Telluride Real Estate Blog

Illusions Die Hard

2009-06-28T21:49:00.006-06:00

This Summer 2009 Market Update is a bit lengthy but filled with lots of helpful information so perhaps print and read it again later.

First, a quick national snapshot. The latest national existing home sales and new home sales numbers last week failed to meet forecasts. The National Association of Realtors reported 2.4% growth in existing homes sales last week, to an annual rate of 4.7 million. The stock market – no longer satisfied with meager housing growth – wanted a rate of 4.9 million and suffered a small sell-off. Even though sales nationally managed to increase in back-to-back months for the first time since 2005, existing home prices are still falling, distressed sales are more the norm and the national market remains saturated with a 10-month supply of homes.

In the Telluride region, sales volume and number of transactions are at their lowest point in many years. Dollar volume in May 2009 is off 79% compared to May 2007, the last May timeframe of normal historical numbers (May 2008 was nearly as dismal as this past month). Number of transactions is no different with May 2009 numbers down 75% from May 2007. To further illustrate the state of Telluride’s real estate market, just 10 transactions (excluding in-family transactions) occurred in May including:

· the sale of a $1.6 million home at Little Cone Ranch;
· three fractional sales totaling $145,000;
· two homes in Mountain Village – one of which was a short sale of a brand new ski-in/ski-out spec home selling for $783/foot and the other a brand new trailside home selling for $788/foot;
· a small, older single-family home near the high school in town for $800,000;
· two sets of mining claims totaling nearly $1 million that sold to a national land trust for open space preservation;
· and a 0.75 acre parcel Down Valley purchased for $235,000 by a local family.

The Telluride real estate market is nearly at a standstill. Since the start of the year, the ratio of how much properties are asking versus what they are selling for in San Miguel County averaged 83.9%. In years past, that ratio hovered in the mid 90%range. The number of listings in San Miguel County for sale in the Telluride Multiple Listing Service is 1,053. June is about to finish with at least seven sales and, most importantly, there are 38 properties under contract in the region including five condos and two single family homes in Mountain Village; 22 condos and four single family homes in town (17 condos at Element 52) and a couple properties Down Valley.

The average number of sales per month since January is 14, equating to 75 months of inventory to sell. Clearly something has to give and I expect it to be additional price reductions of existing inventory along with carefully considered asking prices of new properties coming to market. Anomalies exist and masterpiece properties with all the right criteria continue to command above market prices. Buyers with specific sets of criteria aren’t usually chasing the foreclosure/short sale/best deal properties. The sale of the home at 304 Benchmark in Mountain Village is a great example of that; it was a non-distress purchase selling for current market ($788/ft). A couple years ago it would have sold for close to $1,000/ft.

For some sellers though, the reality of Telluride’s market is seemingly unimportant or of limited interest. For others, they are stuck in a sea of similar properties competing to garner offers from a thin universe of buyers while trying to hold out from reducing asking prices in order to be the first to sell. However, even price reductions don’t always result in offers these days. Throw in a relatively small but significant list of foreclosure and short sale properties in the marketplace (43 of them) and it becomes clear that Telluride is in the midst of a correction too, like much of the country.

The difference, though, is Telluride’s income and property values are much higher than almost the rest of the country while significantly fewer residents are below the poverty line and lower income strata. We’re not going to have the Phoenix, Miami or Las Vegas experience where upwards of 75% of recent monthly sales are foreclosure and short sale properties. We're a "want" based real estate market versus a "need" based market.

What’s selling in Telluride since the start of the year? Condos in Mountain Village closing between $350,000 - $500,000; 2- and 3-bedroom fractionals with an average sales price of $96,000; homes in Mountain Village either in the $2.4 - $2.8 million range or in the $4 - $5 million range; and homes in town below $1.4 million.

Which sellers are reducing their prices?

While this current correction seems to be destroying the illusions of the previous bubble period, it’s still a mixed bag. Americans seem to have straightened up pretty fast. After the crash, we saved all the cash we can, at least according to news and anecdotal reports. Savings rates, which had been near zero, are now bouncing up towards 5%. Americans are supposedly planting backyard gardens, cutting our own grass, driving less, cooking meals at home, and so forth. Yet the feds are waving the bottle under our noses encouraging us to spend. But on the whole, consumers seem to be breaking free of a few investing illusions including that ‘houses always go up in price’. People know it doesn’t work like that. Many speculators and homeowners alike have lost big. They’ll remember it.

In Telluride we will see continued and noticeable growth with families relocating to the area. Buyers will continue to make smart lifestyle purchases of real estate here along with realistic long-term land investing. With rare and risky exception, gone are the days of flipping properties. It now is much more about having a home in the mountains for the extended family to enjoy while usually renting it out to cover some expenses, or relocating for a few years or longer because of the excellent quality of life (community, schools, nature, history, skiing etc).

Yes, the Telluride housing market is slow. But it works like other markets. It reacts, then it over-reacts. It shoots, then it over-shoots. For the past 6-12 months it has been a rough ride for many sellers and brokers here but there is a silver lining for both Telluride and my business. Fortunately my business continues to pace along with a recent closing a couple weeks ago, another one about to close and a third under contract in addition to receiving two offers in the past week for seller clients.

Telluride has a few silver linings too. The ski company just announced a major snowboard World Cup event (boarder-cross and dual giant slalom) December 17-20, which is the only Olympic qualifier competition in North America. Mountain Village’s newest hotel, Capella, opened four months ago and is garnering lots of international attention and strong praise from guests. If you want to try out Capella contact me directly for an outstanding “Discovery Package” involving 3 nights lodging, dinner, activities and spa session for as low as $995. The Peaks Hotel finally is getting its bearings with an impressive remodel and the hiring of a highly experienced sales and marketing director. Other good news is that there were no foreclosures for the month of May.

