What a Difference a Year Makes 10/28/08 vs 10/22/09

Here is a poignant current snapshot of Aspen real estate, a good example of what’s happened to prices in the past year. It relates to a well-known uber athlete’s Aspen home purchased in Oct. 2008 and the house next door which closed on Oct 22, 2009.

…In the past year, an exceptionally talented and successful Aspen residential builder/designer team completed construction of two beautiful side by side West End Aspen homes that took two years to build (see photos and link below). One home sold to the famous athlete at $9.17M or $1,614 sq ft on Oct 28, 2008; the other adjoining and very similar home came on the market in early July 2009 at $9.4M or $1,519 sq ft. (already discounted, taking into account market conditions.).

Unsold throughout the summer, the seller/builder reduced the price of the second home aggressively three times finally around Sept 21st. to $6.8M or $1,099 sq ft., -32% from the original ask price. It closed in mid-October at $6M or $970 per sq. ft., -40% off from what the neighbor paid.

The two homes are very similar in square footage, similar sized lots, same aesthetic, same builder/designer attention to detail and unsurpassed quality and almost identical West End locations. The athlete’s Aspen home is the sold comparable for its Siameese twin, the adjacent home.

At $6M or $969 sq ft, this is one of the most beautifully designed, high quality and unique 2009 new homes in Aspen’s West End and relatively speaking, it has been the best deal in Aspen this fall in terms of its quality to price proposition.

Why the difference in price?

One could simply say the athlete had money to burn, wasn’t paying attention to the local real estate market and unfortunately, overpaid…But, I don’t think so. He went under contract for the property in early summer 2008, mid-construction. He wanted to finish it out with some of his own touches. It was probably worth what he paid for at the time.

The world has changed from a year ago…twelve months of a deteriorating market makes all the difference in perceived value for these nearly identical properties.

Also, this story illustrates the sober reality developer/builders must face…how to unload inventory in a falling market? Consistently, developer/builders are setting new low price benchmarks that the rest of the Aspen real estate market – the second home and vacation home seller – is forced to follow. Ironically, the result is that brand new product is selling at the best – i.e. lowest – prices, not the highest as once was the case during the recent boom. Time is money factor… gotta move on, gotta unload.

Buyers will find the best priced properties picking through the few remaining remnants of Aspen developer/builder new inventory. It’s possible that as this inventory is absorbed, and I believe we are nearing that point if not already there, the market will have found its bottom unless foreclosures start rumbling through the Aspen market this winter, something we’ve yet really begun to experience.

Two new Aspen West End Homes Built Side by Side: 1) MLS #106623 sold on 10/28/08 at $9.175M/$1,614 sq ft; 2) MLS # 109679 is closed mid-October ’09 at $6M or $970 sq ft, reduced from $9.4M original price (-36%) This link is valid until 11/23/2009.

MLS #106623 sold on 10/28/08 at $9.175M
MLS #109679 Closed 10/22/2009 at $6M (from $6.8M Ask)
reduced from July ’09 original price of $9.4M (-36%)