I found the news this morning that a Picasso set an auction record last night a very interesting fact in this economy. With the unending doom and gloom surrounding not only the US economy, but the world's economy, the news that an intense bidding war propelled a 5 x 4 foot painting to sell for over $106 million is quite a statement about where we really are economically.
The US economy is showing other signs of renewed spirit. The economic statistics have been showing signs of improvement. Consumer spending has been rising. Job numbers are starting to improve, and I am hearing that real estate in urban areas is picking up quite nicely.
For those of us who deal in real estate in resort communities, i.e. second home markets, these signs are encouraging, but we have yet to see the actual numbers picking up. I liken this to the tail of the dog. The dog is showing improved health, but he doesn't start wagging his tail until he is all better. Our market is the tail of the dog. When people are under financial duress, they do all they can to protect their primary residences. The second home market, unfortunately, won't show signs of improvement until after the primary home market improves. We are seeing that now, so hopefully an uptick in our market isn't too far behind.
Back to the painting. The commission for Christie's on the sale of this painting was 12%, or approximately $11.4 million. Not even considering the outright sales price of the singular work of art, let us examine only the commission on this sale. $11.4 million in Crested Butte real estate can buy you a $4,750,000 spectacular house on 35 acres close to town. It is over 9000 square feet, has high end finishes and spectacular views overlooking Long Lake. $5.9 million can buy you a ski-in ski-out house that has the finest details in finishes on 1.5 acres, and its own indoor pool and putting green. Or, you could buy both houses and still have $750,000 left for furnishing them, including the artwork.
(Diane Aronovic is a former Managing Director at Bank of America Securities, and a real estate agent at Red Lady Realty in Crested Butte, CO)