Aspen worker housing remains in demand
The Aspen Times
ASPEN – Aspen’s worker housing, a quirky segment of the local real estate market, finished 2010 with 74 sales totaling $16.9 million.
The final two sales of 2010 closed last week, capping a year that closely paralleled activity in 2009, when 72 sales worth $14.9 million were recorded, according to data compiled by the Aspen-Pitkin County Housing Authority. The totals don’t include units that were sold directly by an owner to another worker.
While worker housing remains somewhat insulated from the recessionary bust that has hit the real estate market in general, it has not proven immune to economic forces. The number of prospective buyers entering lotteries for worker housing has dipped, and sales are no longer automatic for the highest-priced homes within the housing authority’s inventory (one has been on the market for more than a year). In addition, sellers aren’t virtually assured they’ll get the maximum price possible for their unit anymore, at least within the pricier tiers of worker housing.
“It’s a buyer’s market right now, even in deed-restricted housing,” said Cindy Christensen, housing operations manager.
The housing authority oversees roughly 2,800 deed-restricted housing units that are set aside for qualified workers, including about 1,300 rentals and 1,500 ownership units. Among the ownership units, annual sales are driven by what happens to come on the market because an owner wants to sell or because newly constructed worker housing is offered for purchase for the first time. There were no new housing developments in 2010, but 2009’s numbers included nine new units at the Pacific Avenue Condominiums that were sold for the first time.
Ownership units are divided into categories 1-7, each with its own price range and asset/income caps for buyers, plus RO, or resident occupied, housing – the most expensive worker residences. Annual appreciation on most of the ownership housing is capped at a set rate, to keep it affordable for successive buyers.
The lower-priced housing in the worker housing market continues to see the greatest demand, as a rule, though the number of “bidders” – individuals entering a lottery for a chance to buy a unit when it comes on the market – has slacked off. The market for the higher-priced categories 6 and 7, and RO housing, is even softer, in part because buyers can now find housing on the free market in the lower valley for the price of the more expensive deed-restricted units, according to Christensen.
“It has really slowed down for the higher end, but in categories one through four, we’re still getting takers,” she said.
A category 2 one-bedroom, one-bath condo at Annie Mitchell Homestead near the Aspen Business Center, priced at $101,983, drew 30 bidders this year. Similarly, a category 3 one-bedroom, one-bath unit at Benedict Commons in downtown Aspen, priced at $144,813, drew 40 bidders.
Also this year, a one-bedroom, one-bath Centennial condo priced at $145,055 attracted 22 bids. However, two years ago, a similar unit priced at $134,306 lured 74 bidders.
A category 7 three-bedroom, two-bath unit at Burlingame Ranch, priced at $489,266, attracted just two bids this year. Another similarly sized category 7 residence at Burlingame drew just one bid. Those sorts of odds of winning a housing lottery, once unheard of, were commonplace for the pricier units at Burlingame this year. Even participants in the lottery for a category 2, one-bedroom, one-bath Burlingame unit, priced at $96,309, had a one-in-16 chance at winning.
Burlingame Ranch, however, is outside of town, across Highway 82 from Buttermilk. Worker housing in Aspen proper remains the hottest draw, even if it’s pricey. An RO unit at Trainor’s Landing at the base of Shadow Mountain, a three-plus bedroom, 3 1/2-bath townhome priced at $985,974, drew 10 lottery participants.
As the city of Aspen contemplates construction of phase 2 at Burlingame, the City Council has discussed the pre-sale of the next round of housing there – lining up interested buyers as a first step, rather than simply building the housing and putting the units up for sale through the lottery process.
And, starting next year, the housing authority will require individuals who want to enter lotteries to prequalify with a lender to speed up the sales process and ensure that they have a reasonable chance of securing a loan.
Prospective buyers of affordable housing, much like their counterparts in the free market, are finding banks increasingly tight when it comes to lending, even though the housing authority buys back any unit that goes into foreclosure in order to keep it in the worker housing pool.
“These really are no-risk loans,” Christensen said.
Local bankers understand, but out-of-state underwriters do not, and wariness over the deed restrictions placed on worker housing has become problematic for some buyers trying to get financing. Housing officials hope to bring bankers and underwriters together next year to explain the program, according to Christensen.
While the housing program has seen few foreclosures, the three that occurred this year are somewhat unusual, Christensen added. Housing officials urge owners to put their unit on the market and get their equity out of it instead of letting it go into foreclosure, as most units in the program’s inventory are still certain to sell if they are offered through a lottery. Higher priced units, however, might not fetch the maximum allowed price under the housing program’s appreciation caps.
“I don’t know if you’d actually lose money, but you might not gain as much equity as you thought you would,” Christensen said.
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