DEEDED INTEREST

No reason to fear, fear itself in current real estate market

The Aspen Times | Published on October 30, 2021 | View the original article here →

I met a colleague of mine at an Aspen coffee shop earlier this week. She’s about a dozen years my junior and been in the real estate business a relatively short time. Nonetheless she’s off to a fast start and become an impressive player among the ultra-competitive field of local luxury brokers. I’m never too proud to ask others for their secret sauce and make a new connection and glad I did. Some are more generous than others with what can be proprietary but in this case, we both shared some trade secrets and inside info and learned a thing or two from each other.

We also talked about the recent shift from the non-stop activity for the second summer in a row, to what has been a noticeable reduction in sales volume related to available listings. The action remains brisk as new listings that come to market are quickly snapped up no matter what the price, location or condition. Many brokers have lots of buyers in the wings, but fewer and fewer have properties to show or sell. As brokers who secure listings are almost guaranteed a sale, digging up new options is akin to hand-to-hand combat among competing brokers. Owners in desirable areas report constant solicitation by way of emails, post card, letters, calls and even knocks on the door.

The level of concern is becoming more palpable and a point of discussion among the local brokerage community these days. No broker wants to admit they’re not busy or jinx themselves, but I nearly choked on my cappuccino when my coffee mate asked me if I had ever experienced this kind of stagnation before? Surely she was joking before remembering she was not a broker when the Great Recession hit and the music stopped playing; not for a few months but for years on end. Back then, there were plenty of sellers who wanted out, but buyers were unable to act or capitalize as so many were underwater. Those who could buy made out.

To be clear, we are nowhere near recession, but the lack of options for buyers is raising more than a few hairs on necks. It’s hard not to make a comparison to car dealers who have a waiting list of buyers but nothing on the lot because the product is stuck on a boat or hasn’t left the assembly line. I admit, it took longer than I would have liked to shake of the PTSD after what happened 10 years ago, but when it comes to the market around here, yes, circumstances have changed again, as we knew they would, but I personally don’t find a reason to panic.

Yes, some buyers are opting to ride the pine for the time being to see if prices will adjust in their favor. But others remain engaged and as others opt to wait, those buyers will see less competition. This is also the time of year sellers tend to become more flexible as many would prefer to sell before the end of the fiscal year and don’t want to wait until next spring and summer to try again. There’s also real fear the capital gains tax will be adjusted up soon.

High end luxury options over $20M continue to fly off the shelves as a hedge against the market. The wealthy realized phenomenal returns pre-COVID, made millions more post-COVID and now desire tangible and usable assets as they take their profits and head for the hills.

And then there’s the very real phenomena of buyers remorse. We saw many buyers who had visited or were familiar with our valley escape from the cities and buy homes and land here. But I’m guessing about 1 in 10 of those folks came here in a bit of a panic, following the herd and not knowing what the mountain lifestyle was all about and are now missing the bright lights, the ballpark and the opera. And you don’t need snow tires in LA.

And not to be caviler or insensitive, there’s always the three D’s — namely death, divorce and debt. People live and die, they get married and break up, they up-size and down-size and around here they also speculate, re-develop, wash, rinse, repeat.

That said, I’m of the opinion or at least am committed to a mindset that good things lie ahead. Of course, we can’t predict the future and remain in a highly fluid and dynamic time. And at the end of the day, there is certainly no shortage of critical issues that require our attention now.