Barring any extreme situations, I believe Telluride has touched bottom in terms of sales. We may bounce around down there for the rest of the summer through fall and into winter, but as sellers continue to relent and others acquiesce to a new market reality, transactions will continue. Offers are definitely being made and properties are contracting yet buyers for now have the benefit of choice and price on their side.

Downturn Slams Mountain Village Owners Association, Forcing Board to Eye Cuts and New Assessments

2009-06-26T16:20:00.003-06:00

by Seth Cagin
06.26.09 - 12:41 pm
Board Discusses ‘Prioritization’ of Resources

The tough economy is not sparing the Telluride Mountain Village Owners Association, which is absorbing a sharp drop in revenues, particularly from real estate transfer assessments. There was ample evidence to be drawn not just from the content but also from the sober tone of a board discussion on Thursday that the crisis is, if not imminent, clearly in sight.

“The purpose of this discussion is that we want to make sure everyone is aware of where we are,” said TMVOA President Nelson Sharp. “I’d like to get a lot of membership input on this. We are going to be forced to prioritize, even if things partially come back.”

As of May 31, TMVOA, which is the master owners association in Mountain Village, saw revenues $952,000 behind budget. RETA, which has been the association’s largest revenue stream, is 66 percent below 2008 to date and 69 percent below the average of the previous nine years.

After accounting for expenses, TMVOA has lost $853,500 through May 31, compared to a budget that foresaw earnings of close to $100,000, for a net variance of $953,500. As a result, TMVOA reduced its reserves from $13.32 million to $12.47 million, versus a budgetary expectation that reserves would grow slightly.

The risk of foreclosures poses yet another threat to the TMVOA budget, if membership dues are affected, although that specter has not yet manifested and owner assessments through May 31 are actually slightly ahead of budget. Owner assessments, budgeted at just over $1 million this year, represent the second largest revenue stream to TMVOA, after RETA, which was budgeted to generate $4 million this year, but will likely fall far short of that.

Looking ahead, according to a memo prepared by TMVOA CEO Erin Neer, if nothing changes through the end of 2010, “the organization will be drawing down reserves significantly, leaving very little excess reserves to cushion further detrimental performance or significant outlays that are currently not planned.”

As one way to avoid that outcome, Neer identified several potential new revenue sources for TMVOA, notably a civic assessment, which is tantamount to a municipal sales tax and which could generate $1.5 million a year, and a resort fee assessed on lift tickets, which could generate $700,000. Finally, if existing revenue continues to flow below expectations and no new revenues are found, debt obligations and TMVOA’s legal obligation to fund gondola operations could require TMVOA to impose a special assessment on all the members, which consists of all property owners in Mountain Village.

In light of the daunting series of budgetary challenges, one Mountain Village resident, Don Orr, challenged the board by asking whether there is any firm evidence that money spent for event sponsorship, at just over $845,000 this year, and which includes the summer sunset concert series, is economically beneficial.

TMVOA president Nelson Sharp agreed that measuring an economic return on that investment is high on his agenda.

Several board members responded that events produce clear benefits, including a higher quality of life for residents and visitors alike, the creation of “vitality,” and making Mountain Village a desirable place for new buyers of real estate, which in turn generates real estate transfer assessments.

Penelope Gleason of Bootdoctors argued that while the sunset concerts, for example, don’t directly benefit her business because her store is closed when they take place, she absolutely supports them because they benefit the economy as a whole, and the success of restaurants and bars, who do benefit directly from the concerts, is essential to her own economic success.

As has often been the case in the Telluride region, some fundamental questions were posed in the course of Thursday’s discussion, namely, “what are we?” and “where are we going?”

“Are we the economic development arm of Mountain Village?” Sharp asked. “Are we the entertainment arm?”

In funding worthy causes, referring as an example to support for the Telluride Montrose Regional Air Organization, board member Jonathan Sweet said, “we should do our share, but not more than our share.”

Telluride Ski and Golf Co. CEO Dave Riley, who sits on the TMVOA board, said that it is necessary to put discretionary spending in one bucket and essential spending in another, “and see what that looks like.”

“I think we’ve gotten ourselves in this pickle here because for twenty years we’ve been riding a real estate development boom” and there’s a need to ask “what is our economic model for the long run here … that is not dependent on real estate development.”

“We can’t event ourselves out of this problem,” he concluded.

This story will be published in the July 2, 2009, print edition of The Telluride Watch.
© watchnewspapers.com 2009

A Plug For An Outstanding Illustrator & Photographer

2009-04-30T20:32:00.004-06:00

I had the fortune to stumble upon Joanie Schwarz's outstanding works when she was on a working ski vacation to Telluride a couple years ago. Since then, Joanie has photographed and illustrated two portraits of our family -- one of our daughter Ava and the other of our border collie, Mesa. Joanie has been recognized in the publishing world for over 25 years for the dreamlike quality in her painted and photographic imagery including works in Time Magazine, US News and World Report, Playboy Magazine, and hundreds of book covers for Simon and Schuster and Scholastic books. She shoots newborns, bellies, family and kids, dogs, painted works and nudes. Joanie is frequently in Telluride and lives in New Jersey.

You can see her work at www.joanieschwarzphotography.com. Her illustrations were perfect surprise gifts for my wife as well as our relatives.

Vacation Homes Still Work For Some

2009-03-25T10:58:00.002-06:00

An interesting article from CNBC

Vacation Home Still Works For Some
By: Shelley K. Schwartz, Special to CNBC.com | 23 Mar 2009 | 01:15 PM ET

Interest rates are at rock bottom. Housing affordability is at a record high and the glut of available properties on the market has left buyers holding all the cards.

If your long-term financial plan includes the purchase of a second home, or vacation property, now may be the time to make your move.

“There are an abundance of properties available right now with sellers making concessions that they generally aren’t going to make in a rising market,” says James Boykin, author of “Investing in a Vacation Home for Pleasure and Profit” and a retired professor of real estate analysis at Virginia Commonwealth University.

