Second Quarter Market Report 2024 | Christie's International Real Estate Aspen Snowmass
Second Quarter Market Report 2024
Q2 2024 Economic Overview:
As we move into the second half of 2024, despite the record-breaking temperatures across the country, the U.S. economy is cooling. Inflation, as measured by the CPI, declined 0.1% in June, the first month-over-month decline since May 2020 as inflationary pressures continue to recede. Year-over-year inflation was 3.0%, the lowest reading since June 2023. Core inflation, a better measure, rose a scant 0.1% month over month, the mildest rise since January 2021 and 3.3% year-over-year, the lowest reading in three years. Very importantly, housing inflation, a key component of the index, is lessening. If we need additional confirmation that the economy is starting to slow, 24Q1 GDP was revised downward to 1.4% from 1.6%, well down from 23Q4’s 3.4%, and the decline was entirely due to a large downward revision of consumer spending. Current projections for 24Q2 growth are between 1% and 2%, which suggests an economy approaching stall speed.
In the labor markets, employers created a respectable 206,000 net June jobs, but April and May totals were reduced by a hefty 110,000. The unemployment rate rose from 4.0% to 4.1%, its highest level since November 2021, a troubling rise since the April 2023 low of 3.4%. Average hourly earnings of private employees have been steadily slowing from a peak of 6% in March 2022 to 3.9% last month. The quit rate, which is highly correlated with wage growth, has plummeted from a stunning 3%/month as recently as April 2022 to 2.2%/month last month. The 24Q2 job creation numbers are the worst since the early days of the covid shutdown, and while the jobs data is not entirely bad, overall, it is yet another sign of across-the-board weakening.
In the stock market, July 2024 has been a month of records for all three of the major market indexes, boosting portfolios and minting new millionaires. But there is concern about market concentration, to wit, the combined valuation of six tech companies in the S&P 500, Alphabet, Amazon, Apple, Meta, Microsoft and Nvidia, is $15 trillion, while the other 494 companies are worth $33 trillion. Through 24Q1, year-over-year earnings growth for the Magnificent Seven is 100%, while for the other 493 firms it’s -3% year-over-year. Even within the tech sector, most of the innovation and investment is in artificial intelligence, a sub-concentration within a concentration. Most importantly, the gains in tech are camouflaging weakening in the rest of the economy.
Finally, much is riding on the results of the 2024 Presidential election. A recent survey of 50 economists, including professional forecasters from business, Wall Street, and academia, finds that 56% predict inflation will be higher under a second Trump administration compared to 16% under a second Biden term. As for deficits, 51% expect them higher under Trump compared to 22% under Biden. Thus, 59% see higher interest rates with Trump versus 22% with Biden.
Bottom line, if we continue to see inflation cool without a meaningful deterioration in the labor markets and the Fed follows through and lowers rates in the fall, it’s still entirely possible that we dodge a recession. However, if we see a marked shift towards a recession, expect the Fed to dramatically cut rates.
Q2 2024 National Housing Market Overview:
While annualized home sales continue to hover slightly above the depressingly low sub-4 million trough of last fall, the housing market does appear to be improving slightly for several reasons. First, simply the passage of time has increased demand, regardless of high interest rates and high prices. Families marry, divorce, and change jobs, and eventually people must move, regardless of interest rates. We see this in the declining number of mortgages that are at 5% or below. Two years ago, nearly 90% of mortgages were below 5% while the most recent data shows that only 76% are sub-5%, and estimates are that nearly half of the mortgages originated since 2022 have rates exceeding 7%.
Second, we have seen inventories of both new and existing homes for sale rise. June inventories were 36% higher than last year and have grown for eight straight months, however nationally they remain well below pre-pandemic levels. New home listings are up about 6% from last year, and mortgage rates have eased just enough that with increasing demand and more active listings, we are finally seeing a slight improvement in sales numbers. But the news is not all positive; pending home sales slipped 2.1% in May, after falling a larger 7.7% in April. On a year-over-year basis, sales are off just 6.6% after last year’s year-over-year decline of 20.7%. That leaves the NAR Pending Home Sales Index at 70.8, slightly lower than the April 2020 covid-induced low and at the lowest level since the series began during the 2001 dotcom bust.
In response to improving inventories, during the month of May the percentage of active listings with price drops was 19.2% of all for-sale homes. That is up from 13.2% a year ago, and close to the all-time high of 21.7% set in October 2022. For comparative purposes, in the years leading up to Covid the rate was about 12%. That said, even as inventories increase, they remain at historically low levels, and combined with pent up demand, we have not seen the steep price declines of the Housing Bust. In fact, the median home sale price in May 2024 was a record $419,300, an increase of 5.8% from a year ago.
