Aspen Snowmass Sotheby's International Realty President Andrew Ernemann Shares Expert Insights on Aspen Snowmass Real Estate Market

725 Aspen Valley Downs Road, Woody Creek, listed with Chris Klug.

Andrew Ernemann, president of Aspen Snowmass Sotheby’s International Realty.

As president of Aspen Snowmass Sotheby’s International Realty (AspenSnowmassSIR.com), Andrew Ernemann has a wealth of knowledge regarding buying and selling properties in the Roaring Fork Valley, overseeing more than $2 billion in real estate transactions each year. We check in with the industry insider for his insights.

What trends are you observing in the Aspen real estate market? Have buyer preferences evolved over the past year?

In the Aspen-area real estate market, there’s always this pendulum going between buyers and sellers. Are we in a buyer’s market? A seller’s market? This pendulum swings based on what’s happening in the world and the economy. Right now, we’re at this interesting intersection of emotion and investment. Coming out of COVID the last couple of years, a lot of people made a life decision, an emotional decision or a psychological decision to spend more time in places like Aspen and resorts all over the world. In Aspen, our local community economy has been a big beneficiary of a tremendous amount of social capital for different people coming to Aspen and spending increasing amounts of time or moving here full time. We’ve certainly had (like many resort markets) a big post-COVID surge in real estate. There are still many trends that continue even after four years. One of those is our very high-end, ultraluxury market. At Aspen Snowmass Sotheby’s International Realty, we are a big part of this, and because of our brand, who we are, our reach and our agents, we’re very plugged in with the top end of the market. And we’ve seen not just our business but also the market hit new highs in terms of prices. It’s the sheer quantity of people making those purchases and sales because every transaction has two sides.

Just the sheer number of sales, over $20 million, has dramatically changed compared to pre-COVID, and that is what I refer to as the intersection of investment. People are moving here primarily for more emotional reasons, but when they’re making a purchase or selling a property for $20 million, $50 million—and in one case this year in Aspen over $100 million—that’s not just emotion. These are sophisticated buyers who have built their wealth in various ways. When they’re spending a high amount of money such as this, they very much look at it as an investment. They’re considering the rentability of the property, the trajectory of the market, what the historical perspective has been on prices and how likely they are to go down soon. What’s the historical perspective on prices in the market? How likely are prices to go down soon? These buyers work closely with their investment advisors considering how purchasing an Aspen property fits into their current portfolio. The trend of viewing it more as an investment has become more acute than in the past, where it used to feel like it was one or the other. It was like coming out of the Great Recession, people only think about price per square foot and the economy. And then we got into this golden stretch of 2015, just pre- COVID, where it was an excellent functioning market. It felt like people were buying because they spend time and create memories. And now, people are focused on both. That’s been an interesting thing to be a part of.

As we look to the next couple of years, what do you think buyers should know?

Buyers, in general, tend to feel comfortable when they’re informed. I grew up in Aspen. Sometimes our clients from places outside the Roaring Fork Valley think a real estate agent is just someone to let them into properties and fill out the contract. We have to get past that stigma. I was just meeting with a seller’s agent a few minutes ago, talking about the value they added in a recent transaction. [Other] professionals, whether that’s a real estate attorney, a land use consultant, engineer, contractors or title company, all have their pieces. There’s a symphony that brokers contribute to a real estate transaction. I think, going forward, what’s even more important is how we as real estate professionals distinguish ourselves as just that. We are trusted advisors for our clients. At Aspen Snowmass Sotheby’s International Realty, we educate our agents so they can help their clients navigate all the changes occurring in Aspen with issues like land use codes, construction and requirements for affordable housing. A constantly-changing market is a challenge, but it’s also a real opportunity for our agents who are top-tier and well-positioned to be the expert advisors their clients deserve.

I think that speaks to the following question: What are some of the most significant challenges— whether it’s land use, understanding that and those laws changing—over the next few years in Aspen, and how has your team helped clients address those challenges?

