For most of the last twenty years, if you wanted to live and make money in Telluride, your best option was real estate or real estate development, or a closely related field like banking, architecture, or home furnishings.
Or you could be comfortably middle class by working for a local government or the school district, especially if you could get into affordable housing. There were really very few other professional options that paid enough to support a Telluride lifestyle.
There have been a couple of obvious reasons for this.
First, the entire country and much of the world have been living through an epoch where speculative investment was far more lucrative than owning or running an operating business. (This is one reason metropolitan daily newspapers are in trouble, because they leveraged themselves to the max rather than attending to their core businesses.)
The smart move in Telluride, given our natural assets (unsurpassed beauty, recreational opportunity) and liabilities (remoteness, high cost of living), was to develop and sell properties that were fundamentally not homes but were equity investments that happened to look like homes. Like other equity investments these past few decades, the basis for valuing these properties became divorced from underlying economic realities, and because of lax regulation, banks were all-too-eager to lend against those exaggerated values. But as long as the bubble lasted, individuals could and did make good money in the local real estate market.
The second reason the Telluride region became so heavily over-invested in real estate is because our zoning and political culture strongly encouraged it. Developers could create residential properties within existing zoning and without facing the enormous mitigations required of tourist-related construction, not to mention the headaches and risks of operating a hotel once it was built. There weren’t all that many investors for tourist-related development in the first place, but there were some, and they faced nothing but discouragement. The local political culture has been passionately anti-growth, and understandably so, given the consequences of overdevelopment on exhibit elsewhere in the Rockies. All of the political pressure has been for lower densities, which again favored sprawling residential development.
Combine a macroeconomic climate fueled by speculation with local politics that were militantly anti-growth and the outcome was all-but-inevitable. Despite our best intentions to build a sustainable community, we built instead a community for the gilded age, with gargantuan private homes and far too few tourist accommodations to support a vibrant economy with a middle class.
This might have worked indefinitely if the bubble had lasted indefinitely. But the gilded age has come to a crashing close, as we all knew it had to, and the question for Telluride and Mountain Village now and for the next decade is where do we go from here.
Wrenching, painful change us upon us, whether we like it or not. Our real estate community, which has created our prosperity over the last several decades, will not vanish, and people will still want to live and invest in Telluride. But even our most bullish real estate brokers recognize that the market is not going to be what it was anytime soon, and maybe never.
The silver lining in this crash is that finally, politically, the Telluride region may be forced to strive for balance. Can we possibly have both a real estate sector that is not unsustainably overheated and a tourism sector that is not unsustainably comatose? Is this too much to hope for? Perhaps the portion of the community that has been most leery of growth, and has fought it at every turn, will understand that all growth is not equally objectionable, that some forms of growth are more sustainable than others, and that no growth, ultimately, is not a viable option.
Having been deeply wounded by growth fueled by leverage, hopefully some of the people who wish to remain in Telluride and make a living here will step back from the get-rich-quick mentality of the late, unlamented gilded era and dedicate themselves instead to the one sustainable enterprise that can really work here: hosting visitors.
We may not get obscenely rich being the tourist town we were always meant to be, and certainly not as rich as we did when the houses we bought one year were worth twice as much just a few years later. But we can have a sustainable community.
From the bottom of the Great Recession, where we find ourselves now, that doesn’t look so bad, does it?