Despite the incentives to buy, however, the mortgage crisis that crippled the market over the last three years has made it harder to qualify for loans—particularly true if you’re purchasing a second home.

And with property values continuing to fall, homeowners who once relied on the equity in their primary residence to finance the purchase of a cabin or beachfront retreat are no longer able to tap those funds.

As such, if you’re looking to expand your real estate portfolio in today’s market, be prepared to bring more cash to the closing table and perform greater due diligence to ensure the property you do select meets your personal and long-term investment needs.

“Real estate is a very good alternative to stocks and perhaps other investments at this time, but it needs to be right for you personally as well as right for your portfolio,” says Boykin.

Here’s a look at how the second home market stacks up, what to look for when selecting a property and what it takes to land a loan.

Future Demand

According to Walter Molony, spokesman for the National Association of Realtors, the second home market is “fundamentally healthy,” despite short-term ups and downs.

Indeed, the number of vacation homes sold fell 30 percent to 740,000 in 2007, from a record 1.07 million in 2006, according to NAR. The median price was $195,000 in 2007, down 2.5 percent over the prior year.

While the results have yet to be tallied for 2008, Molony notes demographics bode well for that segment over the next decade.

“The long-term underlying demand is favorable for vacation homes because of the large number of middle-age, middle income Americans [who are the primary buyers of such properties],” says Molony. “In recent years, this market has been driven by the baby boomers, but there are two even larger population groups coming up right behind them. Those younger segments will continue to fuel this market for the next 10 years.”

At the same time, NAR reports the housing affordability index rose 13.6 percent in January to 166.8, the highest since tracking began in 1970.

The January index, the most recent month for which data are available, indicates a median-income family, earning $59,800 could afford a home costing $283,400 in January with a 20 percent down payment, assuming 25 percent of gross income is devoted to mortgage principal and interest. A year ago, the same family could afford a home costing $263,300.

“If you have the resources and are confident about your economic future, you’re not going to find a better market than we’ve got today in terms of affordability and raw buying power,” says Molony. “It doesn’t get much better than this.”

Who’s Buying?
Those who buy vacation homes overwhelmingly do so for personal enjoyment, rather than investment potential.

A 2009 NAR study finds 84 percent of vacation homebuyers were most interested in owning a family retreat, while 25 percent bought with the intent to rent to others and 26 percent are looking to help diversify their investment portfolio.

A smaller percentage – 30 percent – expect to use their vacation home as their principal residence in the future.

Regardless of your intent for a vacation property, however, Boykin notes it’s important to buy with resale value in mind.

Look for views, proximity to amenities and established resort communities, he says, especially if you hope to rent it out part-time.

It’s also best to stay within driving distance of your primary home, enabling you to enjoy your vacation retreat more often and pop in to address problems as they arise.

First-hand knowledge of the market will also help you avoid buying into a community that’s on the outs.

My Top Clients' Perspective On the National Economy

2009-03-24T21:44:00.004-06:00

In the past week I spoke with my top clients about their intimate and very knowledgable perspectives of the national economy. These are people who are titans in business and politics and have some very informative opinions.

1. Extended period of massive deleveraging by financial institutions (4-5 years).

2. Further GDP contraction

3. Reduced consumer spending

4. Higher (10%+) unemployment through 2010

5. Periodic bear market rallies rolling over to new lows

6. National property market looks ugly. Only really motivated sellers will transact unless place is unique (beauty is in the eye of the beholder/buyer).

7. Every market is different but real estate market will hit bottom in late 2009 (the most optimistic assessment of the people I spoke with)

8. 16 million homes upside down in America. Government stimulus should help 4 million of them.

9. One client just lectured students at MIT and told them that of the various real estate markets he analyzed around the country, the median sales price declined 42% to get the markets going again.

10. The velocity of money, income and spending must increase before the markets hit bottom. All three are still decreasing.

11. Another $1 - $2 trillion in government stimulus needs to be injected then ultimately drained out of the markets.

12. There will be no bounce of a recovery. Instead of a "V" shaped recovery it will be a "U shaped recovery.

13. The stock market is going nowhere for a while. Earnings will be trashed for a year+.

14. Hard assets will not generate a high rate of return. Risk capital will demand very high rates of return. The Obama administration is going to have to deal with risk capital...it is on the sidelines and will eventually have to be dealt with.

15. Smart money is paying down debt and hording cash. There will be an enormous number of buying opportunities for investors, especially in securities and real estate, not equities. Non-performing loans will be bought for 20 cents on the dollar and resold for 60 cents on the dollar.

16. Household income will be flat for the foreseeable future and therefore inflation will not be a problem.

17. Prime will remain at current level into mid/late 2009.

18. US Dollar should show strength based on global problem with money flowing to US Treasury for protection. 5yr curve remains stable and the 30yr may show some increase, but small.

19. Energy is a wild card but since the US has seen $3+ pump prices it won’t shell shock consumers.

20. Current housing inventory is on a rapid decline due to builders not over starting new homes. Fed has jumped in to mortgage back securities and the $8,000 direct tax deduction on 1st time home buyer will give birth to entry level home sales trickling up into the more expensive home priced market.

21. All in all consumers are beginning to realize the sky IS NOT falling in and beginning to take advantage of the purchase opportunities.

22. $1.75 trillion debt for 2008 is a low estimate and it’s sad to see these mammoth corporations continue financial bailout and abuse. The Fed needs to take a hard stance and stop the bailouts.

Anyone readers care to share your opinion?

If You Own Property In Mountain Village, This Affects You

2009-03-02T12:39:00.001-07:00

TMVOA Members Circulate Petition to Force Special Election
by Seth Cagin, The Telluride Watch, Mar 02, 2009

A petition is being circulated among members of the Telluride Mountain Village Owners Association to force an election before the end of the ski season to amend the organization’s articles of incorporation.

