TELLURIDE – Single family homes and condo sales in Mountain Village and Telluride were down by 8 percent in 2013 compared to the year before. Similarly, the dollar volume of those sales dropped by six percent over the same time, from $239 million to $208 million.
But Judi Kiernan, owner of Telluride Consulting, said that’s not a cause for concern. She believes the residential real estate market has good days ahead of it despite the decline in market activity in the two towns, which account for 84 percent of the county’s market.
“Telluride and Mountain Village is a small market,” Kiernan said. “A couple of sales can really skew our numbers either way… Generally speaking, we’ve improved dramatically since the recession.”
A leading factor in Kiernan’s view is that 2013 saw a significant decrease in foreclosures.
“In a nutshell, 2013 foreclosures were down 60 percent – from 90 foreclosures in 2012 to 36 in 2013, said San Miguel County Treasurer Jan Stout. “This is only one foreclosure more than 2008 which was the lowest level in five years.”
Fewer foreclosures properties are a healthy signal, said Kiernan.
“Once you get rid of that damaged inventory, then things can start to get back to normal in terms of reestablishing value. But first you need to get rid of those properties and not keep adding them,” she said.
Broker George Harvey, owner of the Harvey Team, agrees that fewer foreclosures promote market stability.
“We had about four or five years where buyers wanted to look at foreclosures or short sales,” he explained. “Now that 60 percent are gone, it will be hard for that buyer to be satisfied with the deals they can find,” he said.
“I believe that’s a good trend,” he continued, “because once the prices stabilize, people feel that the bottom has been found and that their investments are safer than they were three or four years ago. Those folks were gamblers. The stability of the market is much easier to determine right now.”
As the foreclosure rate rapidly approaches pre-recession levels, the San Miguel County real estate market outside Telluride and Mountain Village experienced an increase in total number of sales - from 57 in 2012 to 69 in 2013 – despite a decrease in total dollar value of sales from $35.7 million in 2012 to $33.5 million in 2013.
More Signs of Improvement
Another significant improvement, according to Kiernan’s data, is a sharp uptick in Mountain Village condominium sales. In 2012, there were 60 sales for a total dollar value of $53 million. In 2013, condominium sales in Mountain Village increased by 17 sales, increasing the dollar value of sales by a whopping $26.8 million.
A major contributor to 2013’s improvement in the Mountain Village condominium market was the $15.25 million sale of Cassidy Ridge, a complex of luxury condos located near Chair 10. For years, Cassidy Ridge sat idly on the market until a Texas-based real estate firm bought the property in late 2013.
With heavy snowfall before the holidays, the listing broker for Cassidy Ridge, Pat Pelisson of Telluride Properties, said he has seen an increase in interest in the condominium units.
“It’s been a very busy holiday season,” he said. “Between people coming to our open houses, to people skiing into the Cassidy Ridge office, we’ve had quite a bit of activity.”
Since the 18 units hit the market in December, Pelisson has already sold two two-bedroom units for $576,000 and $615,000, and has already contracted a third. In addition, two Cassidy Ridge penthouses are currently being negotiated, he added.
“Buyers are starting to come back to Mountain Village for its lifestyle, views and quality of construction that make it such a great family investment in the first place,” Pelisson said.
While the Mountain Village condominium market heats up, the single-family home market in Mountain Village remains lackluster.
Twenty-three Mountain Village homes were sold in 2012 for a total of $76 million, but 2013 saw only nine sales totaling $27 million.
“That’s a pretty big issue, because that’s nearly a $50 million difference,” said Kiernan, who believes there are several reasons behind the downturn.
One problem in particular is the unwillingness of many single-family homeowners in Mountain Village to lower their prices.
“These are wealthy people, but the downside is that they don’t feel compelled to sell,” Kiernan said. “They have deep pockets and show an amazing resistance to sell below what they think their homes are worth.”
Stewart Seeligson, a broker at Telluride Sotheby’s International Realty, observed that while the single-family home market in Mountain Village is lagging, the condominium and single-family home markets in Telluride are strong.
Telluride is so strong, Seeligson said, that despite the slight decline in the number of homes sold in Telluride in 2013 compared to the previous year, at least twenty Telluride homes have sold every year since 2010, with over a hundred homes sold during that period.
The market for single-family homes in Telluride rebounded quickly after the Great Recession and remained strong in 2013, said Lars Carlson, broker at Telluride Sotheby’s.
“The Town of Telluride single-family homes market shows great resilience,” Carlson said. “The list and sale prices are very similar to what they were before the recession. The single-family home market in Telluride hit bottom a few years ago whereas the market in Mountain Village is rapidly approaching bottom.”
Carlson and Seeligson say they see opportunities for growth in Mountain Village sales.
“Due to the sustained strength and firm prices of the home segment in Telluride, I would expect a greater awareness of the value opportunities in Mountain Village which should lead to a significant uptick in home sales there this year,” XX said. “You can take a $4 to $5 million home in Telluride and compare it to a home in Mountain Village for the same amount, and it’s an entirely different product. The one in Mountain Village offers a different value opportunity.”
Seeligson added that Mountain Village buyers tend to be ski-oriented, and this year’s heavy snowfall could contribute to a strong 2014 in Mountain Village.
“I think there’s more emphasis in Mountain Village products when we have good snow years, and this is turning out to be a year that offers great snow,” he said.
“There are always going to be buyers where the location is more important than what they’re getting for their money,” George Harvey said. “The Town of Telluride healed about two years ago, it’s values are stable, and there are still people that want to live in town and are willing to pay the price it takes to live there.”
But Harvey also believes that Mountain Village and homes on the mesas are at the tipping point where prices will stabilize and more properties in those locations will sell.
“[The market for] Mountain Village and homes on the mesas are still a little soft,” Harvey said. “But I look for Mountain Village to do well this year, there’s a lot of good value there and on the mesas. Some buyers are always looking for a deal.”
Because the stock market roared to record highs in 2013, and is stalling in the beginning of 2014, Harvey predicts that affluent potential buyers will start investing in real estate.
“Sure, it’s a common occurrence. I hear from my broker friends across the state and they say many of their clients have regained what they lost in previous years, and now they’re looking to diversify their assets,” Harvey said.
But, he added, while optimism is temping, Mountain Village faces challenges.
“The first dozen or so sales will be the hardest to negotiate because it’s going to be hard for buyers to know what the fair price is,” Harvey said. “The real estate community will need to educate buyers that there are still good deals and buys out there, but the buyers will need to be brought into the reality that many of the deals of three or four years ago are not available anymore.”
Despite the challenges, Harvey predicts that the Telluride, Mountain Village and county will generate a combined $340 million in sales this year, nearly $100 million above 2013’s total volume.