Let’s rewind two or three years ago, coming out of COVID. The big challenge, the buzzword, was short-term or vacation rentals. Vacation rentals didn’t receive as much attention or scrutiny in the years prior. The local government and other municipalities wanted as many hotel units as possible so visitors could come here, and we wouldn’t have as many vacant condos, penthouses or homes. Well, the surge that COVID brought to resort markets like ours changed that completely. The complexities around the cost-benefit trade-off of short-term rentals make it a hot topic. The complexities around that facet of our business now are much more complex. You have to consider not only the agents handling the rentals but the clients who are buying or selling a property and are interested in that investment income. Our agents are able to offer their clients expert advice, telling them where to go and what to do so our clients are set up for success. In addition, our agents remain experts on the changing energy codes, which is important in each municipality in the Roaring Fork Valley. How do we build carbon-neutral or net-zero homes? How can we be more energy sustainable and energy thoughtful going forward? That’s tricky in our market because you may have a buyer who’s looking at a home in the city limits of Aspen, another home in Snowmass Village and another home in unincorporated Pitkin County. All three areas have different requirements and regulations for short-term rentals and energy codes for buildings. The third issue has recently become more significant in Pikin County. They’ve scaled back from being able to build up to 15,000 square feet to now less than 10,000 square feet, which is still a huge home by any standard. For somebody who’s accustomed to it—and we have a lot of clients who are accustomed to much larger homes now—their options have become more limited. On the flip side, if you own a 13,000- or 15,000-square-foot home, that’s a rare property because you can’t re-create that again, right? That changes the supply-demand dynamic. There’s this constant evolution of, what are we? Who are we as a community? I think that’s something our buyers and sellers don’t think about when directly in the transaction, but it does impact them in so many ways. Our service industry—for restaurants, for retail—our traffic challenges, getting people in and out of town, all those things impact life here. That’s the piece that I feel is most critical—but also proven over time to be very special in this area. You have all these different voices and opinions and challenges and opportunities. Still, over the last many decades, we have somehow come together in a way that continues to make our town and our location a desirable destination. And I think that will continue to be something we do as part of the real estate industry, which is a significant industry for our valley. We need to be thoughtful with those discussions and what we bring to the table.

“I’m confident we have more off-market listings at our fingertips than any other firm, mainly because of the size of our company. Being the largest in the valley, there’s a huge value to that.” –ANDREW ERNEMANN

For a new buyer entering the Aspen real estate market for the first time, what critical advice would you give them?

Get educated. Find a real estate professional who can hold your hand. There’s a lot of rhetoric out there with changes to how the real estate industry is governed. The impacts of the National Association of Realtors settlement, that has some trickle-down in terms of the mechanics of how buyers work with agents and how agents get paid with buyers. It’s easy for a buyer to go back to what I said earlier, saying that a real estate broker is not that viable in terms of the overall equation—‘I can do it myself. I can go directly to the listing agent. I can go directly to the property owner or seller.’ There is a segment of buyers who are sophisticated, savvy or experienced enough, or have enough other people around on their team that can work for them. Ultimately, we are in a market where on just one block, a home can sell for $1,700 a foot and three houses down, a home can sell for $3,700 a foot. Why is there a value difference in a market where getting a demolition permit is nearly impossible? Why that is, the time frame and implications, are all things we, as real estate professionals, talk about. Our Aspen Snowmass Sotheby’s International Realty agents know the market, know the business and create value. Creating value is the piece that matters most for our clients. I think it’s important for buyers to understand a real estate agent provides value by sharing the complexities of the local market. Inventory is still at historically low levels, even though it’s gone up over the last year. One of the things we’ve done at our company is assemble a great internal database of off-market listings, and I’m confident we have more off-market listings at our fingertips than any other firm, mainly because of the size of our company. So if I’m a buyer, I’m looking and I say, ‘All right, I see the home that I like, or the three homes that I like, and I’m just going to show up and take a look at those. I’ll reach out to the listing brokers, or I’ll find a buyer’s agent to represent me.’ Our agents can uncover something that’s off-market or help a buyer understand the intricacies of the negotiation process here and then ultimately determine the buyer’s opportunities to make sure it’s the right property for them. I don’t believe many buyers put enough credence in how important it is to be educated. The truth of it is, buyers don’t make decisions when they’re uncomfortable or not confident. They may not realize that’s why they’re not making a decision, and that’s where our agents come in, giving their buyers every advantage.

Are there any promising investment opportunities in Aspen’s real estate market that you would spotlight or highlight?

73 Hideaway Lane, Aspen, available for rent, listed with The Team

That’s a great question, and it’s funny because our clients generally fall into two different categories. I’d say that most clients are looking for that special property, whether it’s for themselves or their family or multigenerational. A lot of our clients, even the ones that fit in that first box, still want to find a good investment. They want something that’s a deal or something that they feel they’re getting an inside track on—or a better deal than somebody else. It is a little bit foolish to say, ‘Here are the two or three incredible investment opportunities’ because that’s different for one buyer than it is for another buyer. What I’ve learned in my many years of various roles in real estate in Aspen is there’s always [opportunity] no matter what the market is, how much prices have gone up or continue to grow, or how tight the inventory is. There’s always a seller who may not be broadcasting to the masses that they’re ready to sell, and they’ll sell for 30% off their list price. There’s always a property that maybe 300 people have sort of looked over and not seen an opportunity that the 301st person sees or that a particular real estate agent has uncovered and figured out an angle for it if it’s a redevelopment or remodel that maybe somebody else didn’t think of. There’s never-ending opportunity for buyers. This, again, goes back to why they should be represented by an agent who can help navigate the market with them, whether it’s a home or a commercial investment. Commercial property management is in even tighter supply and an even harder thing to get your head around from an economic standpoint. Aspen commercial properties trade at very high multiples compared to other commercial real estate markets around the world. The people who ultimately get it understand this is a long view. If you said, ‘I want to buy something and be able to flip it and make a good investment on it,’ that’s typically not our market. But if you said, ‘I want to buy something and have an indefinite hold period. I might want to sell it in three to five years. It could be 10 years, it could be longer,’ that’s where our market has proven to be a successful place to own real estate. There are very few windows of time, maybe only one or two in the last 30 or 40 years, when people bought property in Aspen and it was a longer period of time before they could resell for a profit—or at least got whole on their investment. When somebody comes in investment-oriented first, saying, ‘I only want to deal, and if it’s a rainy day three months from now or a year from now, I want to be able to sell and be covered,’ that’s not really how this market functions.

