Why a Recession Might be Good for Aspen Real Estate

One might think that a recession should slow down price appreciation even in the high-end real estate markets like Aspen or Snowmass. The problem is that a moderate recession might not have a moderating effect on prices.

Diversification might be the issue that further lifts the luxury real estate markets like Aspen to even loftier heights. Divestitures of stock holdings into real estate of prime status will happen if the stock market sees moderate losses over a longer period. Dramatic stock gyrations will more likely encourage investors to sidestep re-investment and will result in increased cash holdings in portfolios.

Only in times of more extensive turmoil will the wealthy stockpile cash or other short-term liquid assets and neither engage in the stock market nor the real estate market. This effect applies mostly to the top-end of the luxury market. So it is only logical to see more ultra high-end properties go under contract in the coming months.

For sellers that are not aware of these market trends the whiff of uncertainty in the air will actually make them more motivated to close deals. If both buyer and seller are keen to transact the closed deal volume is bound to do well during 2008.

The difference between prior slowdowns and the coming one is that Aspen Colorado real estate is relatively inexpensive versus other resort towns. It will take less of a leap-of-faith to pull the trigger on any purchase as the price appreciation slows.

The overall transaction volume in Aspen and Snowmass might slow down from its record setting pace of the last 2 years. In all likelihood we will still transact more than $2 billion worth of prime real estate in Pitkin County this year. The super luxury real estate offerings will contribute their share to that figure.