Telluride is enduring an 18 month global economic downturn which began in the fourth quarter of 2007. Our real estate market has remained relatively stable with regard to pricing, but volume of sales declined in 2008 by 55% versus 2007. That decline in gross dollar sales has continued into 2009, down some 80% as compared to the first quarter of 2007 – – the last year of a bullish local market.
Contributing to the stability of values is an overwhelming majority of non-leveraged, non-speculative owners who continue to enjoy the Telluride lifestyle in a market where supply is severely limited and quality tightly controlled. It is this firm belief in the inherent quality of life and its real property that breeds patience on the part of owners/sellers.
At present, the market, for the most part, has stalled. Although media instilled panic and significant paper losses have driven many investors underground, substantial focused interest was realized this past winter despite negative economic circumstances. A surprising number of offers were processed with buyer expectation of significant discounts falling well short of seller willingness to accommodate those discounted offers.
Better news seems to be forthcoming related to the global economies and the gap between buyer and seller expectations is likely to narrow during the late summer and fall months. Sellers must exercise patience and buyers must recognize the historical significance of Telluride as a safe haven for investment – – both as to the bottom line and personal lifestyle. Business cycles always reverse themselves, and while we are in that reversal process, buyers have some select opportunities to acquire improved properties below replacement cost and sellers, with motivation for liquidity, can achieve such if price levels below the 2007 standard are sought. For those less-than-desperate sellers, develop a detailed pricing strategy now such that upon the first signs of recovery, your property might be one of the first to move related to the competition.
The bottom line—Telluride is no less a special place than before the economic downturn. Its inherent beauty, controlled growth, sense of community, pristine environment, abundance of public lands, lack of vehicular congestion and cultural events posture this market place in the medium term as a landing place for investors for generations to come.
We look forward to seeing you in Telluride this summer.