Tuesday, February 6, 2018

It ain't the skiing.... letter to the editor

"In Aspen you either have 3 jobs or 3 homes."

It’s not a skiing economy. It’s not an outdoor sports economy or an arts economy or a conference economy. It’s not about the skis, the bikes, the kayaks, the concerts or the think tanks.

Follow the money and you will find the answer.

It’s a real estate economy. (Follow "What's the Big Deal?")

Aspen real estate is an investment which is AAA with a phenomenal rate of return when flipped. The dividends are parties and networking.

Ask yourself what sustains the real estate economy ? Then ask yourself if that’s what you want.

Real Estate prices stay high as long as demand is higher than supply. There are other factors but that’s the economic foundation. All of our restrictions, our labyrinthian  permitting, our challenging terrain, our civic divisiveness, our remoteness,  - those all increase costs, increase the project timeline, and thus limit supply.

The same factors increase the divide between classes, the 3 jobs class vs the 3 homes class

The same factors decrease the amount of land for wilderness and wildlife- after all even an uninhabited monster home is an invasion displacing species of native plants and animals encouraging scavengers who are used to living off our trash and on our well watered lawns.

When did the real estate economy take off? In my opinion the rocket launch was  in the 70’s. Condos encouraging non-residential ownership combined with limited growth ordinances, and  height restrictions all combined to squeeze the supply.

Square footage prices alone are not what has made Aspen what it is today. Add to this Affordable Housing which helped keep wages artificially low (The entry level wages I received in the 70’s would translate into $55 per hour today.) and the J1 visa (multilingual *and* cheaper be still my beating heart).

Viola!  Ever increasing real estate prices and stagnant low wages. … and you wonder why the 1% of the 1% wants a slice of Aspen? It ain’t skiing.

Update: Follow the money.... 2018

"In the first quarter of 2018, the median sales price for a luxury home—defined as the top 10% of the market—in Aspen reached $18.34 million, an impressive 162.1% increase from the same time last year when the median was logged at a comparatively measly $7 million. 

“We’ve been seeing these big numbers because the backlog—what I call the ‘aspirational priced inventory’—is coming off the market, either expiring, or sellers are realizing they need to meet the buyers on price,” Mr. Miller said."'