What's Next for the Telluride Market?
If the pandemic has imprinted anything on our psyches, it’s that our homes are our havens and living in a place that makes you happy is more important than ever.
We have been fielding calls from clients wondering what will happen to the market in Telluride – interest rates are high, consumer confidence is low, and a recession almost seems imminent.
However, unlike most big cities and suburbs, the pandemic brought on the extreme demand for beautiful, rural places like Telluride.
Since the pandemic, market conditions have strengthened with even fewer properties on the market, pushing prices even higher than back then. However, conditions remain fluid because, locally, there is a shortage of property inventory, and, globally, there are pressing concerns, including geopolitics, international turmoil, and high and persistent inflation. Recession risks in Europe, China, and America have dimmed the outlook for the U.S. economy. Despite the current outlook, Americans continue to spend heartily. Sales of clothing, cars, and furniture are some data points that ticked up despite the troubles abroad and high prices at the checkout stand. Families continue to spend, and businesses are still trying to hire, especially around the Telluride region. Countrywide, there is dwindling demand for home loans and refinancing. However, the Telluride market is a cash market, with most land and luxury home purchases occurring with cash or margin borrowing.
While middle-class consumers are slower to act, the upper end continues to seek out the qualities and attributes of the Telluride region. We are witnessing more hesitancy on the lower end of the market yet continued strong demand on the higher end. If the properties are distinctive, we’re continuing to see market absorption regardless of price. Our Ophir lot listing sold quickly due to it being a rare triple-lot, while a fabulous penthouse at Cassidy Ridge contracted in just a few days.
Those with strong balance sheets are either making offers or, because of the shortage of inventory, are waiting for the right property to come along, at which point lightning quick offers are made and “Days On Market” remains well below the norm. Multiple offer situations continue with strong sales in the luxury and recreational ranch market if the quality is there.
Dollar volume YTD has increased 122% from last year, but there has been a 29% decrease in the number of transactions. However, there have been 31 sales over $5m during the first half of 2022, with the luxury market buoying real estate currently.
Another trend that we’re seeing that we haven’t seen in our careers is that new construction homes are being gobbled up, even prior to completion. Even lots with pre-approved plans are going under contract quickly, which tells us that buyers are looking to save time and buy new. The land rush has already happened – for years, we have talked about land being an incredible bargain, but those days are over. Telluride and Mountain Village are reaching the limits of their developable land and, as a result, are exporting demand to other areas of the county, like the outlying countryside.
We’ve also seen families retreat back to their city life after spending the COVID years in Telluride. They did their time here, had an amazing experience, but now that things are morphing into an endemic, they are retreating back to their “regular” lives.
Telluride will continue to be a sought-after commodity by those who can afford it. Natural landscapes will continue to erode in our country and worldwide as population growth outstrips available developable lands. This has already impacted mountain towns (the Vail/Beaver Creek corridor, Steamboat, Park City, and Jackson, for example) that don’t have our physical constraints, further ensuring the future values of Telluride. Additionally, ~70% of our county is public land, and ~30% is private, with a significant amount of the private land being in the west end of the county in farm and ag, as well conservation easements, already developed PUDs, and built-out neighborhoods surrounding town and MV. This appropriation of lands points to scarcity moving forward. Time and again, savvy, well-funded families are diversifying and parking their money in enjoyable investments made of mountain modern masterpieces, cozy log cabins, and convenient ski chalets with stupifying views.
We don’t have all the answers, but we do know that the “right” time to buy is when you find the right home that fits your family and budget. The pandemic has taught us to embrace and enjoy every moment, and if being in Telluride would make you happy, we can help you make that happen.
One thing we know for sure – you’ll never regret spending time in Telluride.