Ah, Aspen, a SecondShelters.com paradise of stunning ski homes owned by some of the world’s wealthiest and most glamorous travelers who desire the pleasure of a winter retreat in the snow.
This dramatic vacation home was previously owned by newscaster Paula Zahn and real estate magnate Richard Cohen who sold in 2007 for $14.5 million as part of their divorce but bought the property for just $3.8 million in 2000. The transaction was one of the 10 biggest deals in Aspen in 2007.
I know we just broke the 70 day plus cycle of 100 degree plus days in Dallas but really, it’s time to start thinking about ski season. Jack frost is just around the corner and so much more bearable when you have your own private ski house. Or, in this case, $48,500,000 Aspen estate.
Jigsaw Ranch is a riverfront family compound nestled serenely on 80 acres in the Castle Creek Valley, located just minutes from downtown Aspen. The property features two main houses, a guest house, a log cabin and gatehouse, and ample accommodations for both family and friends. Fully remodeled and renovated to perfection in the late 90’s, a separate 1,500 square foot guest house is also included (and perfect). The second main residence is a newly completed, magnificent contemporary estate designed by Charles Cunniffe Architects, known in Aspen and Telluride as the contemporary architect to the rich. (His name adds at least fifty grand to the sales price!) A 750 square foot guest house/caretaker unit greets visitors at the entrance. With 12 bedrooms, 15 bathrooms and four partial baths, Jigsaw Ranch is a rare buying opportunity for a family to create a legacy for children, grandchildren and great-grandchildren.
And if you get sick of everyone, not to worry. The spread is so big you could lose whoever you wanted to lose for days. Maybe years!
Steven Shane had a twisted holiday this year. The Aspen, Colo., real estate broker, who graduated from selling snowboards to multi-million dollar ski chalets, handled one of the most complex deals of his real estate career over the holidays. End of the year, the rich go shopping for real estate. The sale of a simple duplex turned into a six-sided transaction worth nearly $12 million and dragged in buyers from the United Kingdom, California and Colorado. All that to unload one little half-duplex in Aspen, CO.
It is no secret that the second home market is hurting — hemorrhaging — even more than the primary residential market.
Terry Weaver, chief sales officer and partner in 3rd Home, says 79 million baby boomers reached their earning peak in 1997 and began to buy second homes. Home values skyrocketed, creating a bubble, as buyers bought for investment, not enjoyment. Weaver told journalists at recent panel discussion of the vacation-home market during the annual conference of the National Association of Real Estate Editors in San Antonio that the last four years have been the biggest challenge ever for this market. EVER.
To be sure, few second home developments are starting. I was talking to Dallas Addison today, shareholder/parter at the Addison Law Firm that handles not only golf and resort assets across the country, but also invests in luxurious second home developments. The firms’ latest is one I am dying to see and bring to these pages: The Preserve at Flathead Lake near Kelispell, Montana — the largest natural freshwater lake west of the Mississippi, a Glacier lake. Or as Dallas describes it, a Cowboy Lake Como.
Most golf clubs in the U.S. right now are under some kind of financial pressure, says Addison, though he has seen bright spots, one being a golf resort in Amelia Island, Florida that members took out of bankruptcy and turned around, and another in Scottsdale. The key seems to be in demographics: those half million dollar home buyers are having a tough time now, but the multi-millionaires are doing just fine, thank you.
Which brings us back to Steve Shane and Aspen, a bellwether for the luxury second home market. Buyers with big bucks to spend are back, said Shane at that NAREE panel discussion of the vacation-home market. Proof: 18 properties priced at or above $5 million sold in Aspen this year, 2011, versus 14 sales at that price point in 2010. Meanwhile, 26 properties in that bracket are under contract, according to his brokerage, SDS Real Estate. Even better, it’s summer and the Texans are crawling all over Aspen.
Shane told Mary Umberger of Inman News that asking prices have adjusted down in the range of 25 to 30 percent. And the sweetest news: high net worth people who have been on the sidelines for a couple of years are finally getting back in the game.
Like most of the wealthy’s playgrounds, Aspen has never really suffered. In 2009, while the financial world tanked, Forbes magazine declared the town’s 81611 ZIP code to be the most expensive neighborhood in the country. Median sales price: $6.5 million. (Snowmass and Snowmass Village also landed on the magazine’s Top 10 of priciest ZIPs.) But Forbes also said that $2 billion in home sales in the area in 2007 was down 50 percent two years later, in gloomy 2009. In April 2010, Dallas energy exec Kelcy Warren bought BootJack Ranch, listed at $68 million, $88 million originally, for $46.5 in what was 2010’s biggest real estate deal of the year.
Shane thinks we are seeing the beginning of the upswing now: first-quarter sales in Pitkin County are up 39 percent over the same period in 2010; Aspen leads the county in dollar volume, with more than $58 million in sales.
Who’s buying? Take a guess: people in the financial industry, the private-equity guys, the hedge-fund boys, anybody on Wall Street, Silicon Valley. In San Antonio, Shae told us there is a veritable steady stream of private jets from Chicago to Aspen at any given time.