If successful, an election very similar to what was scheduled by the TMVOA board on Feb. 16 by a vote of 4-3, with only the three Telski members of the board in the minority, and then rescinded on Feb. 25 by a vote of 3-4, after the lodging member of the board, John Volponi, changed his position, will take place.

The ballot questions will ask the TMVOA membership to add residential representation on the board and thereby reduce the influence exercised by the Telluride Ski and Golf Co., and also to remove the provision in the articles of incorporation that allow Telski to veto any such changes to the articles of incorporation or to specified bylaws.

Since Telski does have that veto provision, the company, which enjoys its influence as the original developer of Mountain Village, could veto both ballot measures. Telski CEO Dave Riley stated unequivocally that Telski will do just that when it was a majority of the board, albeit at the request of residents, that was working to call the special election.

The question that will be considered by members if the special election is held is slightly different from what was previously discussed. Last month, the proposal was to add two members to the board to represent the residential class of members. That would have given the residential class four of nine members, and by leaving Telski’s representation at three members would have reduced the ski company’s leverage. The current proposal is to give the residential class one additional member, and add an at-large member to be voted upon by the residential, lodging and commercial classes. In addition to the residential class, the other three classes are the lodging and commercial classes, which each elect one member to the board, and the special class, consisting of the ski company.

As of Monday morning, Mountain Village resident Richard Child, said he has received “many signed petitions” via fax, many of them from “people I don’t know.”

Consistent with what other Mountain Village residents have said, Child added that there is no leader or organized group working to change the way that TMVOA is governed, although he has been a point person in circulating and collecting petitions.

“There are a lot of people involved in this,” Child said on Monday morning. “That’s what makes this special, that it’s not just one set of people. It’s a true grassroots effort.”

Child also emphasized, as other Mountain Village residents involved in the effort have emphasized, that there is “no antagonism” toward Telski, but rather a simple desire to see equity on the TMVOA board.

In the email that accompanied the petition and was signed by Child, the effort is described as a bid to end “taxation without representation.” While residents have 58 percent of the votes and pay 79 percent of the assessments that help fund TMVOA, they have only 29 percent of the votes on the board, according to a chart in the email.

Telski, as the sole “Class D” member, casts no votes and pays no assessments, but controls 41 percent of the board seats – although it does cast votes and pay assessments by virtue of its ownership of residential and commercial property.

The issue of this disproportionate representation has come to a head, the email suggests, in part due to concern about a collapse in revenues to TMVOA from real estate transfer assessments. Were TMVOA, which is the master property owners association for Mountain Village, to run into budget shortfalls, a special assessment might be necessary to meet TMVOA’s legal obligation to fund gondola operations. The gondola costs around $3 million a year to operate and has also required expensive periodic maintenance. Last year, for example, TMVOA spend approximately $3 million in gondola upgrades.

If a special assessment were necessary, Child writes in his email, “Class D (Telski) would not bear any portion of the special assessment.”

Assessment rates for the various classes of TMVOA members are established in the TMVOA articles of incorporation, which is precisely the document that can be amended only with Telski’s assent.

Residents are becoming increasingly educated as to how TMVOA operates and is funded as this process moves along, said Davis Fansler, a former Mountain Village mayor.

The fact that Telski pays no assessment is clearly part of that education.

“If you assume that any future financial risk currently resides with the residents,” Fansler said on Monday, “it is fair to ask what the residents might do to redistribute that risk.”

Buyers Love Telluride, But At What Price?

2009-02-26T10:34:00.005-07:00

In past downturns, Telluride held fast to the ability to be among the last enclaves to be effected and one of the first ones out of the fracas. Seems like we are among the last to currently decline given the nearly 2-year housing ailments in various segments of major markets like Phoenix, Los Angeles and Miami. While Telluride's market strength is holding up better than most, the national consumer psychology is so damaged that my sense is a large percentage of prospective buyers are expecting Telluride to substantially fall off the numbers. Telluride is in a declining market, yet a large number of sellers are still living under the aura pervading this town since the 1970s -- that Telluride will continue to consistently go up in value. Owners use the fog of generalities in placing an unrealistic value on their properties. It’s tough to fault them too, given the last few years of heady returns.

In general, there are some positive elements that will keep Telluride from falling off a cliff including very limited supply; incredible beauty; unique recreation; a historically intact town; deep wealth; families providing struggling relatives (who own here) with private promissory notes and, thus, preventing foreclosures; and limited foreclosures in San Miguel County compared to the rest of the nation. The opportunities are beginning to surface here with the increase in the quantity and depth of price reductions and appropriately priced listings. Yet, with some exceptions, the nation is taking a breather with real estate.

Some of Telluride's top visitor markets are the markets with the largest number of foreclosure ratios. As long as foreclosures happen in any neighborhood, whether in Telluride or where you live, values remain in jeopardy. Amid this storm, anomaly sales will become more revealing. Families will be buying for more practical reasons like lifestyle changes, family gatherings or for relocation and less for speculative investment. Cash buyers will have a field day cherry picking some great value plays. I also think the new luxury development Capella in Mountain Village will be part of the anomaly amid this crisis. The truly rich are very glad that fewer households are in their echelon. Luxury is a word/concept/lifestyle that's been ridden hard and left wet by the masses over the past two decades. The cache of "luxury" will revert back to the domain of the truly rich in the next few years and parts of Telluride, like Capella or a special ranch or a well-located, positively unique home, will ultimately benefit.

Mountain Lodge Stats

2009-02-17T17:58:00.005-07:00

Just some quick stats on the Mountain Lodge, a 96-unit ski-in/ski-out hotel condo project in Mountain Village with pool, restaurant, hot tub and other ski amenities.

Currently there are ten two-bedroom condos for sale at Mountain Lodge with an average of $526,200 and an average asking price per foot of $618 and an average days on market of 264 days. Two two-bedrooms are currently under contract and scheduled to close in the coming 2-4 weeks.

