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Newsletters
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Title: |
November Market Report |
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Author: |
Rick Fusting |
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Date: |
01/24/2006 |
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Dear Friends,
Another season for skiing and playing in the Rockies is underway in Telluride. As many are aware, we started the season with below par snow conditions. Not to worry, as we're happy to see the snow falling steadily today and it is common for Telluride to receive a 2 ½ to 3 ft storm in the month of December. This would be enough to get the mountain fully opened for the Holiday season. This season should prove to be a very busy one, as most rental management companies show an increase of bookings from 30% to 35% ahead of last year. If you have not yet booked your stay, I would recommend doing so as soon as possible.
Continental and America West are offering discounted flights from Phoenix and L.A. Roundtrip flights from L.A are under $300. Please email me for additional information.
The real estate market in Telluride saw a surge in activity during the off season. Most of this activity traded in the higher dollar properties. As predicted in my summer email to you, most of the activity was in the Mountain Village where buyers are seeing value opportunities.
Multiple factors are prompting the buying trend in the Village. The voters approved an $18 million recreation center which is geared towards providing more amenities for the Telluride Visitor. The new grocery store located adjacent to the Gondola will also bring more life to the Village. At the same time, there are some large developers and financial institutions making large investments. The following transactions occurred in the last six months or are under contract:
Hotel Developers from Park City purchased the hotel Lot 126 and the 151 Lots for $25 million.
The Blackstone Group purchased the Peaks Hotel and plans on spending a large amount of capital to upgrade the hotel. Blackstone Group has a strong history in the Hotel business, and a history of taking a hotel and selling hotel units as hotel condominiums.
It appears as if the St Regis will break ground in the Spring.
Hotel Lumiere, a smaller upscale hotel, is currently getting approval on their plans.
Lot 161CR next to the base of the Gondola was purchased for about $9.8 million. It is rumored that Lehman is backing this project which will include a hotel, commercial space, and condominiums.
The fresh money and development that is taking place will help strengthen the Mountain Village and attract new buyers for years to come.
As for the Town of Telluride, it too is grasping the hotel condominium concept. Hotel Telluride started selling units this summer, and Hotel Columbia may have units available as soon as the Christmas Holiday. The River Club will probably do the same, but a timeframe for their release of inventory is premature. If you are interested in any of these products, please give me a call. I anticipate them to sell swiftly if the sellers price them correctly, so the better units will sell first.
Lately many pundits and journalist have talked about some air coming out of a perceived bubble. I tend to agree that there are many markets in the Country that will probably stop appreciating at their current rates and will level off for a while. It seems to be Greenspan’s intention to take out the froth in some of these markets. There are definitely over inflated markets, but there are also plenty of markets where there has not been a run-up in pricing over the last three years.
Price declines in markets are generally due to increased supply and wage growth not growing as fast as the rate of home appreciation. Because many of our buyers do not live in Telluride and are in the high net worth category, wage growth does not correlate with home buying in Telluride. As for supply, most buyers would welcome more supply in our market, as our market has always had a history of low inventory levels. Note that most of the development projects that I spoke about above will not come on the market for at least three years. With that, some of these hotels will bring in new clientele which will provide new buyers.
Mountain Village supplies are actually getting thinner as the Village has not seen the great appreciation that other out of state markets have received in the last four years. There are actually a couple deals out there where the seller has taken less than what they paid in 2000. The Mountain Village has already started to rebound and should show some very good appreciation in the years ahead.
The Town of Telluride has seen a strong appreciation over the last three years, supply remains thin, and maybe the only area that will be at risk of flattening or leveling off is the lower end condominiums. The activity of single family homes is slowing due to lack of quality inventory in the under $2 million range.
As stated in my last letter, location cannot be forgotten in the real estate market. Our location is one of the strongest in the Country and its natural beauty cannot be duplicated. If one sticks to strong locations that have a good long-term histories, real estate investments should be sound. I anticipate a very busy season for Telluride real estate after the stronger than expected numbers of off season contracts are released in December.
Lastly, please check out my new website: www.telluride-colorado.com. It shows the entire Telluride MLS, and you can have your own personal notebook to save old searches or have an email sent to you when a new property comes on the market that fits your parameters.
I look forward to seeing you in Telluride.
Rick Fusting
This letter was emailed to friends and clients of Rick Fusting on November 30, 2005. This email was of personal opinion and not necessarily the opinion of other brokers within telluride-colorado.com |
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