In terms of new construction, May housing starts were 1.3 million annualized, down 19.3% year-over-year and at their lowest level since June 2020. Multifamily starts fell a whopping 52% year-over-year, and while single-family starts were off just 1.7% year-over-year, they are down three months in a row for the first time since early 2023 and are at their lowest level since October 2023. Moreover, single-family permits have fallen four months in a row and are at an 11-month low. The NAHB Builder Sentiment Index reflects the slowdown, as it dropped to 43 in June 2024 from 45 in May and was at the lowest reading since December of 2023. When inventories were less than two months, many buyers were willing to stretch to afford a new home, but as months’ supply of existing inventory approaches four months, there is less incentive to purchase a newly constructed home.
In summary, Dr. Eisenberg says, “At this point it’s difficult to imagine the housing market really picking up until we see rates come down by more than half a point, but I also don’t see it meaningfully deteriorating. With inflation declining pleasantly, I see almost no possibility that rates will rise, the question is how quickly and by how much they decline. I anticipate rate cuts in September and December, with an increasing possibility of a half-point cut in December.”
Q2 2024 Colorado Overview:
Unemployment in Colorado in May was 3.8% compared to 3.1% a year ago and a peak of 11.7% in 05/20. For comparison, the pre-pandemic rate was 2.8%. Colorado’s rate remains well below the May national average of 4.0%. Statewide continuing claims for unemployment for the week of 06/29/24 were 26,866, compared to a pre-pandemic level of 20,735, while a year ago it was 18,800. In Pitkin County, the May unemployment rate was 6.4%, the highest May rate since 2021. A year ago it was 5.3% and for comparison, pre-Covid in November 2019 it was 5.7%.
Statewide, the June 2024 median price of a single-family home was $599,000 and was 3.1% higher than June 2023, while the year-over-year average price rose 2.1% to $739,610. In the condo/townhome market, the year-over-year median price remained virtually unchanged at $419,900 while the average price declined 0.7% to $506,569. Through June, closed sales across the state are down 4.4% while new listings are up 11.7% from last year. There are 24,830 active listings statewide at the end of June, up 22.3% compared to last year and representing 3.6 months’ supply of inventory. Across the state, the percentage of list price received at sale was 99.1%, down from 99.3% a year ago. During the first half of 2024, the average home spent 51 days on the market until sale, up from 48 days last year.
Colorado made headlines in the recently issued Federal Housing Finance Agency report on the mortgage rate lock-in gap, or the ‘golden handcuffs’ phenomenon that has bedeviled the housing market since rates began rising in 2022. The spread between Colorado’s 24Q1 average mortgage rate of 3.8% and the current 7.25% market rate on a new loan is 3.45 points, the biggest gap in the nation. Going from a rate of 3.8% to 7.25% on a $500,000 home would translate to a monthly payment increase of $1,081, making it much less likely for existing homeowners to move and take on a new, higher-rate mortgage. There are several factors to explain the high Colorado gap, but key among them are average credit score (Colorado residents generally have a higher credit score than the national average), and when the loan was originated (in Colorado, more loans were likely to have been initiated in 2020 and 2021 when rates were at their lowest). While the golden handcuff effect has been particularly hard on the Colorado real estate market, the large increases in statewide inventories suggest a softening market as more and more Colorado homeowners slip out of the golden handcuffs.
Q2 2024 Aspen Overview:
The median price of a single-family home in Aspen through June 2024 was $16.5 million, a 44% gain compared to the first half of 2023, while the average price increased 55.0% to $22.2 million. Aspen townhomes and condominiums had a median price of just over $3.0 million, up 4.0% from last year, and an average price of just under $4.1 million, down 10.0% from last year. In Snowmass Village, the single-family median price increased 42% to almost $7.6 million, while the average price rose 23% to just over $9.0 million. Snowmass Village townhomes and condominiums saw a moderate 3% gain in median price to just under $1.9 million, while the average price rose 17.0% to just under $2.7 million.
Across the Aspen/Snowmass Village area, closed sales were down 7.0% compared to last year but overall sales volume rose 19.0% to just over $1.3 billion. The percentage of sold price to original listing price compared to last year declined by 1% for Aspen single-family homes, where it dipped from 93.0% to 92.0%, but the ratio for Snowmass Village single-family homes increased from 92% to 94%. Days on market increased for both Aspen single-family and townhomes and condos, while in Snowmass Village, average days on market for single-family homes rose but condos and townhomes sold much faster and had the shortest time on the market for any property type.
