(These are my summary notes of the 12/17/08 presentation by Randy Gold, President of Aspen Appraisal Group. The complete presentation, text with charts, is available at: www.AspenAppraisalGroup.com )

12/17/08 Aspen Board of REALTORS Luncheon at Hotel Jerome

Executive Summary

We are in a “struggling 2008 market” but real estate markets are and have always been cyclical. It will take time to recover, “But we will”. In every month in2008, there’s been a decline in activity, while 2007 was down over 2006. For Aspen, it’s estimated this downturn will last 18-24 months. Nationally, we are into it now 13 months. As has been our historic pattern, Aspen has been one of the last to feel the consequences of this economic slump, and we will most assuredly be amongst the first to feel its uptick.

Areas of greatest strength?
• Aspen Core is probably less bad than elsewhere. New product in the West End probably the same as well.
• Also, anything new and/or remodeled product has a lot better sales potential than older product.
• Snowmass Village:Two Creeks and Divide areas are probably less bad, or at least these areas will be the 1st to respond in an uptick.
• Aspen still represents a decent value to really high end international markets.

Areas holding up:
Properties under $10M category in these areas
• Red Mountain
• Pitkin Green
• West End
New and remodeled Aspen Core
Ski accessible in Snowmass Village
Base Village, new product

Greatest Weakness?
• Over $10M and especially over $20M categories.
• Vacant land and lots
• Snowmass Village, specifically the Wildridge and Melton Ranch areas which are dominated by older single family home product

• Interest rates down
• Construction costs down (10-20% already)
• Prices down
• More motivated sellers every day
• Buyers need to think long term

Whats happened to actual values of properties?
Has there been actual decline in value up to now and what about next 12 months?
• There are a large number of listings where the price has been reduced, but fundamentally were they worth the original ask prices to begin with?
• Answers from various brokers range from 10-25% decline in 2008 down to 2005 levels to no decline whatsoever.
It’s very difficult to know what properties are worth now. Reasons?
• Lack of current sales data
• Have to look at older sales
• Aspen Appraisal Group will select the bottom range of price valuations and any values less than they were 1 year ago.

• We are in 2nd year of a slowing market, in the grips of recession.
• Most sellers still living in the record, heady days of 2006. And they are unrealistic. Residential owners have to change their attitudes. We are no longer in 2005-2007 territory. Recession is finally being recognized triggered by financial meltdown.
• There is a big disconnect between buyers and sellers. And this is most likely the reason why the market activity has slowed so much. Buyers are staying away until sellers and prices get real.
• Supply and demand is way out of balance, supply far exceeds demand.
• Slowdown started 2nd Half 2007
• Pricing is key
• We are in a challenging financial and economic environment. The Aspen myth of “high end protection” has been debunked. We are feeling the impact. There’s a lot of fear how deep and long this will last.
• Yes, we have been through past recessions, but this one is much more far reaching and broad based.
• Past bad recessions: Early ‘80’s, it took 3 yrs to recover. This is worse than that and will likely get worse.
• How long will it last? Our market will be one of the first to respond just as it’s been one of the last to slowdown. Maybe it’ll take us 18-24 month while the rest of the country 3-5 years to suffer through this.

For my full notes in pdf format, please contact me: testin@masonmorse.com