Elliot F. Eisenberg, Ph.D.
Source: Aspen Board of Realtors Multiple Listing Service
National Overview
ECONOMICS
The national economy turned in a strong performance in 2024, with GDP again exceeding expectations, although inflation remains somewhat elevated as a result. Third quarter GDP growth was impressive at 3.1%, although the fourth quarter is likely to be slightly lower but still solid at 2.25%. Wage growth has fluctuated over the past several quarters, declining from 5.9% to 3.6% but is projected to be 4% for 24Q4. Productivity was up a superb 2.2% in 24Q3, linked to continuing gains from investments in machinery during the pandemic, a large number of new firms, and higher personal productivity resulting from job shifts. December saw surprisingly strong employment growth, with the unemployment rate declining to 4.1%. Government spending is also driving GDP growth, but with an accompanying rise in the deficit, which has long-term implications for Treasuries, and thus also mortgage interest rates.
“...the implementation of tariffs is likely to raise inflation in the short run, as tariffs will increase the costs of imported goods, and this inflationary effect may persist...”
Despite mildly slowing income growth, consumer spending remains strong due to surging household wealth, which hit an alltime high of $168.8 trillion in 24Q3, driven by huge gains in home equity and retirement portfolios. However, lower-income families are increasingly facing difficulties as inflation continues to cut into household budgets, but this has not yet translated into a meaningful decline in consumer spending. Overall, 2024 was a year of consistent over-performance, driven largely by improved supply chains and strong consumer spending, and supported by relatively low unemployment rates.
While the Fed cut interest rates 100 basis points over the last three meetings in 2024, a response to a weakening labor market and declining inflation, markets pushed longterm rates back up, particularly the 10-year treasury and, as a result, the all-important 30-year mortgage rate. The rate reversal resulted from recent Fed signals suggesting a more cautious approach moving forward, reflecting concerns about still-too-high inflation and the potential for inflationary impacts from some of President Trump’s key policy proposals. First, the implementation of tariffs is likely to raise inflation in the short run, as tariffs will increase the costs of imported goods, and this inflationary effect may persist for a year or two if there are retaliatory measures from other countries. Secondly, more restrictive immigration policies could lead to wage increases, as a shortage of workers in various sectors, such as restaurants, hotels, agriculture, and construction drive up labor costs, contributing to higher prices. Lastly, if Congress agrees to extend existing tax cuts, it will most likely worsen the federal deficit, leading to increased government borrowing, which will put upward pressure on interest rates.
Looking ahead to 2025, GDP growth is expected to moderate but remain solid. While fears of recession and stagflation have clearly lessened, the Fed’s ability to manage inflation remains in the spotlight. Dr. Eisenberg comments: “While the Fed will certainly lower interest rates in 2025, the real issue is how many cuts will there be. They have signaled two quarter-point cuts in 2025, but I suspect there will be more because inflation is weaker than it appears. For example, in the last six months, annualized PCE inflation is at the Fed’s target of 2%, but there are a multitude of variables at play with the new Congress and Administration. However, the economy enters
2025 very strong and can withstand many policy shocks.”
HOUSING MARKET
At the national level, November existing home sales reached a seasonally adjusted annualized rate of 4.15 million, which was a 6.1% increase year-over-year, the largest gain since June of 2021. However, closed sales are still at levels last seen during the Housing Bust, or prior to that, during the mid-1990s. The median sale price for existing homes rose to $406,100 in November, an increase of 4.7% over last year and the 17th consecutive month of year-over-year price increases. Nationally, the inventory of homes available for sale is 3.8 months’ supply, up from the lows following the pandemic, but still well below what would be considered a balanced market. This continues to push home price appreciation up, although at a slightly slower pace. Although high prices and a lack of available inventory play a part, the housing market remains constrained primarily due to high interest rates, which hover around 7%. Studies show that for a meaningful number of homeowners to be motivated to sell, interest rates need to be in the 5% range.
“In the multifamily sector, Fannie Mae recently reported that the multifamily 60+ day delinquency rate is at the highest level since early 2011 ...”
On the new housing front, single-family home construction is anticipated to remain at or slightly above current levels, despite high rates and challenging construction costs as demand remains solid. Builders have adjusted by building smaller, more space efficient homes and are incentivizing buyers with mortgage buy-downs. In the multifamily sector, Fannie Mae recently reported that the multifamily 60+ day delinquency rate is at
the highest level since early 2011 (excluding Covid), when it was declining from the Housing Bust peak. The rate is elevated because completions are up, household formation and rent growth have slowed, and vacancy and borrowing costs are up. The office space market, with a 20.4% vacancy rate, is also struggling due to remote work trends, but as more companies mandate return-to-office, there may be some recovery, and A-Class office space is doing well. Commercial lenders have mostly adopted a “pray and delay” strategy and we have not yet seen a meaningful level of commercial foreclosure activity.
