No need to fear the bursting of the housing bubble. The National Association of Realtors reports that pending home sales rose by 4.3 percent in August – a sign of stabilization. This latest barometer comes at a time when three U.S. homes are listed for more than $100 million dollars.
There is a house party in Aspen, Colorado, but you better be serious and not just curious.
“It’s like the $5 million dollar house is now $10 million and $10 million is now $20. You become used to it in a perverse way”, said Gideon Kaufman, a real estate and land use attorney.
Twenty-two years ago, Nancy and Howard Gross bought their first condo for about $600,000.
“At the time we purchased, I said to my wife ‘we must be out of our minds’. The price was much more than my full-time home in Columbus, Ohio and a third of the size. We thought we were crazy. It appreciated and appreciated and appreciated”, said Howard Gross.
Today the Gross’ live in an 8,000 square foot house that they designed and built on this 15-acre lot.
“I must say I never dreamed of building or living in a home quite like this. Not only is it a special place to live but a good investment”, said Nancy Gross.
Aspen is home to priceless real estate and one of the things that is pushing the pieces is the limited amount of space to develop. It’s not unheard of for someone to come along and buy a $20 million dollar home and knock it down just to build something they really want, and in one instance a multi-million dollar home was on the market for just 12 hours.
The town’s history is silver mining, but Red Mountain is the real estate goldmine.
“I think it’s basic economics. Limited supply that is extremely regulated and our growth control becomes harder and harder, yet the demand remains constant and even increases”, said Kaufman.
Why the demand? Once a town known primarily for its skiing, Aspen in no longer just a winter playland. The summer season offers the great outdoors, as well as cultural and intellectual pursuits, which have contributed to an evolving real estate consumer.
“For some people, they experience sticker-shock when they get here, but soon they’re able to get their arms around the real value of real estate and being here in Aspen”, said Joshua Saslove, owner of Joshua & Co.
Joshua Saslove has been selling homes in Aspen for thirty years.
“This office so far in 2006 has closed $184 million dollars over 18 single-family transactions. That’s over $10 million per single family residential”, said Saslove.
Startling when, according to the National Realtors Association, less than 2% of all homes in the U.S. sell for more than a million dollars.
“In 2005, if you consider Snowmass, Aspen and Basalt, there was $2 billion worth of real estate sold. $1 billion in Aspen alone”, said B.J. Adams, owner of B.J. Adams &Co. Real Estate.
For this small town that’s a pretty big piece of the $2.3 trillion dollars in U.S. home sales last year. In Aspen this year, dollar volume is up 14%, the median sales price is up 36% and inventory is down 27%.
“The only thing that might keep us from exceeding the $2 billion mark is lack of inventory. We don’t have nearly as much to sell as we did a year ago. We have 20%-60% less inventory”, said Adams.
Which is why B.J. believes she can sell a cattle ranch sitting inside the Aspen city limits for as much as $15 million dollars.
“The value of real estate combined with the cost of construction make these numbers understandable”, said Saslove.
And what does it cost to build in Aspen?
“In 1996 when we started building $400 per foot. In 2000 it was $700-$800 per square foot. However, now in 2006, the product is selling for $1,300 - $1,500”, said Greg Hills, of Austin Lawrence Partners.
Those costs might explain why the condo market has appreciated between 20% and 60% and all the big ticket items might be fueling the run on fractional ownership at places such as the Hyatt vacation club and the St. Regis Residence Club, which is nearly sold out at prices from $300,000 to $1.5 million.
This is exactly why Nancy and Howard Gross are so happy. Remember, they bought their first condo for about $600,000, then stepped up and built their dream home? Well now it’s on the market for just under $14 million dollars.
“After living here full-time for ten years, nothing shocks me anymore”, said Nancy Gross.
“Yes, compared to something on the outskirts of Denver it seems like a lot of money, but relative to everything else around here and the prices of some of these homes, it’s on the money”, said Adams.