Properties are contracting in the region but at a slower pace than normal. It seems like the entire mid-America market is dead with nearly non-existent retail expenditures and continued foreclosures and jobless claims. While that may be the pulse of the country in general it is not what is happening in Telluride's "island of wealth" as one client puts it.

More details on what's contracting when time permits.

San Miguel County Real Estate Update 10.18.08

2008-10-20T15:13:00.002-06:00

Single family home sales in the rest of the county have finally followed the trend in town and Mountain Village and have declined 48% from 60 transactions last YTD ($57 million total) to 31 this year ($32.5 million). Residential vacant land sales outside of town, Mountain Village, Ski Ranches and Aldasoro are down substantially from 70 purchases last YTD ($93.1 million) to only 32 this year ($21.7 million).

Besides locals' housing in the town of Telluride, the only areas of growth or flatness are: the sales of value-priced, big view vacant lots in Aldasoro (above the airport) with 6 sales this YTD and 7 sales in 2007 YTD; the sales of select lots in Telluride Ski Ranches (a huge value play in my opinion) and an increase in single-family home purchases in Ski Ranches from 3 in 2007 to 5 in 2008 YTD.

Besides town and Mountain Village and with the exception of the West End (Norwood, Naturita, Nucla etc), there are 9 other properties currently under contract around the county with a median asking price of $998,000 totalling $13.8 million including 1 home and 2 lots in Aldasoro, 1 home in Ski Ranches, 1 home Down Valley, 2 homes on Wilson and Last Dollar mesas, 1 condo outside of town and 1 deed-restricted home in Lawson Hill.

Since January 1, 2008, 246 properties of 1,046 properties (23.5%) currently for sale in the immediate Telluride area (town, MV, Ski Ranches, Ophir, the mesas, Ilium, San Bernardo, Down Valley etc. but excluding the West End and other counties) have reduced their asking price on average of 14.1% (-11.2% median). Of those 246 price reductions, 89 are in Mountain Village with an 11.3% average price reduction (-9.1% median) and 64 are in town with a 15.8% average price reduction (-11.2% median).

Smart, cash-enabled buyers continue to cherry pick their favorite homes and investments amid a vast array of properties. Please contact me via email or cell phone for a more detailed perspective on any part of the market or to get details on the best buys in the area.

Mountain Village Real Estate Update 10.17.08

2008-10-20T15:03:00.004-06:00

Telluride Properties has watched markets rise and fall for almost three decades and this year, because of our nimbleness and foresight, the company has garnered our biggest market share ever in an incredibly difficult market. Personally, I am having a better year in 2008 than in 2007 including a record-setting sale of a beautiful, historical home in Telluride as the highest price paid on a price per square foot basis ($1,411) in the history of the town. Certainly, opportunities exist.

Mountain Village Real Estate Update
It's a dramatic story in Mountain Village with 70 condos selling last YTD and 29 so far this year (a decline of 59%). Fractional purchases are relatively steady in Mountain Village with 53 sold last year YTD and 43 this YTD with only a $450,000 difference in volume ($6.5m last year, $6m this year). Single family home sales in Mountain Village have fallen precipitously by 71% from 28 sold last year to 8 this year. Vacant land sales in Mountain Village have dramatically declined too and are off 60% from 25 sales last year to 10 this year.

Gauging current activity in the Telluride MLS, there are 30 properties under contract in Mountain Village totaling $62.5 million. Of those, 8 are fractional interests at the Franz Klammer Lodge; 2 are condos at the Mountain Lodge; 1 vacant lot asking $499k; 2 single family homes; and the remaining 16 are pre-completion units at Tristant, Cortina and Capella (some which may not be arm's length, end-user transactions). The purchase of the Peaks Hotel remains to be an opportunity as the most recent buyer of the entire complex ended up having big federal legal troubles and the deal evaporated.

Since January 1, 2008, 246 properties of 1,046 properties (23.5%) currently for sale in the immediate Telluride area (town, MV, Ski Ranches, Ophir, the mesas, Ilium, San Bernardo, Down Valley etc. but excluding the West End and other counties) have reduced their asking price on average of 14.1% (-11.2% median). Of those 246 price reductions, 89 are in Mountain Village with an 11.3% average price reduction (-9.1% median) and 64 are in town with a 15.8% average price reduction (-11.2% median).

Backing out 30 contracts on pre-completion condo developments, there are 40 properties currently under contract in the immediate area. Of those 40, 19 made price reductions before going under contract with an average percent off ask of 12.2% (-9.6% median).

Of the 189 sold properties (listed in the MLS) in the immediate area since January 1, 2008, a whopping 163 (86.2%) of them made price reductions with a 13.6% average percent off ask (-11.6% median). Of those 163 sold properties, 75 were in Mountain Village with a 14.0% average percent off ask (-11.6% median).

Telluride Real Estate Update 10.16.08

2008-10-20T14:54:00.002-06:00

Greetings from Telluride. It's been a couple months since I posted any relevant information on my blog and now have some very revealing information to report regarding the Telluride real estate market.

TOWN OF TELLURIDE DETAILS
Through September 2008, the Telluride region continues to feel the effects of the dreadful and appalling national economic meltdown with the number of transactions down 47% year-to-date and dollar volume down 50% YTD in San Miguel County.

In town, the condo market declined from 57 transactions YTD last year to 28 so far this year (a decline of 51%). Single family home transactions in town declined from 22 last year to 14 this year YTD. Fractional purchases in town have started to slow down too with 23 made last year at this time and 16 this year. Even vacant land in town is down 70% (from 7 lots last year to only 2 this year).

Backing out 16 pre-completion contracts at the luxury condo development Element 52, there are 11 properties under contract with a total asking price of $12.3 million ranging from a $329,000 studio at the Hotel Telluride to a $3.995 million spec home.

