During the Christmas/New Year’s week, hyperbole was rampant. The word from visitors was that there was real estate blood on the Aspen streets (this was before the New Year’s bomb threat incident which closed Downtown Aspen for New Year’s Eve) as they confidently cited a number of incorrect examples of desperate sellers willing to let go of properties at 35-45% off ask price.
One gets a sense of sharks circling with a number of prospective buyers saying they’ll wait for more downward movement in prices before striking. The pervasive out-of-towner sentiment seems to be it’s going to get worse in Aspen amidst plenty of uncertainty, fear and devastation in a number of Aspen’s historically strong feeder markets …NYC. East Coast, Miami to name some.
Well, maybe there’ll be “more blood” going further into January and Feb 2009, but it ain’t necessarily so at present. The reality right now is: buyers think they’re going to get “a steal”, and they won’t (unless highly unique circumstances); a deal, they might; a good value, absolutely.
Sellers, while certainly becoming more realistic daily, continue to hold on to the intrinsic value of Aspen real estate which is its unmatched beauty, unmatched transportation and cultural infrastructure, surrounded by 92% public lands, the strictest zoning in the country and huge demographic trends favoring Aspen’s long term valuations. They’re not going to give away the store.
Of the little activity there’s been, here’s proof of the above: a broker I know has a “vulture”buyer, a guy ready to buy at distressed prices. They made 3 offers on three separate properties at -45% off ask price (already 20-30% reduced from original ask price) that are well-known highly motivated situations. The sellers didn’t respond, no counter, nothing. Another property on the block because of the Madoff scandal received an offer -40% off current ask (already reduced -35% from original ask), and again the seller chose not to counter but encouraged buyer to come back again with a more realistic offer.
Major Closing Events in Jan 2009: Residences at Little Nell and Dancing Bear Phase 1
In the next 27 days, till the end of January, there are two important Aspen Core fractional projects with scheduled closings, The Residences at Little Nell (RLN) and Dancing Bear Phase 1 (DB1). Both properties had been selling exceptionally well for the past 1-3 years until September 2008, and buyers have put down 15% (RLN) and 25% (DB1) earnest money respectively for units scheduled to close this month.
From the beginning of their sales, summer 2005 to present, the developer’s offering prices have more than doubled. RLN is reportedly 95% sold out, and DB1 is sold out, now selling well into DB Phase 2. But there haven’t been any additional sales this fall, other than early Sept.’08.
The big question is how many of these scheduled January ’09 closings will actually close? Are the units still worth what buyers signed up for 0 – 2 years ago? Or will buyers walk and forfeit their deposit? A lot of people are doing brain damage trying to figure this out.
The outcome this month is unclear but, for certain, the timing couldn’t be worse. On the negative side, the developers have never provided financing so buyers have to come up with closing cash when lenders are few,(although developers maintain they have lenders ready to loan funds at 65% LTV, 5/1 ARM at 4.87% or 10/1 ARM at 5.25%) portfolios have taken huge hits, and cash preservation rules. On the positive, both projects are extraordinarily well-situated, the RLN located at the Gondola base of Aspen Mountain and Dancing Bear only two blocks away, and both are exceptionally high quality and beautiful. Until this month, they have been regarded in the fractional industry as the epitome of high end luxury and for their spectacularly successful sales programs.
Long term, say 3-5 years from now, my opinion is that those buyers who bought in early enough will be feeling fat, happy and flush from their Little Nell balcony or Dancing Bear rooftop deck reflecting on the wisdom of their early purchase decision. But I am not so sure how others who signed up later in the game will come out of this.
There may be a very limited three week window of opportunity here for buyers who’d wished they’d bought in early to these projects to pick up big discounts from sellers who can’t or don’t want to close on their units. Please call me directly, 970-920-7387, for specifics.
See Jan 5, 2009 Aspen Times Article.