Once again Aspen is making headlines for record-setting luxury home sale prices, with a $77 million April sale quickly surpassed by a staggering $108 million transaction. Not only were these records for the Aspen area, but they set records for the entire state, eclipsing other Colorado luxury ski towns like Vail and Telluride and multi-million-dollar ranch and estate property sales. These and other large homes and properties are likely to continue to appreciate simply for their square footage and acreage if nothing else, especially considering the new construction house-size cap of 9,250 square feet imposed by Pitkin County in 2023. Much of the growth can be explained by the surging stock market, but money is pouring in from international buyers as well, as the appeal of Aspen is truly worldwide. Dr. Eisenberg notes: “When it comes to the Aspen/Snowmass Village real estate market, the word ‘cooling’ simply does not apply. We have seen record appreciation in the Aspen/Snowmass market since the start of the pandemic, and absent a serious economic correction like a recession or a stock market crash, I see no signs of it easing off anytime soon. High net-worth investors are always drawn to trophy real estate, and Aspen has all of the cachet and amenities of the world-class resort that it is.”
Aspen Single-Family Highlights:
• The median price for a single-family home in Aspen through June 2024 was $16.5 million compared to a median sale price of almost $11.5 million for the same period last year. The average price for 24H1 was $22.2 million, compared to $14.3 million for the same period last year.
• There were 33 closed sales through the end of June, a 25% decline compared to 2023, but rising prices pushed overall dollar volume up 16% to nearly $732 million. The average sold price per square foot increased 9% to $3,427.
• As of the end of June, there were 73 single-family homes on the market, compared to 75 at the same point last year.
• The most expensive single-family home sold in Aspen during the first half of 2024 was a record $108 million, compared to a $65 million sale during 23H1.
• Days on market increased from 153 to 253, while the percentage of sold price to original listing price declined slightly from 93% to 92%.
Aspen Condos/Townhomes Highlights:
• Compared to 23H1, the median price of townhomes and condominiums in Aspen rose 4.0% to just over $3.0 million, while the average price declined 10% to just under $4.1 million.
• The number of properties sold during the first half of the year increased from 37 in 2023 to 59 in 2024. The increase in sales pushed dollar volume up 43% to just over $241 million and the average price per square foot increased 6% to $3,018.
• Condominium and townhome inventories declined from 53 units last June to 44 units this year.
• The most expensive unit sold so far this year was $14 million, well below last year’s record sale of nearly $22 million.
• The average days on market for condominiums and townhomes through June was 146 days, up from 134 days last year. The percentage of sold price to original list price increased from 94% last year to 95% this year.
Snowmass Village Single-Family Highlights:
• In Snowmass Village, the 24H1 median sale price of a single-family home was almost $7.6 million compared to 2023 when the price was just under $5.4 million, a 42% increase. The average price increased 23% to just over $9 million and the average price per square foot rose 10% to $1,857.
• Year-over-year closed sales for the first half of the year increased from 12 last year to 18 this year, a 50% increase, and that nearly doubled overall dollar volume to $163.1 million.
• There were 15 single-family homes for sale in Snowmass Village at the end of June, compared to 26 at the end of June 2023, a 42% decrease.
• The most expensive single-family home sold through June in Snowmass Village was $24.5 million, while the highest price during the first half of 2023 was $17.8 million.
• The days on market for single-family homes in Snowmass Village rose from 149 days last year to 157 days this year, while the percentage of sold price to original list price rose from 92% last year to 94% this year.
Snowmass Village Condos/Townhomes Highlights:
• Condominium and townhome median prices in Snowmass Village through the first half of 2024 gained just 3% year-over-year to just under $1.9 million. The average price rose 17% to just under $2.7 million, while the average price per square foot rose 14% to $1,845.
• Closed sales during the first half of 2024 declined by about one-third year-over-year to 67, and overall sales volume declined 20% to $179 million.
• At the end of June there were 32 townhome or condominium units on the market in Snowmass Village, compared to 58 last year.
• In the Snowmass Village condo/townhome market, the most expensive property sold during the first half of 2024 was $9.5 million, compared to the highest sale price last January-June of $8.8 million.
• The percentage of sold to original list price declined from 98% to 95%, while the days on market declined from 543 to 103.
To read the Full Report with graphs and stats from Aspen to Glenwood Springs: Click here