Dr. Eisenberg comments: “I expect housing sales activity in 2025 to be slightly better than 2024; a hoped-for decline in rates will help, but just as importantly, so will the pent-up demand of buyers, whether move-up or firsttime, who can no longer wait for rates to come down. Additionally, if the job market remains as robust as it has the last several months, then we will undoubtedly see more housing demand. On the not-so-bright side, the escalating scope and cost of natural disasters, exemplified by the East Coast hurricanes and storms and the West Coast fire disasters, are certain to push home insurance premiums up across the country, and especially so in highrisk areas. This will add additional pressure to housing costs over time.”
Colorado Overview
HOUSING MARKET
The unemployment rate in Colorado in November was 4.3% compared to 3.3% a year ago and a peak of 11.7% in May 2020. For comparison, the pre-pandemic rate was 2.8%.
Over the last year, Colorado’s unemployment rate has trended similarly to the national rate, which for November was 4.2%. In Pitkin County, the November unemployment rate was 6.4%, the highest November since 2020. A year ago, it was 5.2% and by comparison, pre-Covid in November 2019, it was 5.7%. The recently released University of Colorado Boulder, Leeds School of Business, Economic Outlook 2025 report called out the Aspen airport’s 14.2% Y-o-Y (7/24 compared to 7/23) increase in passenger traffic as one of the largest gains in the state and also mentioned several new Aspen area hotel openings as part of the Aspen area’s ability to capitalize on high-end, luxury resort projects. This is likely to continue to move Aspen and Snowmass Village prices up, even as the national market cools.
“In terms of the Colorado statewide housing market, most metrics point to a weakening one. Prices are mixed, with single-family prices generally up slightly and multifamily homes flat to down slightly...”
Statewide, the December 2024 median price of a single-family home was $575,000, up from $549,000 a year ago, while the year-over-year average price gained 4.6% to $735,996. In the condo/townhome market, the year-over-year median price dipped 2.7% to $413,317, while the average price was almost unchanged at $596,425. For the year, closed sales across the state were unchanged from last year at 85,335, while new listings are up 10.8% compared to 2023. There were 19,459 active listings statewide at the end of December, up
8.9% compared to last year and representing 2.7 months’ supply of inventory. Across the state, the percentage of list price received at sale in 2024 was 98.7%, down from 99.0% in 2023, while the average home spent 55 days on the market until sale in 2024, up from 49 days in 2023.
In terms of the Colorado statewide housing market, most metrics point to a weakening one. Prices are mixed, with single-family prices generally up slightly and multifamily homes flat to down slightly. After accounting for inflation, however, prices are, at best, up slightly. Like an increasingly large number of areas around the country, the Centennial State is experiencing a normal market correction following a period of rapid price increases that outpaced income growth. Add in increased interest rates, a slightly weaker labor market, changing demographics, and now return-tooffice mandates, and a slightly slowing market is unsurprising.
ASPEN SNOWMASS ECONOMICS
The 2024 median price of a single-family home in Aspen was $13.4 million, an 8% gain compared to 2023, while the average price increased 22% to $19.6 million. Aspen townhomes and condominiums had a median price of $3.45 million, up 8.0% from last year, although the average price of $4.55 million was down 6% compared to 2023. In Snowmass Village, the year-over-year single-family median price increased an impressive 45% to $7.95 million, while the average price rose 32% to just under $9.5 million. Snowmass Village townhomes and condominiums also saw very large year-over-year gains, with the median price up 53% to $2.7 million and the average price increasing a staggering 77% to $3.77 million. In fact, a recent Wall Street Journal article called out the growing luxury
home market in Snowmass Village, citing the slope-side access and substantially lower prices than Aspen as key to the growing popularity of Snowmass.
“If the 2017 tax cuts are extended by the new Republican Congress and incoming Administration, it could further boost portfolios and enhance the appeal of the Aspen/ Snowmass Village area even more...”
Across the Aspen/Snowmass Village area, closed sales were up 3.0% compared to last year, and along with higher prices, pushed overall sales volume up 15.0% to just under $2.75 billion. The percentage of sold price to original listing price compared to last year declined by 1% for Aspen properties (to 92% for single-family and 94% for townhomes and condos), while the ratio for Snowmass Village single-family homes remained flat at 94% and townhomes and condos declined 2% to 96%. Days on market increased for both types of Aspen properties, while in Snowmass Village, average days on market for single-family homes rose but condos and townhomes declined.
The Aspen/Snowmass Village real estate market is experiencing remarkable strength, driven by a multitude of factors: amenities, location, recreational opportunities, and overall quality of life. Limited inventories coupled with strong demand has pushed prices ever higher. The stock market has been performing well, partly due to advancements in AI, and that has accelerated wealth appreciation for high income households. If the 2017 tax cuts are extended by the new Republican Congress and incoming Administration, it could further boost portfolios and enhance the appeal of the Aspen/Snowmass Village area even more. Dr. Eisenberg comments: “I have run out of superlatives to describe the vitality of the Aspen and Snowmass Village real estate market. While much of the country continues to see a weakening in the housing market, Aspen/ Snowmass buyers show no signs of stopping their fascination and willingness to pay ever higher prices to live in one of the most desirable parts of the world.”
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