Shane is listing golfer Greg Norman’s 11,000-acre Seven Lakes Ranch in Meeker, Colo. for $55 million. The estate has been for sale for about a year, but he has identified a buyer, and it may be close to a deal, he said.
What’s it like selling to celebs and the super rich? Shane, who’s wife is Christie Brinkley’s sister, says that when working with high-net-worth buyers and sellers, he usually deals with the folks they’ve entrusted to help them run either their business or their personal lives, such as money managers and in-house counsel.
And even the rich, when they want to buy a vacation home in Aspen, have to unload another property somewhere else. Which brings us back round to Shane’s holiday.
Seems a Hollywood producer owned a half-duplex in Aspen, but wanted to trade up. Shane said he didn’t see anything suitable in the MLS, so he contacted the owner of a home not listed, asked if he’d consider selling. He took the half duplex and some cash in trade for his home. But the buyer didn’t want the half-duplex, which almost sounds like having half a trust fund in Aspen. He asked Shane to sell it for him.
Shane knew someone in London looking for a good deal, who he called, who bought the half-duplex, sight unseen.
In dollar terms, he explained, the sale of that half-duplex — by the way all three transactions closed on the same day — Shane represented buyer and seller in each for a total of six transaction “sides”. Total sales about $11.9 million.
Sure beats selling snowboards. Shane says his life as an Aspen agent to the rich and famous requires a pricey overhead to maintain. After all, to serve the rich one needs to be wrapped in their circle of trust (funds). These are not the type of people who drink $25 bottles of wine, Shane told Umberger.
If you are mulling a location for your second home, here’s an article that is like a beacon of real estate appreciation light: the 50 most expensive small towns in the U.S. At first when I read this, I was sad: most of the towns are in New York, New Jersey, Maryland, Washington (state), Cali and Florida. (Jupiter Island, home of Tiger Woods, has been holding court at number two spot for a long time.) Those places are pretty far from me in Texas. But then the investment light-bulb went off. What can we learn from this list about making a sound investment in a second home? Let’s face it, we do not want to buy in a place where values are going to plummet. And no one really expects huge appreciation in this market short term. Long term is what it’s all about, and if I buy, I want a place my grand kids can say, boy that crazy granny of our’s was one smart cookie to buy this when she did. We could never touch this now.
So what do we learn from this list, no matter where we are buying?
1. Buy where other rich people are buying. I know this sounds like “follow-the-Prada” herd mentality, but there is a kernel of truth. Why has Aspen real estate always done so well? Because people with money, who are insulated from market turns and tuggles, live there. They don’t have to sell because they are underwater. They don’t get underwater. They weather the storm and hence, your neighbor’s property values are not about to go into the toilet.
2. Buy near a body of water. With the exception of a ski home, or possibly a mountain retreat, people have a natural inclination to flock to water. (I swear I stared this blog just to be able to buy a beach house all my own, somewhere.) Maybe it’s the evolutionary genes calling us back to the water, but look at this list and find me one spot that is not near water. Yes, there are storms and hurricanes and wood rot and oil spills but has anyone heard about the end of building on Florida’s Gulf Coast? Will Pebble Beach ever be underwater? I don’t think so.
3. Golf courses must be good for real estate value. I’m told that during the boom, a golf course was developed almost every day in the United States, which means we have a ton — way too many, in fact. And golf is a dying game. The younger gen doesn’t embrace it like our gen, and our gen is not even as golf hardy as our parent’s gen. Golf courses have had to make drastic changes to stay in business — go casual, offer amenities, go green. And they are costly to maintain so watch your HOA dues that may be shelling out big bucks for tees. Still, if there is a golf course nearby, it means something for friends to do when they get together. It’s an added plus and besides, the wealthy love to golf.
4. Activities are a must. You can only hike and bike so much, and getting fried on the beach is no longer fun nor recommended by dermatologists. A good second home community is not too far from great shopping, movies, restaurants, equestrian centers, wineries, skiing (if mountains), fishing, boating. One of my sources tells me he is seeking a resort with great snorkeling because not everyone can S.C.U.B.A., but even a 70 year old can snorkle.
5. Find a town where people don’t worry about locking their doors. The town is small but loaded with families. It is safe enough that small kids can have total freedom during the day. We used to ski in Utah at Snowbird when our kids were young. I’ll never forget the freedom I felt when I said, here are the keys to your room, you are free to go anywhere in the resort. We lived in a big city where they had to be shadowed, supervised and shuttled everywhere for protection. How refreshing it was for both of us to be able to navigate in a safe environment, much like most of us did growing up in the 1950’s and 1960’s.
Let’s face it: the value of property in places like Aspen just doesn’t tumble. It may take a hit from peak pricing, but honestly, will the average price of an Aspen home ever go back to $50,000, where homes were years before the boom? The average Aspen home is now about $6 million and the community is so loaded with second (or multiple) home owners, many of these beasts sit empty most of the time. That does not create good community: at least one developer is putting together a neighborhood where full time residency is required.
Alas, now may be the best time to buy in Aspen, where one local agent says people with serious money always seem to float. And if money gets tight, many second home couples are selling primary homes in the city and moving to Aspen full time, which could alter the city’s dynamics all over again.