Since January 1st, 246 properties of 1,046 properties (23.5%) currently for sale in the immediate Telluride area (Town, MV, Ski Ranches, Aldasoro, Mesas etc) have reduced their asking price on average of 14.1%. Of the 246 price reductions, 89 are in Mountain Village with an 11.3% average price reduction (-9.1% median) and 64 are in town with a 15.8% average price reduction (-11.2% median).

Of the 189 sold properties (listed in the MLS) in the immediate area since January 1, 2008, a whopping 163 (86.2%) of them made price reductions with a 13.6% average percent off ask (-11.6% median). Of those 163 sold properties, 47 of the 163 price-reduced properties were in the town of Telluride with a 13.2% average percent off ask (-11.6% median).

July Telluride Real Estate Update

2008-07-23T16:16:00.004-06:00

Telluride's market is off considerably...50% off in number of transactions YTD through June versus last year and about 40% off in dollar volume YTD. Historically, about 1,200 properties are in Telluride's Multiple Listing Service (MLS) at any given time with about 600-750 properties selling. Now there are about 1,650 properties for sale in the MLS and I am projecting about 400 properties will sell. In other words, only about 25% of the properties on the market will sell this year. Of course this means it is a buyer's market...however there is a huge disparity between realistic sellers, ignorant sellers and those stubborn and/or wealthy enough to ride out this stormy market.

Rosewood Hotels is dead in the water. Developer was foreclosed on by the lender for $50 million about a month ago. Developer has filed a lawsuit against the lender to stall off the foreclosure. There will not be any activity on the Rosewood property for at least a year or two in my opinion.

The buyer for the Peaks Hotel continues to keep the property under contract but the closing date keeps getting pushed back. I have low expectations on this deal too.

Interesting Telluride News

2008-06-21T10:48:00.003-06:00

Having lived here intimately for over 15 years while now raising a family gives me an interesting perspective on where we are as a community and where we are heading. In essence, Telluride has fiercely held onto its small-town charm while embracing the values of small town living with a big-time appreciation for a strong community, a high level of educational excellence, the success of many long-standing summer festivals; and an incredible quality of life. This doesn’t come easily and there are serious challenges including replacing Main Street’s water line, paving the road into Telluride, bonding for a new medical center, funding for new affordable housing and dealing with an expanding school district. Approving and funding these issues will easily cost the community $60 million, a startling number considering that about 3,000 residents live here. Some additional highlights:

The Valley Floor - The Colorado Supreme Court recently upheld the district court ruling allowing the land known as the Valley Floor (the entrance to town) to remain as open space forever. The monumental decision guarantees that the land will never be developed.

Revelation Bowl – The ski mountain will have a new high-speed lift located on the backside of the top of Gold Hill accessing a wide and treeless, open bowl that spills down towards Bear Creek. The terrain dramatically sits in a hanging bowl with a northeastern aspect that naturally gathers huge amounts of snow from the area’s predominantly western storms. This terrain combined with the opening of Gold Hill Chutes and Palmyra Peak has totally changed the way Telluride’s mountain skis. The amount of additional terrain has created a ski mountain experience unlike no other in North America…and I don’t say that lightly. The mountain has opened up an additional 400 acres with 4,425 vertical feet of skiing.

Capella Hotel – This 150-room uber-luxury hotel located in Mountain Village is scheduled to open early 2009. Headed by former Ritz Carlton visionary Horst Schulze, the hotel promises to provide meticulous personal service, a private high-end spa, pool and lounge, gourmet cuisine, an ice rink and an intimate level of detail. Having met with Mr. Schulze a few times in the past couple years, my skepticism has turned to belief in his aim to deliver perfection with an uncompromising emphasis on personal service. Capella Telluride should become one of the world’s finest ski hotels in due time.

Telluride’s School District – At various points throughout 2007, the Telluride School District has received the state of Colorado’s most prestigious awards in education with the naming of Colorado’s Superintendent of the Year, Teacher of the Year, Athletic Director of the Year and the Librarian of the Year. The 4-award occurrence was so rare that Governor Bill Ritter gave his only commencement speech of his term to the students, faculty and families of the Telluride High School a couple weeks ago. Beyond the awards is proof in the pudding: the Telluride elementary, middle and high schools continue to outperform a great majority of school districts across the state in standardized tests, nearly 20% higher on the tests than the state average.

Telluride is entering its Golden Age. The Telluride community is determined to maintain peace, harmony, stability and prosperity for a long time to come!

Telluride Real Estate Market Update

2008-05-14T14:40:00.003-06:00

The month of May is more like March with two storms that dropped over a foot of snow in the San Juans in the past week. Lifts are closed but the first festival of the summer, Telluride Mountainfilm, is around the corner celebrating its 30th year over Memorial Day weekend.

Through April, Telluride continues to feel the effects of the sluggish national economy with number of transactions down 44% year-to-date and dollar volume down 32% in San Miguel County.

In town, the condo market declined from 28 transactions YTD last year to 15 so far this year. Fractional purchases held steady in town with 14 made last year at this time and 15 this year. Single family home transactions declined from 9 last year to 4 this year YTD. It's a similar story in Mountain Village with 35 condos selling last YTD and 15 so far this year. Fractional purchases are steady in Mountain Village with 30 sold last year and 26 this year. Single family home sales in Mountain Village fell 50% from 12 sold last year to 6 this year. Vacant land sales in Mountain Village have dramatically declined from 15 sales last year to just 1 this year (for $3.2 million).

Single family home sales in the rest of the county have declined slightly from 26 transactions last YTD ($21.7 million total) to 17 this year ($25.1 million). However, residential vacant land sales in the rest of the county are down substantially from 25 purchases last YTD ($16.2 million) to only 6 this year ($3.4 million).

