What does 2009 mean for Real Estate...?

For 2009 Sellers…it means it is time for a reality check.

This New Year is a time to look in the mirror and ask yourself, “Am I really a 2009 Seller”? Today’s reality is that inventory is building at an alarming rate and property values have dramatically changed, following the trends of the financial portfolios and stock prices. The 2009 Seller has to let go of the gravy train of the past six years and get realistic with pricing. A 2009 Seller must realize the futility of stubbornly following the dreams of profits on paper, an attitude akin to what has lead to the woes of today’s financial market meltdown. Is the 2009 Seller well served by throwing out an unreasonable price just in case that “one person comes along”? As a 2009 Seller, what do you really think a 2009 Buyer will think about a headline on an ad that reads:

Was $5 million, then $4.9 million, then 4.6 million, then 4.2 million, then 3.9 million, now 3 million. Motivated Seller!!!

As opposed to “A solid value at $2.8 million”

The 2009 Seller realizes that taking a profit is how to gain wealth, even though it may not be as much profit as you thought, moving on to the next deal as a 2009 Buyer will position you for more real estate profits in the future. The 2009 Seller must recognize that coming to terms with breaking even or even taking a loss might be in your best interest unless you are prepared to hold on to your property for a long time.

The 2009 Seller will make a deal if they look at the expanding inventory of unsold property and make an honest decision as to where their property stands vs. properties recently sold and listing prices for comparable properties. Positioning your property at a price that is better that the comparables will get you the showings and put you in the best position to make a deal. A successful sale will lead to another deal and the market will start to move. The 2009 Seller will then be in a position for future profits as a 2009 Buyer, leading the market. The other Sellers will continue to spin their wheels, following the market.

Are you a 2009 Seller?

- Tom Kilby, Associate Broker

Rentals Look Stronger in February & March

The rental market in both Aspen and Snowmass has been affected by the economy. This comes as no surprise. It is interesting, however, that the later in the winter the stronger the rentals look. Christmas is well off last year, but February and March, while down, are showing signs of improving. Let's hope the improvement continues!

- Tom Leddy, Associate Broker

The Greening of Aspen, Part II & III

Part II:
Over 75% of the power provided by Aspen Electric is renewable energy; generated by solar panels, wind power and hydroelectric systems on local rivers. Aspen Electric also has a new tiered-rate system. The top 7% of electric users will pay $0.23/kWh compared to $0.07/kWh for customers in the lowest tier. This helps to encourage the largest users to reduce their electric expenditure.

Part III:
The City of Aspen has enacted a recycling ordinance that requires waste haulers to include recycling in the cost of trash pick-up, ensuring that all citizens and businesses have recycling pick-up available. The city’s building department has also agreed to the 2030 Challenge, which is a program designed to reduce the impact of new buildings (http://www.usgbc.org/). Unlike the voluntary LEED standard, the 2030 Challenge will be required.

- Lynne Cantrell, Associate Broker

Wall Street or Real Estate?

With investments in stocks and bonds yielding negative returns, commodity prices dropping and construction costs becoming more competitive, is it time to build? Building costs have ranged between $500 to $200 a square foot for labor and material depending on the quality of construction and the site location. If these costs drop 15% to 30%, say an average of 22%, a 5750 sq ft house which would have cost $2,300,000 to build at $400 per sq ft now costs $512,240 less. If you have the liquidity it may be time to make an offer on the large supply of available lots and take advantage of these building savings.

- Dale Potvin, Managing Broker

Financial Down-Turn Hurting the Down Valley Market

While November was a relatively poor sales month throughout the market, Aspen at least did ok, while the Roaring Fork valley barely had any activity. Aspen was down 15% from last year, at 42 million and has been maintaining about that level for the past several months. Snowmass was only down 5% from last year, at 9 million, but last year was also very low. The average for the last 4 years in November in Snowmass is 24 million. The Roaring Fork valley had the 2nd lowest month in the last 5 years at a paltry 5 million. Clearly, the financial down-turn is having the greatest impact on the down-valley market.

Tom Leddy, Associate Broker

Feel Like Some Holiday Music?

If you happen to be out and about on Sunday morning, December 21, there is a very nice Christmas concert at the Aspen Chapel. The Chapel Choir, led by Susan Nicholson, will sing a variety of Christmas pieces, with various local instrumentalists accompanying them. I will be singing in the choir as well as playing a piece on the Renaissance lute. Hope to see you there (it starts at 9:30am).

