The Set-up: Home prices in America have rocketed 45 percent higher than inflation since 1996 – creating five trillion dollars in wealth, according to the Center for Economic Policy Research. The Doomsday Scenario: The average home buyer cannot afford the average home. Inventories swell, prices sag. Five trillion dollars vanish – that’s $70,000 per family of four.  The Happy Ending: You’re in Aspen where the housing bubble is made of Kevlar.
 
Pickup a copy of the Wall Street Journal or Business Week these days and you’ll find economists peering through a miasma of contradictory figures to divine where the housing market is headed.  Mark Pasani, number cruncher and marketing director for Aspen’s Land Title Guarantee Company, has a n easy time reading his charts- they all point up.  Pasani reports that for Pitkin County, “A very strong October puts dollar volume up 15 percent for the year and up almost eight percent in the number of transactions.”
 
The picture nationwide, however, is not as rosy.  The National Association of Realtors (NAR) reports that existing home sales will fall 8.6 percent in 2006 from the previous year.  New home sales will fall 16.8 percent and housing starts 10.6 percent.
 
“Even as the national market cools, the real estate market here is cushioned by a national and global demand,” says Tim Estin, a broker for Mason & Morse who writes an occasional real estate market column for the Mountain Business Journal.  Estin, who also reports on local market trends on his Web site (www.EstinAspen.com), sees the richest of the rich driving most of the demand in Aspen.  “In 2006, there has been a surge in the sale of homes over $10 million,” he notes.  In 2004 and 2005 combined, there were only 12 listings in this category.  This year, there have been 36 such listings, and 12 of them have already sold.  “The sale of anything over $20 million is extremely rare, and we’ve had three such sales in the past few months,” continues Estin.
 

It’s worth noting that for more that thirty years, the Aspen housing market has weathered every storm; during periods of national recession, owners here – who tend to have deep pockets - pull properties off the market rather than discount.  Rod Woelfle, president of the Aspen Board of Realtors and the local chapter of the NAR, says, “Luxury markets – like Aspen or the Hamptons – are more isolated.”  “The main factor insulating the Aspen market is a formula of basic economics: supply and demand.  The supply of area homes is extraordinarily constrained. Ninety-two percent of Pitkin County is government land or otherwise protected,” notes Estin.