The Aspen Board of Realtors Market Update Luncheon recently featured economist Elliot Eisenberg of Graphs & Laughs, offering a comprehensive economic analysis and predictions for the Aspen real estate market. With a focus on disposable personal income, spending patterns, and broader economic indicators, Eisenberg provided valuable insights into what the future may hold for Aspen's real estate landscape.
Eisenberg opened with a discussion on the changing landscape of disposable personal income. He highlighted a potential divergence between spending and income growth, with spending maintaining its trajectory while income growth lags behind by approximately $1 trillion. This discrepancy, coupled with a lack of savings (3.5-4%), raises concerns about the financial health of consumers.
Eisenberg pointed out a concerning trend of rising credit card spending, particularly among the bottom 20% of the population, who are grappling with financial challenges. In contrast, the top 20% still possesses considerable financial resources, contributing to a growing wealth disparity. This divide has a significant impact on Aspen's real estate market, likened by Eisenberg to the economic dynamics of Manhattan.
Market Influences: Stock Market, IPOs, and Billionaires. The economist underscored the influence of the stock market and Initial Public Offerings (IPOs) on Aspen's real estate market. With the super-rich amassing a larger share of income (7% compared to 1% in the 1960s), Eisenberg explained that this increased wealth enhances their ability to make significant property investments in Aspen. This phenomenon has contributed to the consistent upward trajectory of home prices in the area.
Eisenberg delved into the global economic landscape, expressing concern about potential recessions in the UK, Europe, and Japan. While he acknowledged the likelihood of a mild recession, he highlighted that Aspen is somewhat protected due to a 33% decrease in real estate prices since 2023.
The economist expressed concerns about the inverted yield curve and its historical correlation with recessions. He emphasized the importance of the Federal Reserve's actions, noting that if they respond swiftly, a recession might be averted. Additionally, labor market strength is crucial, and rising unemployment rates could signal a recession.
Eisenberg outlined three key factors that would NEED to happen in this country to avoid a recession: increased labor force participation rates, more legal immigration to support those higher labor rates, and higher labor productivity growth. He stressed the importance of these factors in influencing wage growth and the Federal Reserve's decision-making.
Despite concerns about a general economic recession, Eisenberg provided a more optimistic outlook for the real estate market. Existing home sales are expected to increase, and the construction sector, while facing challenges, shows signs of resilience. The real estate market, according to Eisenberg, has already weathered economic downturns, with no indications of a bubble. If there was a real estate recession, it already happened, he said, even if there is a recession in the greater global economy during 2024.
The economic insights presented by Elliot Eisenberg at the Aspen Board of Realtors Market Update Luncheon shed light on the complexities and nuances shaping Aspen's real estate market. As the local market navigates potential economic challenges, the key will be adaptation and a keen awareness of global and local economic indicators. Investors and real estate professionals in Aspen can leverage these insights to make informed decisions in a dynamic and evolving market.
