Greetings,
Telluride regional sales for 2019 were $594.3M and the number of sales was 540. This was the second best year in the last 10 years with 2017 sales coming in at $621M. The number of sales in 2017 was also higher at 619 sales. However, the trend for the last decade from 2010 through 2019 has been a huge upswing. In 2010, total real estate sales in dollars was $317.6M and the number of sales was 327.
What a great improvement! Prices in the last 10 years have made a steady price increase which is good for property owners...not so good for buyers. Generally, the price of a home in the town of Telluride has doubled on a price per square foot, but has remained flat in the Mountain Village. In 2019, the average sales price of a home in the town of Telluride was $1,238 per square foot with the average sales price of a home in the Mountain Village at about $696 per square foot. Obviously, your dollar will go a lot farther for a home in the Mountain Village than in the town of Telluride. However, the average sales price of a home in the town of Telluride was $2,813,700 and in the Mountain Village $4,015,921...a big difference.
The average discount between asking price and selling price for a home in the town of Telluride was 7% and the average discount between asking price and selling price for a home in the Mountain Village was 11%. Historically, there have been five years with sales higher than 2019 with 2007 being the highest at $756M.
See below for the Telluride Consulting December comparative sales report.
Condominiums are a different story. A condominium purchased in 2019 in the town of Telluride would have cost you about $870 per square foot but in the Mountain Village about $643 per square foot. In 2019 the average sales price of a condominium in the town of Telluride was $870 per square foot and in Mountain Village $643 per square foot. However, the condominium average sales price in each town is not that far apart; the town of Telluride was $1,348,043 and in the Mountain Village $1,246,546. However, the condominium average sales price in each town is not that far apart; the town of Telluride was $1,348,043 and in the Mountain Village $1,246,546. A very unusual historical statistic is that on December 31, 2019 there were only 31 condominiums for sale in the town of Telluride and 95 sold last year. That is the most lopsided sales to inventory ratio in any category in the last 30+ years. In the Mountain Village there were 81 condominiums for sale on December 31, 2019 and 76 selling last year.
Let’s talk about overall inventory available on January 1
st
of 2020 and historical inventory levels. There were 830 listings in the Telluride MLS on January 1
st
and of those only 577 were in San Miguel County. Most of the other listings are in outlying areas surrounding San Miguel County within a one hour drive. As recently as 2014 there were about an average of 1,050 listings in the Telluride MLS and in the era of 2008-2010 the average number of listings in the Telluride MLS was about 1,700 to 1,800 properties for sale. In 2005 there were 883 property sales, in 2006 there were 709 property sales and in 2007 there were 631 property sales. That is a dramatic change. As I’ve said in the Tellugram for the last two to three years inventory is very slow to create in a Colorado mountain resort and in my opinion even more difficult in the town of Telluride and a bit less difficult in the Mountain Village. Large condominium projects of ten units for more can take years to get approved and years to build. Also, the construction industry is pretty close to maximum output.
More market overview: In 2019 in all of San Miguel County there were 120 single family home sales totaling $245,620,307. For condominiums there were 176 sales totaling $225,374,200. Seventy-nine percent of the total dollar amount of sales was in homes and condominiums combined. The rest of the market comprises land sales, commercial property, development land, fractional, deed restricted, water rights and exempt sales
.
See below for the San Miguel County Real Estate Sales Activity report for 2018 compared to 2019.
On December 31, 2019 according to the Telluride MLS there were 33 homes for sale in the town of Telluride with 21 having sold that year. There were no home sales below $1M, only one above $6M and 15 sales between $1M and $3M. In the Mountain Village there were 49 homes for sale on December 31
st
with 29 sales in 2019. There was only one home sale below $1M, one sale above $8M, and 20 sales between $1M and $5M with sales being more spread out by price points in the Mountain Village than in the town of Telluride.
See below for our Telluride and Mountain Village Single Family Homes Absorption Rate for 2019.
We always get asked about other western ski resorts, so let’s take a look at three of them:
- Aspen’s largest sales year in the last decade was 2015 at $2B. For the last decade Aspen sales totaled $15B...yes Billion. Aspen largest sales year in the last decade was 2015 at $2B. However, in 2007 Aspen did $2,425,123,000. The average sales price of a single family home in Aspen last year was $7.4M.
- Vail dollar amount of sales for 2019 was $1.75B. The most expensive home to sell in Vail in 2019 was $23M. The number of sales in Vail in 2019 was 1,351. The largest dollar volume of sales in Vail ever was $2.9B in 2007.
- Jackson Hole reported $1.336B in dollar sales in 2019 and 657 sales. Even though JH dollar sales are 2 1/2 times the Telluride area market, there were 45 homes that sold below $1M. However, there were 64 single family home sales above $3M and 30 home sales above $5M.
After three decades of tracking the Telluride area real estate market and more than a dozen other Colorado and western state ski areas, the biggest difference in the Telluride real estate market and the above three resorts is that Aspen’s, Vail’s and Jackson Hole’s high end markets are much, much higher in prices and number of sales in the upper prices ranges.
In the last decade we have survived The Great Recession and had 10 years of economic growth in the United States and globally for the most part. When The Great Recession came to Colorado resorts, we who had been in the real estate business for a decade or two scoffed that high end resorts would be affected. We boasted that our clients ‘flew above’ the oncoming economic ripples that was affecting mainstream America. We were wrong...really wrong. We had never experienced widespread foreclosures which peaked out in San Miguel County at about 100 foreclosures per year for four or five years. I worked for Bank of America for two years handling their foreclosed properties here in San Miguel County.
