What to Expect from Aspen Luxury Real Estate in 2022

After a record-breaking year of sales in 2021, Aspen’s luxury real estate market has already seen a few changes in the first quarter of 2022. Aspen will continue to be a top destination for year-round residents and part-time vacationers. Take a look at the 2022 real estate trends that are impacting Aspen luxury real estate.

Demand for luxury homes in Aspen is steady in 2022, but the market struggles with low inventory as prices continue to increase. Homes in Aspen sold for an average of $6.6 million in 2020 and doubled to $12.6 million by April 2021. Now, the average sales price for a townhouse and condo has risen 84% from February 2021 to roughly $4.28 million. Forbes reported that the average days for a listing on the market in Aspen fell from 247 in February 2021 to just 37 in February 2022. It’s an astronomical indication that competition is only intensifying. As prices remain high in 2022, low inventory is a pressing concern for buyers and sellers, promising yet another whirlwind year for the Aspen housing market.

And competition is already intense, especially for individuals and families looking to relocate in 2022. Bidding wars in the Aspen luxury markets, along with Snowmass and Basalt, are reaching new heights, so it’s important for buyers to have a strict budget and a solid “wish list” before scouring the market for their next dream home. It’s also important to work with a masterful real estate team, like the Engel Lansburgh Team, who navigates the local market with intimate understanding of its current characteristics.

Back in January 2021, the RH company (formerly known as Restoration Hardware) announced a plan to bring a new luxury community to Aspen, including shops, restaurants, and residences. Their new “ecosystem” will invest $105 million into Aspen real estate, which promises to “change the landscape” of retail and real estate. While these plans won’t be completed until late 2022 and early 2023, this endeavor is something to watch out for in the coming months. Aspen is already a top destination for travel and year-round living, so it will be interesting to see how this increase in market growth will play out by the end of the year.

Mortgage rates were expected to stay low throughout most of 2022, an attractive factor for millennials and first-time homebuyers. But we have already seen mortgage rates climb to their highest level since December 2018. According to Reuters, “The Mortgage Bankers Association (MBA) said the average contract rate on a 30-year fixed-rate mortgage rose to 4.9% in the week ended April 1 from 4.8% a week earlier.” This recent uptick is a stark contrast to the low rates that incentivized homebuyers with more affordability at the onset of the COVID-19 pandemic.

Rent is also forecasted to increase 7.1% in 2022, making the purchase of a home a more attractive option. The millennial generation now accounts for over 50% of new mortgages and the National Association of Realtors reported that 43% of home buyers are millennials. Many young people are still predicted to buy in 2022, especially in suburban areas and small towns, which will cement millennials as the dominant force in the housing market.

However, as interest rates increase, experts anticipate a decline in potential buyers across all markets. In the luxury market, many foreign investors and international buyers may choose not to invest in a property until rates decline. However, it remains to be seen whether this will affect the Aspen market.

 

Low housing inventory seems to be the forefront issue of 2022, especially in the luxury real estate market. In September 2021, there were 36% more homes sold than new inventory on the market, which jumped to 55% in October 2021. Now, inventory is so low that some homebuyers are opting to renovate older homes. There is an ongoing demand for luxury homes, and we’ve seen an increased value for homes sold in 2022 as a result. Supply chain issues are also projected to continue for the rest of the year, which means newly built properties and turnkey luxury homes are extraordinarily hot commodities.

However, homeowners are still seeking to purchase second homes, especially in the luxury home market. Owning more than one property, especially in an area like Aspen, which is known as a resort town and a top travel destination, affords a few possibilities for increasing a property’s value. Purchasing a second home in Aspen as a vacation home with the possibility of renting to visitors increases a home’s value with additional passive income. As a result of buyers seeking to purchase investment properties or second homes in a growing, popular destination like Aspen, we anticipate the local economy to ultimately strengthen. This will help sustain Aspen’s tourism industry for years to come.

 

Forbes predicted an income increase in 2022 (up 3.3%), but inflation has risen significantly this year as well. Many companies are now offering the flexibility to work remotely or have become entirely remote companies. Employees with the option to work remotely are taking their time to evaluate new locations for themselves and their families. Those employees without the option to work remote, but who enjoy the idea of increased flexibility, could be opting for new positions and relocating their families as a result. We have already seen this trend in action in the Aspen area, as the Great Migration. Housing migration is an ongoing trend in 2022. There are certainly individuals and families who want to take advantage of new positions in new locations.

With such incredible views and luxury properties available, Aspen and the lifestyle it boasts are at the top of the list. Suburban areas will continue to attract homebuyers, many of whom will move from densely populated cities in favor of more space and access to the outdoors.

While the COVID-19 pandemic is far from over, uncertainty about a “post-pandemic normal” has influenced emerging patterns in 2022. There are still supply chain issues and labor shortages, low interest rates, record-high sales, inflation, and economic uncertainty as we adapt to various unknowns. While it’s impossible for experts to predict exactly what will happen in the 2022 housing market, it’s helpful to keep in mind the trends that emerged in 2021 while planning for the future.

The “new normal” may bring changes in international sales and a shift to more affordable prices before mortgage rates increase mid-year. Families are still examining their options for relocation and may consider purchasing a second home as an investment property. However, with increased prices, luxury home buyers may choose to wait for prices to dip during the first half of the year, adding to the mixed bag of predictions during another whirlwind market year.

While luxury real estate in Aspen has continued to thrive in 2022, increased demand, higher prices and low inventory certainly pose challenges. This is why it is vital to work with real estate agents who have built strong relationships in the brokerage community. The Engel Lansburgh Team in Aspen has creative ways to find new listings in the area before they become available.

If you’re looking to buy or sell a property in Aspen, contact the Engel Lansburgh Team, an award-winning Aspen luxury real estate agent team, to find your next dream home. Offering impeccable service and world-class experience, Marian Lansburgh and Jennifer Engel will work with you to find a property you love and help craft an offer that will beat out the competition in 2022. There are endless opportunities in Aspen to invest in an incredible property — contact the Engel Lansburgh Team today to start your Aspen luxury real estate journey!