CURRENT TELLURIDE REAL ESTATE MARKET CONDITIONS
Updated November 2014
The 2014 Telluride Real Estate Market has sustained its torrid pace through the first Three Quarters of 2014. Each of the nine months of 2014 has considerably exceeded the same time period in 2013. Markets outside of the Historic Town of Telluride are showing solid signs of improvement. Can we continue to sustain this pace and return to the prerecession sales levels?
Overall the numbers continue to be extremely encouraging.
September 2014 was up an eye popping 107% as compared to September 2013. August was up 83% in dollar volume as compared to 2013. July was up 167% as compared to 2013! The sustainment of these numbers throughout 2014 has even surprised the Realtors!
As of September 30, 2014, overall sales in San Miguel County are up 70% in dollar volume and 32% in number of transactions as compared to 2013.
With 2014 cruising along, it is very interesting to note, that as compared to 2013, the Mountain Village has finally showed some drastic improvement and taking advantage of the momentum caused by the market in the Historic town of Telluride. For example, there have been twenty sales of Mountain Village Homes and another five under contract. In 2013, a total of eight had sold. The pricing has not stabilized and sales have ranged from $324 per square foot to $923 per square foot, but still good news to see the activity and absorption. Mountain Village has also gotten back into the speculative building market once again, something not seen since 2008.
The biggest question as we further examine the local marketplace, is can we expect the market to continue at this pace and will other markets, like land and high-end 35 acre parcel subdivisions see an increase in action? Also, 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?
The 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. We also expect to see the Peaks Resort and Spa sell after taking closed bids in August/September, further adding confidence to the market. High end condominiums and homes continue to move off of the shelf in the town of Telluride at pre-recession prices. As mentioned previously, the Mountain Village residential market is on pace to more than triple its bleak numbers from 2013.
The past prediction in previous summaries is now truth, because of Telluride’s remote location and overall lack of inventory, it has not taken a lot of sales activity to turn our entire market from negative to positive, both in dollar volume and the mental perception that many Buyers and Sellers have. The residential town of Telluride is as strong as it’s ever been with twelve sales at over $1,000 per square foot through three quarters of 2014, versus five in all of 2013. There currently are no homes currently listed for sale under $1.15 million in Historic Telluride and we are at approximately half the inventory levels of the average of the last five years.
All of these strong indicators have led to the bottom of market being reached in all categories except vacant land. After seeing three quarters of 2014 hit solid numbers, it is easier to determine 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 deas vanish, Buyer will revisit land, to build their dream home. Certainly in the town of Telluride, the cost to replace is more affordable than buying an existing older home, 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.
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. Buyers that attempt to purchase properties at unreasonable prices are not realistic, unless it is a special circumstance or a known Seller motivation. 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 enable Sellers to be more patient.
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, luxurious, charming, funky, numerous resort amenities, festivals and culture, are just a few of the attributes. And people will pay a premium for this. The second is value. And there is a balance between the two. 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 on grade 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 year.
As you look at the Annual Dollar Volume in the past 10 years, the pace of 2004-2007 may be on the near horizon; as if 2014 continues to be strong we will finish just 27% below our benchmark year of 2007, vs 55% off the benchmark in 2013.
The summary for both Buyers and Sellers is continuing to change in a 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. Buyers that are less picky, can still find deals out there at up to 40% off the high market times, but will sacrifice something for the inherent value, for example, a stripped bank owned sale, no ski access, high density complex or subdivision, quick cash closing, as well as many other factors. But with a shrinking foreclosure list, and Telluride in the midst of having the “IT” factor in both a Ski Resort and summer destination, Buyers need to act fast, or be prepared to invest more down the road.