Real Estate Deals Up in September

Thursday, October 18, 2012

September so far has been the biggest month in 2012 for Aspen real estate sales and that is translating into a better year than expected for tax revenues that fund the Wheeler Opera House and the affordable housing program.
Last month, there was over $56 million worth of properties sold that qualify for the Real Estate Transfer Tax (RETT), a 1.5 percent tax due on the purchase of property within the city limits. One third of RETT revenues go to the Wheeler Opera House while the rest is dedicated to the affordable housing program.
September’s RETT brought in $845,000, making the total amount garnered this year just over $3.8 million. Prior to September, revenues from the tax were 18 percent below what the city budgeted for 2012. That number has since dropped to about 9 percent, according to a sales tax report released by the city of Aspen’s finance department.
“It’s improved the outlook considerably,” said Pete Strecker, the city’s assistant director of finance, at a recent meeting. “And hopefully that translates to a better number for 2012.”
The city’s finance department budgets conservatively when it comes to the RETT, because it’s difficult to predict what will happen in the Aspen real estate market, said City Finance Director Don Taylor. Prior to the recession, RETT revenues peaked at $8.4 million in 2006, but have since dropped to as low as $3.9 million in 2010.
September’s spike in real estate sales is likely due to the fact that many contracts initiated during the summer months don’t close until the fall, said Andrew Ernemann, a broker with BJ Adams and Co.
Although September sales were strong compared to last year, one month is a relatively small snapshot of the entire real estate market, Ernemann said. It’s not uncommon to see wide fluctuations in those kinds of comparisons, he said.
Overall, the market has been consistent throughout the year, with sales gaining momentum recently, Ernemann said.
“We are having a year that I would say you want to have, because [the market] doesn’t fluctuate widely,” Ernemann said.
Last year, that wasn’t the case, he said. In 2011, the market was unpredictable with most sales happening earlier in the year and a large number of properties selling for more than $10 million. This year, sales have been steady throughout with fewer high-priced properties selling. Ernemann said sales dollar volume is catching up to 2011.
“I think it is a good sign of what’s ahead,” Ernemann said. “We’re in a more stable market.”