Smalls: Prospects for the luxury home market | Company

There are numerous reports from across the country that the national luxury home market is experiencing one of its most dramatic declines in a decade. Defined as the top 5% of homes based on market value, the pre-pandemic luxury home market could be described as sluggish, with markets from the Hamptons to the Aspen-Snowmass area experiencing a glut of properties.

Everything changed with the onset of the pandemic in mid-2020. Driven by a desire to escape the cities, the shift to remote working, the trend towards larger living spaces and ultra-low interest rates, the luxury home market has taken off. It has become one of the most successful segments of the residential market across the country – and locally.

But that seems to be changing in most markets. A recent report by brokerage firm Redfin showed that from June to August (this year), sales of luxury homes in the United States fell 28% compared to the same period in 2021, marking the summer the most recent as having seen the largest decline since 2012 and greater than the 23% decline recorded during the second quarter of 2020 when the pandemic-related lockdown began.

Some of the biggest declines were in markets that saw one of the biggest price increases during the post-lockdown pandemic period. Luxury sales in markets around the San Francisco Bay Area fell 55% to 64% while cities like Los Angeles and Miami saw luxury real estate transactions drop 44% to 56%, respectively. Additionally, the inventory of luxury homes for sale nationwide has increased by 39% over the past year.

What seems to be causing this slowdown? Economists point to fears of inflation, recession and stock market decline. Since many wealthy individuals derive the bulk of their income from equity investments, a declining stock market would have a greater impact on buyers of luxury homes than mid-priced homes purchased on the basis of a wage income. The dramatic increase in mortgage rates is also cited as one of the main causes of the slowdown in the luxury home market nationwide. Mortgage rates have increased by more than 100% over the past year, from a historic low of 2.75% to an average of over 7%. Overall, higher interest rates make investing in luxury homes less attractive than fixed income securities.

What’s Happening in the Aspen-Snowmass Market? By national standards, almost any property in the Aspen-Snowmass area could qualify as luxury homes. But if we look at properties valued at $15 million and above, we see a similar downturn pattern evolving in the Aspen-Snowmass market. Before the pandemic in 2018 and 2019, the number of high-end market transactions in the $10-15 million range (and above) averaged one to two per month. During the pandemic years of 2020 and 2021, this average number of transactions averaged four to five per month, more than double. In the first five months of this year through the end of May, the number of residential transactions over $15 million averaged six per month. Since June 2022, however, that average has dropped to 1.6 per month, in line with what was common before the pandemic.

Although the number of luxury property sales is declining across the country, prices have so far failed to follow suit. In fact, Redfin reported that from June to August, the median price of luxury homes across the country rose 11%, down slightly from the 20% increase over the same period in 2021. Although listing price reductions have become common in the Aspen-Snowmass market, there is still no evidence that values ​​are dropping into the upper price range. In fact, at the time of this writing, there are 16 pending sales of properties priced over $15 million (for a total of $350 million), four of which appear to be firm contracts and 12 are conditional.

It may be too early to tell how much the luxury market has slowed down here in the Aspen-Snowmass area.

Lori and William Small are recognized experts in commercial and luxury real estate at Coldwell Banker Mason Morse in Aspen. They can be found on their website,, or by email at [email protected]