Strong sales of Base Village condos have been masking a troubled Snowmass Village real estate market, which could sink even further without that buffer next year.Excluding Base Village sales, Snowmass Village real estate sales have tumbled 60 percent to 65 percent in the last year, according to longtime local real estate agent Rick Griffin, who is also chair of the town’s Financial Advisory Board. Griffin presented his findings to Snowmass Village Town Council last week during its budget meeting, warning town leaders to tighten their belts in 2009 while both the national and local economy look uncertain.
by Catherine Lutz,Aspen Daily News Staff Writer, October 14, 2008
Pulling sales data from the local Multiple Listing Service, Griffin found that there’s been a slight downward trend in condo sales over the past three years, but if you take out Base Village condo sales, only 36 condos have sold in the village from Oct. 1, 2007, to Sept. 30, 2008. (Griffin pointed out that this number might be a little low since the MLS does not reflect sales that don’t go through brokers.)
“The resale condo market is definitely slower than it’s been in the last two or three years,” agreed another longtime broker, Terry Griggs with Chaffin Light Real Estate.
During roughly that same time period, 66 sales were recorded in Base Village as the first buildings in the 1 million-square-foot development were completed, according to records from the Pitkin County Clerk and Recorder’s Office. (Though the units were pre-sold in 2005, buyers cannot actually close on their units until a certificate of occupancy is issued.)
Transactions on the 90 condos in Hayden and Capitol Peak lodges are still closing, but Base Village sales have accounted for more than $96 million so far in 2008.
But those sales do more than profit developers and Realtors; they also have accounted for more than $1 million in real estate transfer taxes to the town this year, according to a worksheet provided by the town’s finance department during last week’s budget session. RETT revenues are restricted funds, which means they can only be used to pay for certain road projects and equipment, parks and recreation and the town’s transit system.
Single-family home sales in Snowmass have slowed noticeably too, according to Griffin’s analysis. Only 30 homes have sold in the past year compared to 60 in the same time period in 2006 (and 54 in 2007). But the single-family home market may have already hit bottom, according to a recent column by William Small of Frias Luxury Real Estate in Aspen. In the column, Small argues that most of the sales have been in the past six months and prices have adjusted enough to attract more buyers.
RETT to take a dip
RETT revenues from Base Village are projected to dip by about half in 2009, to $556,000, because relatively few residential units are expected to come online next year (21, according to the latest construction schedule by developer Related WestPac).
“We’ve had a false sense of security in Base Village because Base Village has given the RETT its money in 2008,” said Griffin. “Base Village is holding up [the market] this year.”
It’s just unlucky coincidence that the slowest planned year for Base Village sales is also now looking like it will be one of the slowest years for tourism in recent memory. Town Council last week directed staff to plan for flat real estate sales rather than the usual 3 percent gain (which is considered flat by many in the local industry). Already, 2008 RETT revenues proved to be 33 percent down from 2007, which was an exceptional year for real estate valleywide.
With only one-sixth of Base Village residential units planned to be done by the end of next year, Snowmass’ RETT coffers would normally see a huge boost in 2010 and 2011, when the bulk of the 500 remaining condos are supposed to be done. The town is predicting $4.3 million and $1.2 million in RETT revenues those years from new sales in Base Village alone, according to figures provided to them from the developer. But a senior Related WestPac official recently warned town officials that the slowing economy could slow construction of the project — and therefore sales that impact town coffers.
“Base Village actually does pay for a lot of things in this village,” said Griffin, adding that during the last few red-hot real estate years, the rest of the resale market filled in any gaps — but this year and next are looking quite different.
“You have [potential] buyers who have seen a rise in prices but have seen no correction lately,” he explained. “And where they come from they see those prices correct. So they’re unwilling to spend money because they believe the prices will go down; they’re waiting on the sidelines.”
Base Village pre-sales slowing
Griffin pointed out that current Base Village closings are due to buyers who committed three years ago.
There is some evidence that pre-sales for the next Base Village offerings — the Viceroy hotel, Little Nell Snowmass and Key Collection — have cooled off as well. Related WestPac Vice President of Development Scott Stenman told the council last month that 181 units have closed or are under contract since the company bought the project in March 2007. With 66 confirmed sales in Hayden and Capitol Peak lodges this year and roughly 90 pre-sales as of mid-February in the Viceroy and Little Nell, according to a Related WestPac press release, that leaves roughly 25 units that could have been put under contract in the past eight months — just three per month. (Related WestPac officials currently refuse to discuss sales.)
But even as people seem to be putting on the brakes, brokers are optimistic about the future, and many don’t see the current downturn as any worse than the crash of the mid-’80s or the post-9/11 slump.
“My feeling is that the level of interest is very high” for Base Village, and in particular the Viceroy, said Griggs. “At the same time, right at the moment, my feeling is most people are taking a wait-and-see attitude as to what’s going to happen with the economy.”
People tend to hold off on discretionary purchases — second and third homes, in this case — “until they feel comfortable about the way things are going,” as Griggs put it.
This will be the first winter Base Village is open for business, Griffin pointed out, so the town will have extra sales tax revenue from those restaurants and retail shops that are debuting. And the town’s new commercial center is sure to create a buzz, said Griggs.
Still, both brokers pointed out that the current financial crisis highlights more than ever how linked the global economy has become — but what that means from Snowmass’ large international clientele, it’s too soon to tell.
“People forget two things,” said Griffin. “This happens every once in a while. But when it turns, the marketplace here takes off like a rocket.”