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Panic, Depression and Hope in the Aspen Snowmass Real Estate Market Cycle

Economists tell us that all markets have cycles. A typical market, like a wave, has peaks and troughs. Nobody would deny that in the Aspen / Snowmass area, in the years running up to 2007, we were riding the crest of a big wave of optimism and euphoria as the prices soared higher daily.

Equally, it is now clear that we have fallen down the back of that wave just as fast and have experienced denial, fear and panic. Denial characterized Aspen and Snowmass in 2008, with sellers continuing to price their properties as if the wave was still cresting up. As reality set in, panic led the most desperate sellers to make dramatic reductions to their asking price and talk of “deals” at close to 50% off asking price started to spread.

As the graphic illustrates, despondency and depression characterize the low point of the market. If you talk to just about any Realtor or seller who will speak honestly, these are the over-riding emotions they are feeling right now.

As sales were at their peak, inventory was low – after all, who wanted to sell when prices were rising so fast. As the fear and panic set in, the inventory soared and sales started to drop (outside factors such as the economic crisis and tightening of the credit markets clearly triggered this change). The rapidly declining market clearly has left buyers nervous that things will continue to fall and sales have fallen by over 75% from the peak.

Without the oft referenced crystal ball, I am not going to be so bold as to suggest that the Aspen, Snowmass real estate market is about to turn the corner and ride up from the trough. However, since it seems pretty clear that we are in the later stages of the fall, I do believe that this may present the best opportunity for buyers. This is because while supply is still relatively high and demand continues to be low, seller confidence is at an all time low. When things do finally turn, supply will diminish, demand will grow and seller confidence will increase proportionately.

In fact, in some Aspen and Snowmass neighborhoods and price ranges, there are already examples of sales increasing and supply falling significantly. While the overall market supply continues to hover above 40 months, in some neighborhoods it is down close to 10 months with close to 25% of available properties already under contract.

In conclusion, the one thing just about everyone agrees upon is that it will be a long time before we experience the excitement and euphoria of exponential price appreciation again. There is what might be described as a paradigm shift ,or paradigm reset, to viewing Aspen and Snowmass real estate as lifestyle choice and long term investment rather than an exploding penny stock promising outrageous and rapid returns.

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