Winter 2018 Real Estate Market Update

With 19 inches of fresh snow from the weekend’s storm, the ski area opened Chair 5 on Tuesday morning. The blue-bird powder day stoked excitement for more terrain coming soon, likely later this week. There are two more storms in the near forecast, so we look to be on track for a great winter. 

The busy summer season extended into the fall with visitors coming for the beautiful leaves, Blues and Brews in Town Park, and the new Original Thinkers Festival in Mountain Village. After a respite in November, activity is picking up and the official holiday season kicks off with today with Noel Night festivities. 

It’s always exciting to watch the town begin to bustle this time of year. It’s great to have all of our excellent restaurants open again for the season, and I’m especially looking forward to trying out The National when it opens later this month. This new restaurant is located on South Pine Street just behind the Last Dollar Saloon. It’s a new venture by favorite local chefs Ross Martin and Erich Owen, and it is sure to be fantastic. 

I hope you’ve made your travel plans for a trip to Telluride this winter. One new option to be aware of is new daily service from Denver to Telluride offered by Boutique Air. Rates are competitive, and it’s great to be able to have commercial flights directly into Telluride again. Boutique Air currently only code-shares with United Airlines. If you book a flight through United, you can check a bag through to Telluride. If flying through another airline, it's recommended that you only carry gate-checked luggage. Any other airline will require passengers to retrieve checked bags in Denver and go back through security; this is generally not a good plan. 

October was the largest dollar volume for a one-month period since July 2007.  However, the number of transactions in 2018 fell by about 21 percent compared to 2017. As of the end of November, the Telluride regional market is down about 10 percent in dollar volume.  As I have clearly stated in past updates, these numbers do not directly correlate to property values.  In fact the lower numbers are a result of less property for sale. With fewer properties available, the property values are in fact rising.  

Town of Mountain Village Condominiums

Buyers need to understand that over the last eight years there has not been a single new condo development built in the Mountain Village.  We have worked through the glut of 2008 projects, and now there is nothing even in the planning stages to be built.  The lack of supply in the condominium segment and lack of future new product on the horizon will keep prices firm regardless of a possible slowing or topping of an economic cycle.  I believe some new inventory will come from Madeline resales.  There are currently some pocket listings in the Madeline that buyers cannot see online.  The sellers of these units will become more motivated and eventually list the units for sale.  It would be understandable that some Madeline units come back on the market as some of the early buyers look to sell.  The supply is very thin for Mountain Village condominiums between $1M and $2M. 

Vacant Land

By far the best value is in Mountain Village golf course lots priced in the $400K to $500K range and similarly priced lots in Aldasoro. Some of these lots are priced below 2004 pricing.  The issues holding pricing down are increased construction costs and the fact that local builders are backed up for the next year and a half.  This will change with time, and these properties will later prove to be solid buys. There are a limited amount of quality ski-in/out lots for sale.  Inventory is so limited that it gives a strong value to the Ski-in/out homes that are already built.  

Town of Mountain Village Homes

Last year, 26 Mountain Village homes sold while this year about 23 have sold or are under contract.  It seems to be on par until one really dives in and looks at the comps.  In 2018, only one home has sold over $5M; whereas, seven homes sold over $5M in 2017.  There is tremendous value in some of the homes correctly priced over $5M.  Eleven months does not make a trend, and with a good snow season, I believe buyers will step in and purchase homes over $5M in the coming eight months.  Another statistic of note is that gross rental numbers on ski-in/out homes have increased strongly over the last five years. 

Town of Telluride

In the Town of Telluride, property values remain firm, and there is a real inventory problem.  The problem is really a real estate broker’s problem as there is not much to sell. The Town of Telluride has contributed to the increase in building costs due to their increased building and planning fees. These fees will not go away, and as a result it will increase the cost of future construction. This is one factor for the accelerating dollar per square foot. There are certainly still some great buys in Town, and I suspect these properties will be purchased this winter.  I feel the new construction in the Transfer area will also pick up momentum this February/March.  A buyer will need to act on a quality product, as their second option will be less quality or cost more.  However, a buyer needs to be very cautious when looking to purchase something that lacks quality or strong attributes. Some sellers in Town are just not motivated or they are falling into the trap of thinking their property is worth as much as some of the “higher” market sold comps.  There will be more of a price distinction between product with strong quality attributes as compared to properties that lack those attributes. 

On the home page of my website there are four quick links to market segments so one can see the limited inventory in each segment.  

Overall, the main theme is buyers need to be careful not to pay too much for properties that lack location, views, quality of construction, etc., but should not be hesitant to act on properties that are unique and have strong characteristics that are hard to duplicate.   

The market did well last winter considering there was really no snow.  I am eager to see what happens this winter when the snow comes.  Currently, there is a lot of snow up high, and less down low. Telski is blowing snow onto the runs that offer ingress and egress to these higher areas.  With a more few strong storms, the December skiing should be really good.  

If you would like a more detailed analysis on any market segment please do not hesitate to call or email as I am happy to provide those statistics.   

Wishing you Happy Holiday season and a wonderful 2019.

Rick Fusting