What we finally learned is that we sell a real estate product that buyers don’t have to buy and most of our wealthy sellers didn’t have to sell. Most of the foreclosure were locals...many were REALTORS®, carpenters, school teachers and generally local owners of small businesses. The construction industry got hit harder than Realtors. Most had to move to other more affordable markets where there was still some construction happening. Construction all but stopped here in our county. What are the lessons for today? First, we still sell a real estate product that buyers don’t have to buy. It is their reward for having been financially successful somewhere else and can afford our real estate prices. Yes, they fall in love with Telluride, Mountain Village and the surrounding mesas and valleys just like the new and longtime locals have.
What are our current challenges and blessings too? First, the local and national economy is good. How long that will last no one knows. Most economists think the two biggest assets the county has enjoyed for a couple of hundred years has been a good birth rate and steady immigration both needed to fill jobs and fuel growth. The current United States birth rate is the lowest since records have been kept. There are other factors now that are creating head wind. In 2010 the average person lived in their home in the U.S. for seven years. Last year that number almost doubled to 13 years. That means a whole lot less potential inventory is coming on the market. Also, the construction industry has never fully recovered from the recession. For the last five years the average number of home sales in the U.S. has been between 5M to 5.5M units or about one million less annually than is needed to meet demand. That has been the greatest hindrance to increasing supply. The National Home Builders Association says that is due to three major things. One is the lack of skilled construction labor, the second is the cost of land which has sky rocketed in the last five or six years and the dramatic increase in local government building regulations throughout the country. Those same three challenges exists in San Miguel County, including Mountain Village and Telluride.
International real estate investment into the United States has dropped by 50% in the last three years. The pushback has been the rising costs of residential and commercial real estate in the U.S., better real estate opportunities outside the U.S., more restrictive U.S. tax laws for international purchasers, some restrictions from foreigners own countries on taking money out of their own countries, and finally some due to political challenges. The U.S. GDP is predicted to be in the 2.2% to 2.1% range for 2020 and staying in that range for the next few years. The Global GDP rate is expected to be better in the 2.5% to 3% range mostly due to emerging economies. Many of the mature global economies like Japan and Germany have virtually flat GDP growth rates.
The Great Recession showed us that national events can seriously affect local resort economies. Most of my reading and research has pointed to massive government, business and personal credit card debt as the next great economic disruptor. Automobile sales have declined for two years in the United States and globally too. Even auto sales in China declined in 2019. While low interest rates have surely benefited real estate, especially for first time homebuyers, low interest rates have sent corporate America on a ‘debt feeding binge’ for the last decade. Historically, the United States has gone in debt in a big way in time of war or economic recessions and depressions. In a period of great economic times, the U.S. has incurred one trillion dollars of debt per year in 2018 and in 2019. The U.S. is now $22 trillion in debt. The only reason that we can manage that debt is due to the current low interest rates. In the just published Congressional Budget Office report, it suggests that we are on a course to incur a trillion dollars of debt or more in every year for the next 10 years. Neither of the major political parties are even talking about this. Can you imagine the kind of impact on the federal budget with interest rates at 6, 7 or 8 percent?
Before I get to our “Ten Fun Facts”, ponder this. The 1960’s band, The Birds had a hit single called
“Turn, Turn, Turn
” which is taken from biblical verse. The point of that verse is that there is a season for everything...A time to build up, a time to break down. Whether you’re a fan of Warren Buffett or not, he does have a certain amount of credibility as an investor. He says it this way, “Be fearful when others are greedy and be greedy when others are fearful”. I’m positive as I can get on Telluride’s future. However, having lived through the recession of 1981 and The Great Recession of 2008-12, I plan for the best and prepare for the worst.
My annual prediction for the 2020 Telluride Regional real estate market is...the total dollar amount of sales will be between $550M and $575M and the total number of sales will be between 475 and 500. That of course is a decrease from 2019. My reasoning is mostly due to a lack on inventory in some key market segments...houses and condominiums. Additionally, I am concerned about the probable decrease in international buyers due to increasing U.S. real estate prices. I hope I’m wrong, but all economies cycle. It is just a guess at where the U.S. and Telluride is in that cycle.
Now for our monthly Ten Fun Facts:
- In 2019, U.S. auto sales dropped below 17M units for the first time since 2014.
- In China, auto sales dropped 7.4% to 20.7M.
- In 2019, household net worth hit $100.3 trillion, about double 2008.
- U.S. home inventory dropped to a seven year low.
- The International Monetary Fund predicts global growth of 3.3% in 2020, but predicted U.S. growth at 2% for 2020.
- In 1981, the median age of a U.S. homebuyer was 31. In 2018 it was 47!
- On 6/30/19 the U.S. population was 328,239,523 which was a .05 % growth rate for the preceding year. This was the lowest U.S. population growth rate since 1918.
- Chinese citizens have been the largest purchaser of U.S. real estate for eight years in a row. They are in the fastest decline of any country for the last three years.
- Florida is the third largest populated state at about 22M. Colorado is about 5.5M, approximately the population of New Zealand.
- On December 31st, the snow amount at Telluride/Mountain Village was 114 inches. On the last day of January it was 166 inches. 😊
Our sincere thanks to:
Telluride Consulting; Land Title Guarantee Company, Telluride; Andrew Ernemann, Aspen Snowmass Sotheby's International Realty; David Viehman, Engel & Völkers Jackson Hole; Mike Budd, Berkshire Hathaway Home Services Colorado Properties in Edwards; Colorado Biz magazine, Fortune magazine, and my wonderful editor & wife, Becky.
"Happiness is not a destination, but a manner of travel" – Unknown Happy Traveler
As always, contact us for advice as a seller or a buyer and we’ll do our best to give you a honest, straight answer. We can be contacted at
george@theharveyteam.net
or George’s cell 970-729-0111.
George Harvey, Jr.
