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Year Dollar Volume Number of Sales Year-to-date condominium sales are still soaring in both Mountain Village and Telluride with $88 million in total dollar volume for Mountain Village and $55 million for Telluride. These figures are vastly ahead of 2004, which was deemed the “Year of the Condo.” County vacant residential land was also incredibly strong thus far in 2005 with $66 million in total dollar volume, compared to $57 million in the first three quarters of 2004. Additionally, single-family homes continue to thrive with $88 million in total dollar volume for Mountain Village and $37 million in total dollar volume for Telluride. Jan. - Sept. 2005 Jan. - Sept. 2004 % Increase
Year Dollar Volume Number of Sales Telluride’s Existence Outside the Real Estate Bubble Fueling this concern is a drastic increase in supply nationwide of residential homes. With such an oversupply, prices are likely to soften with sellers competing for the same group of investors. The Telluride regional marketplace is characterized by a very limited zoning of only approximately 5,000 single-family equivalents. With 60% built out in a county that is roughly 70% United States Forest Service land, the market supply has always been outstripped by demand. Consequently, supply will forever be limited, and appreciation will remain constant with only an occasional leveling of price structure in the market during periods such as the one that followed 9/11 and the ensuing recession. Additionally, investments by second homeowners are based on lifestyle, as well as the bottom line. Buyers seek the beauty of Telluride and its way of life as a respite from an often hectic metropolitan existence. Like Aspen, and other unique resort communities, Telluride exists in its own market, one resistant to typical trends hitting mainstream market areas. To underscore the uniqueness of the market related to limited supply, there are only 100 homes total currently for sale in the region’s two most significant marketplaces—the historic Town of Telluride and Mountain Village. The Telluride market, like Aspen and other resort areas, is not infallible. Slow-downs and a leveling of appreciation occur on occasion, such as the recession of 2001-2002, but it is relatively safe to assume that if the national market declines or the bubble bursts, Telluride would likely experience a temporary leveling off, rather than a decline, before regaining market strength. A case in point, increases of 36% and 42% in gross dollar sales were realized in 2003 and 2004, respectively, following a two-year plateau, and 2005 YTD is promising to be a record year with sales up 22% over a record 2004. Although little appreciation occurred during 2001-2002, values held for patient sellers and significant inflation occurred thereafter. In summary, Telluride has for the past 35 years been a very stable marketplace with limited negative outside economic influence. Scarce inventory and a discriminating group of financially sound investors in the second home market assure that this marketplace will not fall prey to the real estate bubble.
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Currently…
Real
estate and financial analysts, brokers, buyers and sellers across the
nation have expressed concern related to the real estate “bubble”
and its potential likelihood to burst. Regardless of what might occur
in other regions of the U.S., the Telluride regional marketplace is located
on an island outside that precarious bubble. As a destination resort with
limited zoning, this region is simply not subject to the many bubble-causing
factors found elsewhere across the country. 
The
volatility of the stock and financial markets and low interest rates have
driven investors to real estate in the recent past. There is considerable
concern by analysts that many of these investors are over-leveraged and
may desire to divest with a rise in rates and possible recession. This
may include “dumping” property in order to accumulate cash.
According to an article by business journalist Dana Blankenhorn, “Highly
leveraged buyers with adjustable interest mortgages above $500,000 will
find themselves with a payment and property taxes that are impossible
to make when interest rates rise…the biggest mistake is when the
market becomes flooded with sellers trying to dump their houses because
their payments have tripled…” Again, Telluride, as well as
places like Aspen and Vail, is not the norm. Most property owners are
not highly leveraged and therefore have significant equity and staying
power. They tend to have considerable financial strength and will simply
wait out a slow market before liquidating.