Dear Friends, Clients and Property Owners~
What a tumultuous year for our national and global economies! Although many in Telluride have considered our community an island, relatively unaffected by outside influence, there is no doubt that volatile paper markets have negatively affected our real estate economy. Through the end of November, gross dollar sales are down 54% and incidents of sales down 47%. The Historic Town of Telluride has experienced sales of $87.2M as compared to $164.3M a year ago and the Telluride Mountain Village sales of $151.9M vs. $309.9M in 2007.
There is a silver lining to our market’s sluggishness: Price levels have not noticeably declined during the past year, with the percentage of settlement price vs. asking price at 91.1% relative to a year ago at 92%. The average sold price per square foot for a single family home in Historic Telluride has risen 12% and in the Telluride Mountain Village 1% YTD. We have experienced at least a half dozen economic downturns during my 37 year tenure in Telluride (although none as volatile as the present) and our marketplace is responding as it has previously - - slower sales with stable pricing. There are several reasons why Telluride has become a “safe haven” for capital:
· A vast majority of Telluride owners have not leveraged their ownership and are under no pressure to sell.
· Telluride is an upscale, non-speculative marketplace.
· Investment is made in the Telluride lifestyle as much, if not more, than the bottom line.
· Supply is severely limited and quality tightly controlled.
· Diverse demand for property emanates from local, regional, national and international markets.
Another characteristic of our market is its ability to rebound in advance of a full recovery of the national and global markets. There are winners in every downturn and those winners will seek the stable and proven havens for capital and lifestyle in the Rocky Mountain West. Those who have experienced “paper losses,” will also gravitate to mountain resorts at the first sign of a positive economic recovery.
Other factors point to a positive marketplace in the medium term:
· The Rocky Mountain region is the fastest growing area in the country for persons between the ages of 40 – 60 - - the baby boomer generation.
· With this migration, it is just not secondary homes being purchased, but primary homes for retirement, as well.
· Key factors for this relocation include attractiveness of an abundance of public lands, controlled growth with sensitivity for the environment, a lack of vehicular traffic and low crime rates.
There are isolated buy opportunities which investors are focused upon, but in general, what has been said about the Aspen market is also true related to the Telluride market - “Today’s price may have been last year’s record, but in a flat, stagnant market, that price is still today’s record… and historically, it will be tomorrow’s discount”. For those seeking the bottom of the market, they will have found it only when price levels rise again which will be too late for “perfect timing”.
We look forward to seeing you in Telluride this winter.
TD Smith & Chris Sommers