Tom Leddy, Associate Broker

The "Greening" of Aspen, Part I

The City of Aspen is an environmental pioneer on numerous fronts. The city developed the Canary Initiative (http://canaryinitiative.com/), which is responsible for calculating Aspen’s CO2 emissions and finding ways to reduce the carbon footprint of Aspen. Aspen is proud to offer the first municipal carbon offset program in the United States via the Canary Tag program (http://www.canarytags.com/). The city urges citizens, visitors and businesses to do everything possible to reduce their carbon footprint, and to consider purchasing Canary Tags to offset the remainder. Ninety cents of every dollar donated to Canary Tags goes to support a renewable energy project within 500 miles of Aspen. The Canary Initiative also partners with the Environmental Health Department to run the ZGreen program. This program helps businesses, events and citizens be “greener” and rewards them for their efforts. There are currently 12 ZGreen certified businesses in Aspen. As of January 2009, all events in the City of Aspen will be required to meet ZGreen standards in order to obtain a permit for their event. All events must make an effort towards reducing their energy, water usage, trash generation and air pollution. Citizens are encouraged to visit http://www.aspenzgreen.com/ and commit to doing 5 new things to be more environmentally friendly. The program is free, and new members get a “goodie” bag.

- Lynne Cantrell, Associate Broker

New Home Prices reflect Sold Properties in 2004 & 2005

I've researched the luxury home market looking for single family properties that are very well priced. My criteria were homes built in 2007 or later, which are priced at $1000 a square foot or less. This price per square foot reflects an asking price that was the norm in 2004 and 2005. I found five brand-new homes in the group. Two in the West Aspen area off of Cemetery Lane, two in Meadowwood and one in the Maroon Creek Club. If one of these properties works for you these asking prices reflect very good value.

- Dale Potvin, Managing Broker

Base Village is Looking Good!

Congratulations to the designers who laid out the Base Village in Snowmass. The entire base area flows well, and feels inviting. New restaurants, ski schools and shops are already crowded. Parking is easy. Though the development has slowed recently due to economic conditions, it appears that it will flourish in the long-term due to a superior design.

- Matt Holstein, Associate Broker

Will Snow Settle Economic Jitters?

Will abundant snowfall overcome economic jitters in bringing guests to Aspen this Winter?

- Dan Dunnigan, Associate Broker

Listing prices are coming down. When I list, how should my property be priced?

Pricing is very important, but positioning your property among the competition is just as important. “Lead the market, don’t follow the market” is always good advice. Your Realtor should look at all the similar properties that are for sale and analyze the features that either give your property a better, or worse, value. Price your property to be positioned competitively and to reflect the features that make it unique. If you are very motivated to sell, make sure that you’re the best value of the group, and if not, be in the middle of the low range section of the group.

- Dale Potvin, Managing Broker

The Best Deal I've Seen in a Long Time

There's a "Screaming Deal" on Riverside Dr. At 4100 sq ft, it's only a $1000 a foot for a 4BR/4BA home in great condition with Aspen Mt views and high-end finishes. If you're looking for a deal, this is definitely a great one!

- Dale Potvin, Managing Broker

Holiday Rentals Still in Demand Despite The Economy

Seems like people still want to come here over the Holidays despite the economy. St. Regis is sold out over Christmas/New Years week. Hyatt owners of that coveted 2 week period appear willing, but not desperate, to rent.

- Matt Holstein, Associate Broker

Is Now The Best Time...?

I may be biased but Aspen, the Gem, is still the best place on Earth. Are we seeing the best time to purchase in Aspen and the RF Valley in the last 5 years? Is now the best time to make an offer on an investment property or a residence a buyer has been dreaming about?

- Tommy Kearsey, Associate Broker

The 3rd "Screaming Deal" in RVR

#3 112 Pioneer Ct. $849,000

1 - This lot is great! Nothing but unobstructed views of Sopris, the 8th green and the crystal river from your bedroom deck

2 - Great finishes, awesome outdoor space with a great deck outside the living room and another covered deck off of the upstairs master bedroom. The basement is unfinished, which, if finished, could really add to the value of this home.

- Tom Kilby, Associate Broker

Another "Screaming Deal in RVR"

#2 78 Ferguson- $735,000

1 - Originally on the market for $785,000, this home is on one of the best lots in Oldtown. It’s a 6,063 sq. ft. lot at the end of a great family street, so the lot has a very open feel and direct views of Sopris.

2 - With 3,265 sq. ft., 4 bedrooms & a finished below grade space that could easily become a 5th bedroom, there is a lot of house here. And at $225, per square foot, there are only 9 other homes that have a lower price per sq. ft.
- Tom Kilby, Associate Broker

“Screaming Deals” for under $1 million in River Valley Ranch!

#1 614 North Bridge Drive- $899,000
In my opinion, this one of the best deals in the ENTIRE valley for under $1 million. Here’s why:

1. Price per Square Foot. Originally on the market for $1,275,000, it’s 3,953 sq. ft., including 5 bedrooms- (ground floor master, 2 above and 2 below grade), making it $225 per square foot. Only 10 homes have a lower price per square foot in Carbondale!

