One of the best perks of being the President of the Aspen Board of Realtors is getting the insider’s scoop. While in Washington D.C. I met with the Vice President of the National Association of Builders as well as the Chief Economist for NAR, Lawrence Yun. Yun is recognized as one of the top 10 economists in the United States. This is what they had to say.
Building starts are still down from a norm of two million new homes per year. Of the 1.4 million new homes that were actually built, 500,000 were built as rental housing. Virtually zero units were built as new condos, further inhibiting the opportunity they offer to first- time home buyers. The reasons given for lackluster building starts are: shortage of tradesmen whom have gone into the energy sector, shortage of available developable property, skyrocketing material prices and tight lending requirements.
From the residential consumer angle, Yun said the #1 Challenge in the current real estate market is inventory. Prices are up and continuing to rise, but affordability is becoming an issue. The rental marketplace has grown 12% in the last year, with rents rising 7 years in a row. Vacancies are down to 4% nationally. Normally 30% of the Buyers of real estate are first time home buyers—right now first-time home buyers account for only 14% of the market.
With fewer first-time home buyers and more renters, existing homeowners are gaining more wealth exponentially. More transactions are all cash deals, with homeowners buying more vacation homes than ever before. I found this of particular interest, because although I would call the Aspen market hot, I wouldn’t say it’s on fire. On the other hand, Down Valley, meaning Basalt, Carbondale, and Glenwood Springs are definitely on fire!!