CURRENT TELLURIDE REAL ESTATE MARKET CONDITIONS
Updated April 2015
The 2014 Telluride Real Estate Market outdid each of the previous six years and was the best Real Estate sales year since Pre-Recession. 2015 has sustained this sizzling pace through the first quarter. The town on Telluride is on fire. A few quick market highlights: March 2015 condominium sales in the town of Telluride were the best month in that segment for over six years with 16 sales at over $14 million. 2014 Mountain Village home sales were up a whopping 300% over the previous year.
Overall, the 2014 Sales year eclipsed 2013 by an impressive 48% in Dollar Volume and 28% in Number of Transactions. With 2015 cruising along, it is good to see sustained action in Mountain Village, which is certainly aided by the addition and marketing prowess of the Residences of Hotel Madeline. In fact the Madeleine has sold 8 units since its January launch. Even better is the activity in vacant residential land sales in San Miguel County (does not include Mountain Village or town of Telluride) in the first quarter of 2015, with the number of transactions up 375%. Wow, but can we continue to sustain this pace and return to the pre-recession sales levels?
Specific property sales highlights in 2014 are: The Hotel Madeline Bulk Sale, Oprah Winfrey’s $10+ million purchase of a large Trail Side parcel in Mountain Village, off of the Marmot Ski Trail, Valmore at 40 Granite Ridge at $9.3 million and the commercial lot adjacent to Telluride’s Post Office at $5,800,000.
The biggest question as we further examine the local marketplace: Will Buyers accept that prices have gone up and the investment necessary to be member of Telluride community has increased and in some cases significantly? Bank owned sales, short sales and highly motivated Sellers are increasingly uncommon.
The past prediction of an uptick in sales in previous summaries is now truth and because of Telluride’s remote location and overall lack of inventory, the level of sales activity has turned our entire market from negative to positive, in dollar volume, number of transactions and most importantly the mental perception that many Buyers and Sellers have. The residential town of Telluride is as strong as it’s ever been with fifteen sales at over $1,000 per square in 2014, versus five in all of 2013. There currently are just two homes listed for sale under $1.5 million in Historic Telluride, and we are at half the inventory levels of the average of the last five years.
All of these strong indicators have led to the bottom of the market being reached in all categories except vacant land, but even that market segment is starting to shift. After seeing 2014 hit solid numbers and 2015 sustain that pace thus far, it has been determined that improved property submarkets have rebounded well off the bottom and some are even approaching historically high levels. There are diminishing sales in our marketplace that reflect a variety of desperate Sellers, including Short Sales and Bank Owned/REO properties, which are at their lowest levels since 2008. The prediction is that as these deals vanish, Buyers will revisit land, to build their dream home. At an approximate cost of $400-$450 per square foot to build, the cost to replace is more affordable than buying an existing older home, (certainly in the town of Telluride) both in values and the efficiencies of operating a new home. And in most cases this is true in Mountain Village as well. This aspect should lead to better sales activity in neighboring subdivisions, such as Elk Run, The Preserve, and Aldasoro, among others, as the pricing in these segments currently fall below replacement costs and the end user gets exactly what they want.
Confidence from Buyers continues to increase because of these recent positive indicators that are now sustained. Unless you want to land bank or build your dream home, the investment levels for owning in Telluride have been and are increasing by the season. Despite this activity, Buyers still attempt to purchase properties at unreasonable prices and the result has been a waste of time and losing out on desired properties. The majority of strong Sellers who are not forced to sell and own a high level of equity in their Telluride property still result in a stalemate at the higher end of the pricing scale, but make no mistake there have been significant sales that reward patient Sellers.
Buyers want one of two things, which confirm our market conditions. The first is lifestyle and the historic town of Telluride provides an incredible lifestyle to enjoy for primary and second homeowners that no other locale can offer. Small, unique, authentic, uncrowded, luxurious, charming, funky, numerous resort amenities, festivals and culture, are just a few of the attributes.
Find me another resort that has all of what the Telluride Region can offer? And people will pay a premium for this. The second is value. And there is a balance between the two, but the priority shift is now favored well towards lifestyle. Buyers will live away from the charm to get the value, but just be a short drive or Gondola ride away. A luxurious Mountain Village Penthouse Condo at $277 per square foot? A large acreage mesa log home at $168 per square foot, just thirty minutes to town? A large ski in/ski out luxurious residence with big mountain range views at under $500 per square foot? A Ski Ranches home at $175 per square foot? These are all proven values that we have not seen in over a decade and sold this past year.
As you look at the past 10 years, the sales pace of 2004-2007 may be on the near horizon; as 2014 fell just 27% below the average dollar volume of that timeframe, vs 51% from 2013.
The summary for both Buyers and Sellers has changed in a far more positive direction for Sellers with less and less availability in excellent values. If a property has a high level of quality, uniqueness, desirable location, features and amenities, then Buyers have proven time and time again, that they will “step up” to pay top dollar, and have exceeded traditional top of the market pricing. Buyers that are less picky, can still find deals out there but the discounts are not as severe. Land is the last category left where Buyers are getting upwards of 40-50% off pre-recession pricing. Telluride continues to have the “IT” factor in both a Ski Resort and summer destination, and Buyers need to act fast, or be prepared to invest more down the road.