2. Finishes. This builder’s home is only 2 years old and has incredible high-end finishes: walnut floors, marble countertops, contemporary bath fixtures etc.

3. Upside Value. In my opinion, a home of this size and quality will hold its value. Homes of this size and quality are selling for over $1Million

- Tom Kilby, Associate Broker

Huge Real Estate Opportunities in Northern Brazil!

Miles of undeveloped white sand beaches, great climate, warm water, and a weak Brazillian Real make for a timely investment.

- Matt Holstein, Associate Broker

In a down market, what can you do to find the "screaming" deals?

With inventory increasing in all parts of the real estate market, how do you find the “screaming” deals? Talk to Brokers, talk to Bankers, look for foreclosures, watch for price reductions?? That’s what Peak Brokers do all the time. But talk is always just that. The best way to get a “screaming deal” on a property that you feel has good long term investment potential (3 to 5 years), is to make a written offer at a price you feel reflects the market and your motivation to own that property

- Dale Potvin, Owner/Broker

'Boom' or 'bust' for the local oil and gas companies?

I’ve heard rumors that Shell Oil is hiring 1000 engineers to work on projects for future expansion of oil and gas in the Piance Basin. Yet, I’ve also heard that local County governments have been told to expect a 25% to 50% drop in immediate gas exploration due to prices falling and permits being limited. The current employment level is expected to remain stable but the growth is not going to be there like it has.

- Dale Potvin, Owner/Broker

Are time-share buyers looking for a way out?

What’s happening with the Residence at the Little Nell? Is the darling of the time-share industry going to deliver on time? I hear that the closings are being scheduled for February and March but there are some unhappy Buyers who want out due to the construction delays…Or, are these buyers just looking for a way out of their contracts due to a contraction of the real estate market?

- Dale Potvin, Owner/Broker

Lease Purchase Option…is it worth considering?

I’ve been working with some individuals that have to sell property before they are in a position to buy another property. Despite this, they’re in need of housing due to personal circumstances. While renting a home is the typical way to go, a Lease Purchase Option is another avenue worth considering.

Due to the large amount of unsold inventory in this market, many sellers are willing to get creative and entertain a lease with an Option to Purchase.

From the seller’s perspective, they are going to look for some kind of benefit for entering into a Lease Purchase Option arrangement vs. a traditional rental. The seller benefits from selling their house at a certain price, but there is no guarantee that the buyer will exercise that option - so a payment over and above the typical rent payment needs to be offered for the opportunity to hold that option. Additionally, the amount needs to be substantial enough to be worth taking the property off the market, with the possibility of the seller having to put the home back on the market if the option is not exercised.

From the renter/buyer perspective, if you want to purchase the property, but circumstances prevent you from making a purchase at the present time, you benefit from locking in a price in a down market. Let’s say you’re paying the seller an extra $1,500 per month for a 12 month lease with an option to purchase, the worst case scenario is that you may have to pay $18,000 over and above what you would have paid if you rented the property. But, if you are getting a discount on the purchase price it might be worth it.

I would also suggest structuring the deal so that if the option is exercised, some or all of the rent payments are credited to the buyer against the agreed on sales price. Effectively, you are paying yourself prior to exercising your option to purchase. While the seller may not credit all the payments towards the purchase price, crediting some of the payments towards the purchase price provides a greater incentive to the buyer to go forward with the purchase.

Exercising an option to purchase depends on where the market goes after you make the deal. If the market remains constant and the option to purchase is exercised, it works best for both buyer and seller. If the market goes back up, the buyer has locked in a lower price. If the market goes down, the buyer typically would not exercise the option and would try to work with the seller after the option to purchase expires (yet, they risk losing the property to another potential buyer).

While these are not the only issues to consider when entering into this type of deal, depending on your circumstances, this might be the best way to get into the home of your dreams.

- Tom Kilby, Associate Broker

Not all that bad...

We hear horror stories galore about the condition of the economy. The last few weeks have capped off a really crazy year of bad news. Oddly enough, Aspen is still proving to buck the trends and provide some good news. The real estate market has certainly been relatively soft, compared with record high sales tax revenues last summer. But even in real estate the news isn’t all bad.

One of the methods of comparing real estate appreciation is to analyze a key ratio that provides the closest thing to a constant over time – sales price per square foot of living space. The fact that there have been a number of newly constructed homes sold recently does skew this comparison somewhat, but not entirely. During the 12 months from October through September for the past 3 years, the price/sq ft of single family homes sold in Aspen has increased from $1093 in 05-06, to $1292 in 06-07, to $1318 this last year. This represents a percentage increase of 18.1%, 18.2% and 2% respectively. The 2% is clearly well off the earlier trend, but is still an increase. Even the past 6 month period, with an average of $1370, slightly improves the view over the full 12 months and represents a 5.9% increase over the prior year.

