Equilibrium is the Word for the 3rd Quarter

Published by at under Real Estate Market

As the Aspen real estate market finishes its third quarter for 2013, “equilibrium” is the word that best describes the state of the market in the Aspen area. The overall market volume is similar to the total volume of sales recorded in the past three to four years. By the end of this July, the market throughout Pitkin County had recorded roughly $612 million in total sales. This is very close to the volume recorded at this time of year in 2010, 2011 and 2012. Short of an unlikely surge of activity in the last quarter of this year, it seems very likely the total annual market sales volume for the Aspen Snowmass area for 2013 will range from $1.4 to $1.5 billion.

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The number of Aspen condos on the market at any given time since October of 2011 has fluctuated in a very narrow range between 150 to 170 units. The average asking price for listed units has also held steady at about $1,150 per square foot. The only market indicator that seems to have changed significantly is the average number of days a condo is on the market before it sells. In June 2011, the average days a condo was on the market before it sold peaked at about 275 days, whereas currently that number has declined to about 142 days. This change is likely due to the significant decline in the inventory of condos for sale from over 350 units in October 2010 to the current range of 150 to 170 units that was first reached in the 3rd quarter of 2011. This trend may also be due to the asking prices for new listings being closer to likely sale prices.

The single family home market is a similar story. In 2011 and 2012, there were 81 and 91 single family home sales in Aspen with total annual sales volumes of $516 million and $593 million respectively. The median sales price for both years was in a narrow range of $4.8 to $5.0 million. By all indications, this year will be no different. In terms of the inventory pattern of single family homes for sale, the story is also very similar to what we’ve seen in the condo market. In October 2010, there were over 300 single family homes on the market for sale in Aspen. Since the first quarter of 2012, the inventory of single family homes has also fluctuated in a narrow range between about 150 to 170 homes for sale at any one time with the current inventory of 169 homes.

Despite this stability in the single family home market, signs exist of new activity. Of the 169 homes currently on the market, only 11 percent were built within the past five years. This means the current single home inventory is older than we’ve seen in past years. In April 2011, the average age of a single family home on the market for sale was 24 years. Currently, the average age of a single family home listing is now 32 years. Despite the aging inventory of single family homes, there are signs that a new spec home construction cycle is beginning. Of the 18 homes currently listed that are less than 5 years old, eleven are either currently under construction or were finished in the past 24 months.

These signs all point to a market that is close to equilibrium between buyers and sellers were buyers entering the market are being meet with new listings from sellers ready to sell. Our proprietary Market Action Index, which takes into account the various market indicators such as inventory size, days on the market and change in listing prices stands at 23 just short of 30, the point at which the market reaches equilibrium between buyers and sellers. Over the past 3 years, this indicator has been slowing increasing from a low of 5 in 2010 to its current level. Similar indicators used to predict stock market trends, would point to a market consolidating and likely preparing for its next upward movement.

William Small, JD, CCIM is managing director of Frias Luxury Estates, a division of Frias Properties of Aspen that specializes in marketing luxury Aspen properties. If you are interested in receiving his monthly market report, you can reach him at (970) 429-2419 or email him at bill@friasproperties.com.

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