Redlining. It happens when athletes go out too fast at the beginning of their workout and subsequently hit the proverbial wall. If any of you have been watching the Tour De France or the recent Netflix documentary about the Tour titled, Unchained, these athletes know how to navigate redlining better than anyone in the world. They understand their bodies, the stage, the weather, their teams, the competition, and the consequences in order to make a calculated decision on when to push it to the point of no return. It is a beautiful sight to see when it works out and the rider crosses the line with a yellow jersey, but when there is a mistake in any one of these factors, the riders fail harder than any single athlete in any single sport. You can see the physical, emotional, and spiritual defeat on their faces and in their bodies. It is romantic and yet fierce.
Homes are a materialistic possession or desire, but the process of buying or selling one requires a similar mindset; you have to be aware, calculated, and ready to redline. Carl Icahn recently responded to a $9B loss by saying, “I’ve always told people there is nobody who can really pick the market on a short-term or an intermediate-term basis.” Similar to the riders and Mr. Icahn, it is our duty to help our clients understand and weigh all of the objective and subjective factors, but there is an inherent risk in real estate in the short term. The willingness to redline and either fail or succeed is what makes it romantic.
Hopefully, we all have more wins than losses, but in order to have a chance at the yellow jersey you need to be in the race, you need to do your homework, and you need to have intuition. If we chase markets, we delay decisions, over-negotiate, and postpone the enjoyment that comes with purchasing a new home or selling one to get to the next stage of life. Here are some data points we wanted to share that we came to on our own, with the help of our colleagues and clients, and the local and national news.
- Inflation will further erode your buying power (even at 2% per year compounded is 10.4% over 5 years.)
- Every recession people oversell. If there is a 10-15% dip, step into the market.
- 5-year average annual price per square foot increase has been in the mid-teens to low-twenty percent range for Aspen and Snowmass Village.
- Prices have held and/or continued to increase across every market in the Roaring Fork Valley.
- Sales volume though is down more than 25% YTD. 2022 was exceptional.
- This has led to more negotiating power; list-to-sale discounts are at 6% in Aspen and 3% in SMV.
- The only upper valley property segment that currently has more than a one-year supply of inventory is the SMV single-family home market.
- There is 1/5 of the available inventory compared to the market at any given time prior to the great recession.
- In the past half-century, we have not seen a 10-year downturn from the time it was bought to the time it was sold.
- There is a bifurcation in the market between new or remodeled properties and the rest of the resale market.
- Commercial property valuations have declined as much as 25% or more since early 2022.
