TELLURIDE – If it weren’t for all the political posturing in Washington over the nation’s debt ceiling and the subsequent downgrade of the nation’s credit ranking by Standard and Poor’s, Telluride might have experienced an excellent summer real estate season. Despite the late summer uncertainty in the markets – which most local real estate brokers would agree really hurt – the summer wasn’t terrible either.
After a relatively strong 2010 and an upbeat early summer, according to Telluride Properties broker Brian O’Neill, the real estate market had “decent activity” in certain segments, including homes within the Town of Telluride. Other segments, like the Mountain Village condo and home markets, he said, remain stagnant as high inventories are affecting the values.
“There was definitely a significant number of shoppers in the market this summer,” O’Neill said. “There was more activity than we have seen in a while. There was a lot of optimism going into July that this could be the summer that things pick back up. The interest was there.”
That momentum came to an abrupt end, however, when the nation’s debt ceiling became consistent headline news.
“Everything became dysfunctional in the government and we saw people losing certainty,” he said. “Then, couple that with the S & P downgrade as well as the international issues going on in Europe and Japan, everybody started panicking.”
“I think it probably caused many people who were considering buying in this area to put the brakes on,” Ed Andrews, owner of Ed Andrews Real Estate, Inc., said.
As a result of the downgrade, the stock market became unstable and volatile as the Dow Jones industrial average dropped by more than nine percent in early August.
“The stock market made buyers pause a little bit,” Telluride Real Estate Corporation broker Mike Zuendel said. “I had two deals that were put on hold. Since that happened, the market has gradually been working its way back up. Traditionally, when the stock market has done well, real estate in Telluride has done well.”
But in the last four weeks or so after the debt ceiling crisis came to a head, Telluride Properties broker Mike Shimkonis said, things have picked up again, especially in the Town of Telluride.
“The town is stable, especially single-family homes,” Shimkonis said. “Homes in town have stabilized, homes in the Ski Ranches have stabilized, the general market has mostly stabilized, but there are still some unknowns.”
The biggest question mark surrounds sales in Mountain Village, where sales have been tough to come by. Several factors may be at work, including a high inventory of properties, unattractive pricing, and potential buyers downsizing their needs.
“There is not a demand for large homes in Mountain Village right now,” Shimkonis said. “It seems like people don’t want to go bigger than 4,500 square feet.”
“Buyers are looking for a little less exposure and are downsizing mentally,” O’Neill affirmed. “They are downsizing their expectations and are going after some of the nice larger condos that are available.”
And for many buyers looking in Mountain Village, the prices haven’t quite dropped low enough yet, either.
“The spec homes flooded the market up there and the price tag on a lot of those homes were, in the eyes of some buyers, inflated,” Andrews said. “When you have a surplus of inventory, that inventory has to be depleted before the activity and interest level can increase.”
While prices on land, homes and condos have been reduced anywhere from 9 to 30 percent off of 2007 peak prices, Shimkonis believes Mountain Village property prices are going to have to drop even more before sales increase.
“I think we are due for a price adjustment in general as it relates to Mountain Village,” Shimkonis said. “The prices have dropped but properties haven’t moved. They probably need to go lower.”
Most brokers agree that while the market has stabilized in some aspects, the Telluride region continues to be a buyers’ market and those who have watched the market’s history know that some of the best deals to be had are right now.
“Buyers who are in constant communication with their brokers are going to be able to strike quickly when the right scenario comes along,” Shimkonis said. “We will be in a buyers’ market for quite some time, with some things more in a buyers’ market than others.”
“At this point in time, prices on properties have never been better,” Andrews said. “Prices have been adjusted and some of the best bargains that you will find in this region are to be found right now. In my opinion, the prices will only work through the bell curve and go up again soon.”