Gauging current activity in the Telluride MLS, there are several properties under contract in Mountain Village and town (at least 49). Backing out pre-completion contracts on various condos leaves 10 properties under contract in town (including the Ice House Hotel asking $11 million) and 10 in Mountain Village (not including the Peaks Hotel which may or may not sell to the current buyer). There are 24 other properties currently under contract around the county with a median asking price of $612,000 totalling $15.6 million.

Buyers are cherry picking their favorite properties amid a vast array of properties. My business remains consistent as I recently closed on three properties for clients, have one more currently under contract and have a couple offers on the table.

Was this info helpful? Please let me know your thoughts.

Mountain Village Lot Sales Sluggish

2008-04-09T13:12:00.001-06:00

There are 77 lots for sale in MV with a median asking price of $949,000 and an average days on market of 391.

Two lots are under contract, both contracting in the past three weeks with an average asking price of $2.5m.

Four lots have sold since December 1st (all sold in December, none since) with a median asking price of $1.8m and a median sold price of $1.645m and an average lot size of over 2 acres.

Condo Sales Update in Mountain Village

2008-04-09T13:11:00.001-06:00

167 condos for sale with a median asking price of $2.035m and a median of 290 days on the market. $390m total inventory. Ten condos are under contract that are not part of any pre-construction or construction-in-progress developments like Capella, Lumiere or Tristant. Median price of those ten are $1.442m.

14 condos have sold since December 1st with a median sold of $1.64m and median ask of $1.83m and an average days on market of 345.

Mountain Village Home Sales Revive

2008-04-09T13:08:00.000-06:00

74 homes for sale in MV with a median asking price of $4.325 million, a low of $1.799m, a high of $15.5m and an average days on market of 331. Of the 74 homes, 30 are for sale on the golf course.

5 homes are Under Contract. Four of those contracted within the past three weeks. Median ask price is $6.495m including one for $14.1m. The rich are not blinking.

5 have sold since December 1st.

Telluride Real Estate Versus National Media Perception

2008-03-06T09:37:00.002-07:00

The market has slowed down here for sure but it is not as ominous as the broad brush media reports would have us think. There are 82 properties currently under contract in the area with a median asking price of $1.909 million. About a dozen of those are pre-construction contracts on new projects. The remainder of properties under contract represent a wide swath of categories and prices including land, condos, homes and fractionals ranging in price from $25,000 for a cheap fractional to $12.9 million for a spec home on 35 acres near the Telluride airport.

I have made two offers this week and am expecting an offer for a listing on a $2.65 million property later today. One client made an offer on a $1.2 million condo in town. Another client made an offer on a Terraces condo asking $775k and I have a third client getting ready to make an offer on a $4+ million home.

While buyers shouldn't be in a rush to find a property in Telluride, you should be prepared to pounce when the opportunity presents itself. I expect to see more price reductions on select properties in the next 3 months but as you may know many property owners here are wealthy enough to sit and hold onto their asset and ride out this national market cycle.

Do Telluride Ski Ranches Homes Offer Good Value?

2008-02-24T15:23:00.002-07:00

Sales of homes in Telluride Ski Ranches have been slow in the past few years. And while some may find this discouraging, others recognize an opening for value.

Currently there are 15 Ski Ranches homes on the market. At the 2007 absorption rate (five homes sold in 2007), it will take three years for all of these homes to sell. The median selling price for homes sold in 2006 and 2007 is $1,465,000, or $457.59 per square foot. Of the 15 homes currently on the market, the median asking price is $505/square foot.

At the low end of the homes on the market, as determined by price per square foot, are 151 Beaver Pond Lane ($375.94/square foot, built in 1986), 229 Elk Park Road ($381.25/square foot, built in 1989), 707 Fox Farm Road ($432.83/square foot, built in 1976) and, 694 Fox Farm Lane ($447.03/square foot, built in 2004 and remodeled in 2007). Prices can vary greatly in Ski Ranches; one reason is that as one of the region’s oldest subdivisions it has homes that were built in the 70s on through to today.

From there listing prices jump to the $500’s and up to $818/square foot for a home built in 2007.

Buyers looking for more space, bigger land and more affordable pricing need to take a closer look at Telluride Ski Ranches. Go to my website and compare the prices of newer homes in Ski Ranches with those in Telluride or Mountain Village. At the same time, be sure to take into consideration the age of the homes for sale. Several in Ski Ranches are 20+ years old...but there are hidden gems in this cool subdivision that allows horses and dogs.

Telluride Ski Ranches 2007 Summary

2008-02-22T12:58:00.003-07:00

Telluride Ski Ranches 2007 Quick Summary

A short distance from Mountain Village, Ski Ranches is a beautiful subdivision that offer mountain views, bigger lots that afford a homeowner real privacy, and opportunities to have horses and dogs.

Sales of Ski Ranches homes have been slow in the past few years as compared to some other sectors of the market yet closer inspection reveals that fairly priced homes are still moving (and homes that are boldly priced are taking longer to sell).

While the number of homes sold was flat in 2007 as compared to 2006 (five sold in each year), the median selling price for a Ski Ranches home increased by 11%. With the increase in price came a drop in median days on the market, from 310 to 203.The rise in the median selling price and drop in the median days on the market are positives, as sales in Ski Ranches have been relatively stagnant for several years.

Since there were so few land sales, monitoring the average sold price is more realistic than looking at the median sold price. The average sold price declined 13% as compared to 2006, with an average sold price from $643,750 to a price of $562,250

The median days on market for a Ski Ranches lot rose substantially from 137 to 257 days.

In this slower market, homes that are fairly priced will sell, and sellers who want to reach for the stars will likely have to wait longer.

Town of Telluride 2007 Year-End Quick Summary

2008-02-22T12:56:00.002-07:00

Town of Telluride 2007 Quick Summary

In 2007 the town of Telluride saw 50% more homes sell than in 2006 (33 as compared to 22). However, unlike the Mountain Village which enjoyed a substantial increase in the median selling price, Town of Telluride homes saw the median selling price drop by 7% as compared to 2006 (from $1.975 million to $1.83 million).

