOP 10! - Octagon's are Gone! - Trailhead Lodge @ Wildhorse Meadows Update  RSS Blog Feed
CategoriesFavorite LinksHow Stuff WorksStacy's Website Prudential Steamboat Realty |