Aspen Hasn't Heard U.S. Housing Bubble May Burst: Mark Gilbert
Aspen Hasn't Heard U.S. Housing Bubble May Burst: Mark Gilbert
March 2 (Bloomberg) -- A U.S. housing-market slump is ``the single largest downside risk to the 2007 economic outlook,'' says David Rosenberg, the chief economist for North America at Merrill Lynch & Co. in New York. Paul Ashworth at Capital Economics Ltd. in London calls it ``arguably the biggest risk to the U.S. economic outlook over the next couple of years.''
Figures this week showed the supply of unsold U.S. homes at its highest level since 1998, with 2.91 million houses available in January. Sales of previously owned dwellings fell 2.8 percent to an annual rate of 6.56 million, according to the National Association of Realtors.
If the U.S. real-estate bubble is about to burst, no one has told Aspen, a former silver-mining town in Colorado. Aspen is lucky enough to have the altitude, climate and slopes to have transformed itself into one of the world's ritziest resorts since the first skiers were transported up Aspen Mountain in 1947.
On a small plot of land behind Carol Blomquist's nine-unit chalet, builders are nailing planks to a new home that's on the market for $9 million. Across the street, digging machines are driving in the foundations for two new townhouses, one of which is being marketed at $8 million, the second a relative bargain at $6 million. Blomquist, who has just a couple of part-timers helping her, says the noise is driving her nuts.
Rapids to Real Estate
Every bar, restaurant and hotel lobby in Aspen is littered with glossy magazines advertising McMansions for chief executive officers, trust-fund kids or lottery winners. ``An estate home situated on 1.28 acres, old world architecture, stone, summer water feature, $12.9 million,'' reads one. ``Dramatic stone, log post- and-beam home, exceptional Colorado mountain style, $14.975 million,'' says another.
Even self-confessed ski-bums are donning chinos to hawk property. Jimbo Stockton, 39, has been a ski instructor for 15 years and has lived in Aspen since 1997. During the summer, he uses his 20 years of experience as a river guide to steer white-water rafters down the rapids when the weather allows. ``September, October, November. That's three months when you're not always working,'' he says. ``April and May are pretty slow, too. And being a river guide doesn't pay that well anyway.''
So, last year, Stockton took some time out and paid $1,300 to take the classes to secure his state Realtor license. ``I want to be able to earn more money so I can afford my ski teaching habit,'' he says. ``There's always room for one more honest Realtor. You can make a pretty good living around here.''
Big Payday
Stockton, who pays $375 a month to rent ``a 100-year-old cabin in someone's backyard without a kitchen or bathroom,'' had already closed his first deal before earning his Realtor registration in August. One of his ski pupils bought a $6 million property last year, for which Stockton received a referral fee that was ``the biggest paycheck of my life.''
It may be a bit of a stretch to draw conclusions about the outlook for the U.S. housing market from what's happening in Aspen, whose famous residents include Ringo Starr and Jack Nicholson. It's not just about location, location, location, though; strict planning regulations curbing the growth of the housing stock and the willingness of buyers to load up on debt are equally important, and prevalent in cities that don't share Aspen's quaint charm or celebrity inhabitants.
In three years, Aspen Land & Homes has grown to a six-office business from a single office. ``Aspen broke all records last year, in terms of the value of the deals we closed,'' says Rochelle Bouchard, one of the partners in the firm, an affiliate of Cendant Corp.'s Sotheby's International Realty chain.
Million-Dollar Condos
Bouchard currently has a four-bedroom condo covering 4,300 square feet, ``very high end, almost ski in, ski out,'' at the base of Highlands mountain on her books at $4.9 million; in October, the same property changed hands for just $3.4 million. She says that when they opened for business, $1,000 per square foot was the benchmark for pricing apartments. Now, it's $1,500 and rising.
Bouchard estimates that a 9,000 square-foot, south-facing corner plot in downtown Aspen would fetch as much as $5 million from a buyer looking to tear down existing structures to rebuild. And that means Blomquist, who is 72 and whose lodging house occupies just such a plot, faces an interesting dilemma.
She's owned her business for 30 years and has watched in recent times as small-hotel owners around her have capitulated in the face of multimillion-dollar offers for their properties. With five children and seven grandchildren to spend time with, the temptation to cash in her chips is strong.
``Last summer, there was a real-estate boom in Aspen. I was getting so many telephone calls,'' she says, looking around at the decade-old Jacuzzi tub, the thin pathway shoveled between 4-feet- high snowdrifts, and an ancient chairlift salvaged when Aspen Ski Co. upgraded one of its ski-lifts. ``My grandson said to me, `Grandma, why do you still clean toilets?' But I don't know what else I'd do with myself.''
To contact the writer of this column: Mark Gilbert in London at magilbert@bloomberg.net.
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