Telluride condos followed a more typical countywide trend; prices rose slightly, but fewer units sold. While 21% fewer condos sold in 2007 than in 2006 (62 as compared to 78), the median selling price rose by 11% ($717,500 to $795,000).

As for homes that did sell, those homes sat on the market for nearly three months longer than they did in 2006 (a trend similar to that seen in Mountain Village).

Mountain Village 2007 Real Estate Highlights

2008-02-22T10:35:00.005-07:00

Real estate sales in San Miguel County posted a record in dollar volume for 2007, exceeding the previous record in 2005 by 4% and, flying past 2006 by 11%. While the dollar volume was high, the number of sales in the county declined 11% as compared to 2006. Indeed, the number of sales in 2007 was the lowest for the county since
1998.

While the trend for 2007 in San Miguel County was high dollar volume and lower transaction volume as compared to 2006, Mountain Village homes broke with that trend. After several years of slower sales a record number of homes were sold in the Mountain Village – 40, in fact.

Record Number of Homes Sell In Mountain Village In 2007

And even better news came out of the Mountain Village: even as the number of homes sold rose, the median selling price for each home jumped up as well. The median selling price for a Mountain Village home increased by 18% as compared to 2006 (from $2,500,000 to $2,937,500).

The dollar amount for the highest price paid for a Mountain Village home soared from $8 million in 2006 to just over $13 million in 2007, a tremendous increase for one year.

Sales of condos in Mountain Village followed a more typical trend: the number of sales dropped by 13% as compared to 2006, while the median selling price increased significantly, by 71 % (from $810,000 to just over $1.3 million). That the number of condo sales dropped can also be seen in the fact that condos that sold sat on the market for three months longer than they did in 2006.

And again, the more typical trend of higher dollar volume and lower number of transactions volume was seen in Mountain Village vacant land sales. While the number of sales of Mountain Village vacant land declined by 54%, the median selling price increased by 21%.

National Slowdown Likely To Be Short-Lived In Telluride

2008-01-31T11:49:00.001-07:00

While recent headlines have been filled with news about a volatile stock market and economic experts’ fears of a national recession, Telluride’s real estate market will likely remain relatively insulated from the uncertainties of the wider national economy.

To illustrate, year-end numbers for the market are showing that while the number of sales declined for 2007, generally speaking median sold prices rose. On closer inspection that means that higher dollar properties are selling well and well-heeled buyers are able and willing to make a purchase.

The last time the national economy suffered a severe slow down (after 9-11 and the start of the Iraq War in March 2002), activity in the Telluride market also slowed; however, within six months transactions picked up again and showed a steady increase from that point forward. If Telluride's real estate market performs in this current cycle like it did six years ago, it is likely aging baby boomers and others desiring a higher quality of life (whether by purchasing a second home or relocating to the area) will continue to invigorate the market. The Wall Street Journal recently reported on this phenomenon:

http://www.realestatejournal.com/secondhomes/20080123-dougherty.html

Even so, in the current marketplace price reductions of listed property are occurring more frequently, albeit only in a limited segment of property categories. The typical seller in Telluride owns their property with little or no debt; loves their property; is sometimes upsizing/downsizing within the market; and has the patience to wait for an acceptable price. Still, some sellers, regardless of their net worth are beginning to tire of the length of time their property has been on the market (2+ years), and are becoming more realistic in their price expectations.

For sellers who decide they are ready to move their property, pricing a home at or below market value is critical. Time and time again in this market I have seen buyers act when they see value, no matter what the price band. And for buyers who have been waiting to see value in the market, value can be found in certain sectors of this market.

Knoll Estates Vacant Land Holding Value

2008-01-23T23:56:00.000-07:00

Knoll Estates is a hidden gem of smaller lots tucked onto a prominent ridge in the Mountain Village. From the top of the ridge homeowners have incredible views of the Sneffels Range to the north and the Wilson Range to the southwest – and for the convenience and proximity to the slopes, golf course, and Mountain Village shopping and restaurants, Knoll Estates lots are moderately priced.

Currently there are two lots for sale in Knoll Estates, and, as of the date of this post, a third is under contract.

Of the lots for sale, Lot 12, which is 0.07 acres, is listed for $469,000. It has been on the market for 235 days. Lot 7, which is 0.18 acres and twice the size, has an asking price of $675,000. That lot has been on the market for 230 days.

For comparison purposes, there are ten lots for sale in the Mountain Village which are similarly priced (between $450,000 and $569,000).

The lot in Knoll Estates which is under contract is larger than Lot 12 or 7 and sits on the perimeter of the subdivision. The asking price for that lot had been $624,000.
Knoll Estate lot prices are holding their own. In August, Lot 31, which is 0.11 acre, sold for $485,000, the asking price. In April two Knoll Estates lots sold. One, Lot 33 which is 0.10 acre, closed for $495,000 ($4,000 lower than the asking price of $499,000.) The other, Lot 2, 0.19 acre and which was not listed and sold for $700,000 because of its size and location overlooking Knoll Estate's tennis court.

Wave After Wave of Snow Dumps 14+ Feet In 6 Weeks!

2008-01-12T10:23:00.000-07:00

With an 80-inch base, nearly six feet of snow in the past week and another eight+ feet in December, the ski conditions are the best in many years. Removing that snow from the streets is an entirely different story as crews in Telluride, Mountain Village and the surrounding region are plowing and shoveling non-stop. For the past two weeks the avalanche danger has been high. There are almost daily reports of incidents, close calls and large, human-triggered avalanches. At least fourteen people have been caught in avalanches since December 30 and at least one resulted in a fatality in the Vail backcountry.

Several of my friends have been hitting the world-class backcountry skiing into Bear Creek in the past week, calling it the best conditions ever. Careful terrain selection, conservative decision making and a large margin of error have kept all my buddies safe.