Equities investments are looking unstable.
The Feds' 2023 CPI inflation reports have come in hotter than anticipated leading to expectations of high interest rates throughout the year. Market analysts and pundits are predicting a national economic recession and falling home prices.
The scarcity of easy money could result in bankruptcies, acquisitions, and mergers as the companies with the largest liquid coffers have enough dry powder to withstand the upcoming onslaught and could even take advantage with price cut strategies to exacerbate the damage to their rivals or with acquisitions of smaller, complimentary, financially unstable companies.
The miniature banking crisis recently is an early indicator of forthcoming instability.
The recent generation’s equity darlings like the tech sector are feeling the economic realities of today and are going through massive layoffs to cut costs and aim for profitability where growth was once the most pressing concern. This reshuffling of priorities has sent tech stocks reeling after ten years of record growth, and investors are considering alternatives due to the new landscape.
Aspen has proven itself over many decades when it comes to providing safe long-term investment during uncertain times with impressive value retention and return on investment. Supply in Aspen remains scarce and demand remains high.
Looking at the National Real Estate Market, we should expect home prices to remain flat, but not fall notably. Skyrocketing interest rates put a major damper on spending power for anyone buying with a mortgage. Inventory will be tight as fewer people want to leave a loan at 3% for one at 7%. We should expect home sales to largely depend on necessity and transactions should be down this year.
However, in the discretionary investment markets, mostly 2nd and 3rd homes throughout tourism-driven areas, we expect continued price increases and some rotating inventory, although not at the extreme levels of the past two years.
Buyer’s remorse is a primary driver of sales in the 2nd home market.
The past two years saw an extreme shift in priorities and paradigms for people across the world, leading to unprecedented quick decision-making by everyone in the housing market, especially those in the luxury second-home markets.
Some homebuyers made hasty decisions that they’ve come to regret and many of them are pivoting. “The ultrawealthy are having regrets, too. About a quarter of luxury buyers who purchased a home in the last two years say they are not satisfied with their property because of lifestyle changes, property size, remote location, lack of neighborhood amenities, or a return to full-time office work,” according to the Coldwell Banker Global Luxury Trends Report.
Some buyers sitting on the sidelines are waiting for the fallout. But there’s a benefit to owners in luxury destinations like Aspen: lack of stress on properties reduces incentives to sell and fortifies assets. When your neighbors are some of the world’s most affluent, coupled with continued unsatisfied demand, the house down the street will never sell for an extreme discount and reduce your home’s property value like it might in another market.
While this hurts buyers’ abilities to seize golden opportunities (because few arise), it is an assurance to homebuyers that their property's equity will remain intact regardless of circumstances, and will most likely skyrocket at the next inflection point.
On top of equity assurance, Aspen property owners can look forward to sizable rental incomes.
With more millionaire renters now than ever due to generational changes in lifestyle and work habits that were speed tracked by the Covid crisis, destination markets like Aspen have extremely strong long-term and short-term rental markets.
Families rent long-term to put their kids in school and telecommute, then they rent short-term while on vacation. Singles maintain long-term rentals in destination towns while also jetting around to other worldly destinations and paying for short-term rentals along the way.
The destination rental market is extremely strong. Prices have tapered off a little from what we saw through the Covid crisis as people were panicked and fleeing large locales. Now renters have a little more patience for finding value, but the destination markets are still highly desirable and renters will continue to push their budgets to live in them.
Understanding the buttressed nature of the Aspen real estate as contrasted with national markets vastly simplifies the investment equation. Aspen Owners have too few liabilities and too many opportunities to be backed into a selling position. Almost any townhome can pay its yearly tax bill with a couple of weeks’ rental. If an owner finds himself in need of a half-million-dollar annual income, he can simply rent his house long-term. The property stress which induces selling in other markets simply does not exist in Aspen.
Luxury real estate is once again becoming the go-to safe haven for investors in uncertain times. Scarcity is key and markets like Aspen exemplify the power of a steady market floor. Prices in Aspen only go up or flatten - never down.
The prudent investor works to find the best value available, but without question, time is the greatest factor of price when considering an Aspen real estate purchase. From talking for years with Aspen homeowners and prospective buyers, we at Aspen Luxury Brokers have never found a single Aspen homeowner who wishes they had 'waited to enter the market'.
Even if the perfect property isn’t currently available, getting into the market is essential so that your equity is moving with it. Keeping pace with the property values of Aspen is almost impossible if you’re not invested here. We’ve seen too many buyers get priced out then go glumly looking down valley or in other ski towns.
Just like buying a primary residence, the first one probably won’t be the last. Many Aspen homeowners move throughout the town and the valley until they get the perfect place, and they profit significantly with each transaction along the way.
We have helped multiple property owners use the Aspen Real Estate Market to their advantage and level up with each transaction. We'd love to do the same for you. If you’re still on the sidelines, give us a call or email today and we'll be glad to work with you in finding the right property to get started in Aspen Real Estate.
Or if you’re looking to level up from your current Aspen property, our skills in value-add through design and build give us a distinct advantage over other players in the market and can help you secure your next Aspen home.
There’s simply no better time to buy than today... unless you like paying more.
