Updated January 2014
2013 Telluride Real Estate sales ended just slightly below 2012, which was the best Telluride Real Estate sales year since 2007 with the annual dollar volume exceeding $364 million. What could happen in 2014?
With 2013 behind us, it is interesting to note, that as compared to 2012, overall dollar Volume in Mountain Village was off 13%, the Town of Telluride was flat and the other sales for the remaining San Miguel County were off 6%
As we further examine the local marketplace, what can we expect to see in 2014 and will the Telluride, Colorado Real Estate market continue to get healthier or will it stabilize at the current sales pace?
The best news for 2013 was the continued absorption of condominiums in the Mountain Village market segment, with seventy-seven Mountain Village condominiums closing with a total dollar volume of almost $80 million, which exceeded the Mountain Village condominium sales dollar volume of the entire year of 2011 by over 42%. The increase over 2012 was almost 34%.
Also encouraging in the Mountain Village Condominium market was the Development lot sale of the old “Rosewood” parcel on Country Club Drive and the continued construction at the Cortina project on San Joaquin Boulevard, in which Phase One should be completed in early summer 2014. Cassidy Ridge was purchased in December 2013 in bulk and relisted at higher pricing levels and Ektornet (subsidiary of SwedBank) just announced that the timing is right to sell the Hotel Madeline in the heart of the Mountain Village Center. Buyers went for the perceived value in condominiums and the private residence home market suffered with just eight sales. What has also caught up to the Mountain Village market is the lack of inventory of newly constructed spec homes, due to the difficult financing of such projects, and the cost to replace an existing structure is far more expensive than to purchase what is out there, so land sales have not been rejuvenated either.
In addition, private home sales in the town of Telluride are still moving at a brisk pace. Despite an increase in pricing and lack of inventory, in 2013 we have seen twenty-seven sales at over $51 million, and dollar volume in town was mostly flat as compared with 2012, which proves some slight property appreciation. In addition the “Four Corners” development project in the center of town at Fir Street and Pacific Avenue is going through Telluride Town Council for feedback and early developmental approvals.
However, the brisk action of these two segments (houses in historic Telluride and condominiums in Mountain Village) has not translated into others, which is somewhat puzzling.
Because of Telluride’s remote location and overall lack of inventory, it will not take 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 five sales at over $1,000 per square foot in 2013, and just three homes currently listed for sale under $1 million. The bottom of that segment is well in the rear view mirror.
Even with all of these strong positive indicators it is still tough to call the overall “bottom” of the market. Buyers and Sellers still ask me all of the time: Did we “hit the bottom?” After seeing the 2013 numbers, it is continuing to be tough to determine, but certain market segments have rebounded off the bottom and are approaching historically high levels, but some have not. There will still be sales in our marketplace that reflect a variety of desperate Sellers, including Short Sales and Bank Owned/REO properties that will continue to set the bar very low, and offer bargains for the deal hunters. Make no mistake, these deals are getting harder to find and foreclosures in San Miguel County in 2013 were down 60 percent from 2012!
There continues to be a lack of confidence in Buyers, but the cause is unknown. Are Buyers concerned they missed the bottom? Are Buyers trying to purchase properties at unreasonable prices? Do Buyers want vacation property closer to home at a lower expense? Do Buyers not want to be locked down to one vacation location? Combine that with a majority of strong Sellers who are not forced to sell and own a high level of equity in their Telluride property and the result is a stalemate at the higher end of the pricing scale.
Buyers seem to 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. A luxurious Mountain Village trail side townhome at under $400 per square foot? A large acreage mesa timber frame home at $100 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 $600 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 Annual Dollar Volume and Number of Transactions in the past 10 years, one thing is evident. We are still well off the pace of 2004-2007, both in dollar volume and number of transactions. But, what markets that had steep real estate appreciation since the mid to late 1990’s did not fall into the same pattern?
The summary for both Buyers and Sellers still has not changed: 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.