This Nettle Creek Road property in Carbondale elevates the Colorado standard of living, listed with Scott Bayens. P

In terms of fluctuations and interest rates in the stock market, how do you see that play out in the Aspen market?

It’s such an easy catchphrase that I unfortunately feel like many locals and local real estate professionals talk about how Aspen’s always the last in and the first out of both recessions and that Aspen is immune. You’ll hear people say that Aspen fluctuates less, and it really just depends. During the Great Recession, real estate prices dropped 30%-plus in a few areas outside of Aspen in the Roaring Fork Valley, as much as 40% or 50%. I don’t know of another time when that significant of a drop occurred, and in some cases, over about two to three years. I think there’s only one or two other times over the course of the last 30, 40-plus years where prices dipped a little bit, a few percentage points. We’ve seen prices come back and far exceed where they were before the Great Recession. I do think, as a general statement, we’re not as interest rate sensitive in an immediate sense. Many of our buyers are buying in cash, but even though buyers are buying in cash, that money’s coming from somewhere. They’re leveraging it elsewhere, or they’re getting private institution loans in other ways, or they’re cross-collateralizing. So, interest rates still impact our market. The overall economy and the stock market definitely impact our market because that is where much of our wealth and the wealth of the people who buy and sell in our market come from. Global events impact our market. Over the decades, we’ve seen shifts over a period of time. If you go back to the ’80s, we had a lot of oil and gas people, primarily from Texas and the Midwest, buying in Aspen and Snowmass. They were flush. Then, in the ’90s, it became more Hollywood, with many buyers from California and Chicago with cash. We had a lot of financial people in the early 2000s coming from New York and the East Coast and some from San Francisco and the West Coast. Today, our market seems much more diversified, both nationally and internationally. The international part is still slightly more demanding, depending on currency fluctuations. We’ll get a lot of Australians when the currency fits for them. We’ve gotten more and more Mexicans when the currency fits them as well. We don’t see as many Asian or European buyers in the Aspen area. We’re a little bit less permeable to short-term fluctuations in stock markets and interest rates because of the diversified owner and buyer pool here, but it still impacts us.

How do you manage the high expectations of this clientele, and what do they prioritize?

Our mantra at Aspen Snowmass Sotheby’s International Realty is the client comes first. It’s right in our mission statement. When we think about the minutiae of each agent or individual transaction, there are always things we could do better or differently. Everybody learns and gets better as they go. Broadly speaking, as a company, our goal remains pretty consistent. We really want to serve our clients first; we have a great team of real estate agents, supported by a foundation of great professional staff. I think that’s true in so many different service-oriented, sales-oriented businesses. When you lose your direction off of that path, then it becomes tricky. We have a lot of hard things to tackle with changes in our industry, changes in our market, changes to client preferences—how they do business, how they want to interact and how we service them. Ultimately, we just keep returning to ensure we create value for our clients.

Sustainability is a massive focus in this market and a growing concern globally. How are you seeing this reflected, and how are properties adapting to be more environmentally friendly?

There are a couple of facets to this. One is the properties themselves. We’re seeing what is built within the city of Aspen and Pitkin County, and the different municipalities fighting for building codes and energy standards. It’s forcing architects, contractors and the end user (the person building the home) to be creative with how this home is energy efficient. How do we use more sustainable materials? Aspen’s been an excellent place for that because—in many cases—there’s enough money behind the project that they can spend a little bit more to make it more energy efficient or sustainable. We’re fortunate in that way. There are a lot of areas around the world and in the country where the least expensive methods are what gets built. We see some innovative designs and ideas that can be copied and utilized elsewhere. The second is more broadly looking at the impacts of CO2 emissions or traffic. What do all of these other impacts on the real estate industry and the built environment locally have on the global climate—certainly our local environment. That’s bigger than just what we can tackle alone as agents or as a company. That is our most important area of focus—outside of servicing our clients and their needs—going forward, to be at the table and be thoughtful about those conversations.

There are numerous incredible nonprofit organizations in the Roaring Fork Valley, and our company has been finding ways to support the organizations that enhance the lives of people who live, work and enjoy our valley, as well as those organizations that are aligned with real estate, and with our clients’ needs regarding how they may best enjoy their lives here.