Condominiums show an even greater appreciation with 12%, 31% and 14.5% for the full years and 18.1% for the past 6 months over the year prior. This puts the average price/sq ft of an Aspen condominium at $1563.

The bad news is that there have been significantly fewer deals, only 61 homes and 64 condos against 116 and 155 last year and 138 and 209 the year before. So, half as many deals, but the prices are continuing to hold more solidly than has been the perception.

- Tom Leddy, Associate Broker

In Aspen Glen- unrealistic pricing might be contributing to the slowdown

In looking at what has sold in Aspen Glen in the past two years vs. homes presently listed, there is a “tale of two different cities”. While I certainly concede that the value of anything is in the eye of the beholder, at some point reality in pricing has to set in. If you are truly a seller and not just fishing for that one special buyer, you have to be priced right vs. your competition AND vs. what real buyers have established as present market values. After studying a sample of homes roughly the same size in a particular sector of the Aspen Glen marketplace, you have to wonder whether or not some of these sellers are “real” sellers.

Sold in Aspen Glen 07-08
In looking at single-family homes in Aspen Glen between 4,300 sq ft and 5,020 sq ft sold in 2007 (3 transactions) & 2008 (2 transactions)- a total of 5 homes sold between $1,850,000 and $1,325,000. The median sale price (midpoint between the highest and lowest price) was $1,586,000. The median price per square foot for these homes was $314.

Listed in Aspen Glen as of 10/08/08
In looking at the comparable group of single family homes currently listed in Aspen Glen between 4,000 sq ft and 5,020 sq ft -11 are on the market for asking prices between $2,395,000 and $1,175,000. Of those homes, 4 are priced over 2 million. The median list price in this group $1,895,500. The median price per square foot is $418

There is quite a spread between these two groups, which is likely a factor (among others) contributing to the market slowdown.

Of course many factors come into play when valuing a home, including location, square footage, age of the home, floor plan, outdoor space, etc. Since the buyers now have the advantage in this market, “real” sellers should use some basic market data to at least put their properties in a position get an offer.

- Tom Kilby, Associate Broker

Great Deal in Real Estate = ?

We are all looking for a “great deal” in real estate so I wanted to give some thought to what that constitutes. Is it near bankruptcy with the mortgage company at the door or a quality property at a price that reflects true market conditions? A “great deal,” that is a secondary or third tier property, in my opinion, might fit the first description. Any quality property that is a combination of both will move quickly, but I always place quality first.


- Dale Potvin, Owner/Broker


.

Give us your thoughts and comments

As owner/office broker of Peak Properties, our team enters a new era with our updated website and blog. It is our intent to be informative and provide real info on deals, trends, and the market. Please give us your thoughts and comments.

- Dale Potvin, Owner/Broker



.

Weathering the Storm

Having been a real estate professional in the Roaring Fork Valley for over 28 years, I have seen many cycles in the market, including the sky high interest rates of the early 1980s, the recession of 2000, and the shock of 9/11. All of these had different effects on the real estate market, yet the Aspen/Snowmass experience and our real estate market has weathered them all. The latest economic conditions will have inherent short term effects on the real estate market, so it is particularly important to make sure that you have an understanding of the true value of your property and your options should you choose to market it.

- Dale Potvin, Owner/Broker


.

Music in the Mountains

Locals and visitors alike thrill each year to the varied and unmatched sounds of the Aspen Music Fesitval, which features both world renown professionals and talented students of the Aspen Music School.

Take a moment to review the packed schedule of events, and enjoy a season of music in the mountains.

Buying Opportunity?

Prices are plummeting! Check out these recent price reductions:House on Red Mountain dropped from $27,500,000 to 19,900,000 or 28%House in Old Snowmass dropped from $1,775,000 to $1,275,000 or 28%

- Matt Holstein, Associate Broker

Is Aspen becoming a bargain in the World’s Most Luxurious Real Estate Markets?

A quick look around the world’s hot spots indicates that a great neighborhood in London could cost you $6,000.00 per square foot. In Monaco, just under $6,000.00. St. Jean Cap on the French Riviera may cost more than $5,500.00 per square foot, with Courchevel, France, and Hong Kong demanding more than $4,500.00 per square foot.

In Aspen, the high-end market (with a few notable exceptions) remains in the $1,800.00 to $2,500.00 per square foot range. For those with the desire, ability, and wherewithal to buy, Aspen still looks like a good deal to me.

- Dan Dunnigan, Associate Broker