ASPEN — The highest of the high in the Aspen-area real estate market is recovering the quickest.
There have already been 14 sales of homes priced in excess of $10 million, and another three houses at that price level are under contract, according to Craig Morris, a partner in Morris & Fyrwald Real Estate. That’s only one sale off the record for a year — and there’s still half of 2011 remaining.
“That’s a bright light,” Morris said.
Andrew Ernemann of B.J. Adams & Co. highlighted the strength of the upper end of the market in his semiannual real estate report. He noted that one of every four sales of single-family homes in Aspen so far this year has been for $10 million or more.
“This fact alone is a clear indicator that Aspen continues to appeal to the world’s wealthy, and that buyers at the top of the real estate food chain are investing in the local real estate market in greater proportions than even the best years of the last market run,” Ernemann wrote in his report.
Or, as Mason Morse Real Estate President Bob Starodoj put it: “We’ve seen a hell of a lot more activity” in the upper end of the market. He expects that to continue in the second half of the year because most transactions close in the third and fourth quarters after spring and summer showings.
Starodoj said there are a lot of European buyers active in Aspen right now — and not all Russians. Morris said buyers are also coming from Mexico and Brazil, as well as Australia and New Zealand.
Morris said Aspen is attractive to foreign buyers because of favorable exchange rates and because real estate prices were adjusted during the recession.
Starodoj said there are lots of new buyers in the market, not homeowners moving up into nicer digs. More buyers are motivated by lifestyle improvements and value for their money rather than by seeking investments, he said.
There are signs that the market overall is faring better in 2011 than it did in 2010, which marked an improvement from 2009. Ernemann’s research shows that 40 single-family homes have been sold in Aspen this year, compared to 72 in all of last year and 55 in 2009. Overall, there have been 92 sales of single-family homes, condominiums, townhouses and single-family lots for $375.24 million in Aspen over the first half of the year. That’s up 51 percent in transactions, and 44 percent in dollar volume over first-half 2010, his report said.
“Aspen is leading the charge,” Ernemann said. His report said Aspen prices have stabilized and might start to increase in the best locations.
Snowmass Village is probably six to 12 months behind Aspen in the recovery, Ernemann said. “Prices have slipped further from 2010 levels, but are showing signs of leveling,” his report said.
Low prices are spurring strong sales in Basalt and eating into a big inventory. However, there are still a lot of short sales and sales of bank-owned properties, which are affecting prices. Basalt’s recovery is probably another 12 to 24 months behind that of Snowmass, according to Ernemann.
Starodoj said an interesting aspect affecting the upper valley real estate market is the “shadow inventory.” There were property owners who wanted to put their homes up for sale in recent years but held back because there was too much inventory, and prices were too low.
Now that the distress sales, such as victims of the Bernie Madoff scam, have been flushed out of the system, some of that shadow inventory is appearing on the market, Starodoj said.
While it might be difficult for most folks to imagine that homes selling for $10 million or more come with discounts, that’s what’s happening. Starodoj said “deep discounts” are being made in the 20 percent range, while more common discounts are 10 to 15 percent.
Morris said the sellers who are moving their property realize they must price for today’s market. They cannot ask for the prices common before the recession hit.
“Prices for ’04, 5 and 6 don’t really have any relevance to prices today,” Morris said.
Starodoj said he expects continued improvement in the market — in both transactions and dollar volume — in the second half, as long as there are no catastrophes “and the wealthy people put their hands back in their pockets.
“My assessment is 2011 is going to be considerably better than 2010,” he said.scondon(at)aspentimes(dotted)com