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Newsletters
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Title: |
June 09 Market Update |
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Author: |
Rick Fusting |
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Date: |
10/01/2009 |
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Note this email was sent to Rick Fusting's Clients on 6/15/09 and are the views of Rick Fusting alone. If you would like to receive these Market updates when they are initially sent out please email Rick at rickf@telluridecolorado.net
Dear Friends,
Since my last market update in January, very little has occurred in our market. This was predictable as many buyers remain on the sidelines waiting and trying to sort out the larger macro economic picture. In my last update, I said to keep an eye on your shopping list and noted that only the very strong (i.e. distressed sales) should be pursued. After that, to no one’s surprise, few transactions occurred over the first five months of the year. However, during this time period some buyers stepped in to buy the distressed properties, and I believe these buyers will be rewarded in the future. I have a passion for studying economics, real estate, and world equity markets, but an economist I am not and, quite frankly, I cannot say how the country’s economic landscape will change or when. I am a firm believer in trends and cycles though, and I believe that typically cycles get overblown to the upside and often overblown to the downside.
During the last five months, a true separation has grown between the Sellers that really need and want to sell and those who commonly say, “If I sell it great; if I do not, then it’s not a bad thing, or I am not upset to own a property in Telluride.”
No one can know with certainty exactly when our local market will bottom out. When it does, most people will not realize it. The Telluride market does not have the volume that a Denver suburb or New York City neighborhood has. After localized real estate markets bottom, I think people, for example in Denver or New York, will look back and say the Summer of 20XX or the Fall of 20XX was the bottom, and the buyers who bought at that time will be rewarded the greatest. However, I am starting to feel that in our market the bottom will not be as distinct. Rather, it will be the buyers who bought the distressed properties over a larger time frame of maybe a year. When transactions pick up drastically then we can say that the market has turned, but I believe the buyers who stepped in early on the distressed deals will be financially rewarded the most. Two great examples of this were:
West Meadows Lots 14 and 15 were bought for the debt only. There are no houses for sale in this neighborhood and only one lot available. The lot is priced at over a million more than what Lot 14 and 15 were sold for each.
An Aldasoro house sold for $4,876,000 in 2004 and was resold in April 2009 for $3,100,000. The first sale was as an unfurnished house and the second sale included about $400k of furnishings.
There are more examples, but these are some of the strong deals that obviously favored the buyer, but in no way are indicative of an overall market price decline. These are the kind of opportunities I want my clients in.
With all this said, if you have always wanted to own property in Telluride, it is time to take action and purchase a property from a seller who needs to sell. If the property that fits your needs or desires is not currently owned by a truly motivated or distressed seller then maybe a low offer is submitted or we just wait. Looking back through decades of sold comps, never has the number of transactions been as bad as the last 6 months. Even looking back at more mature markets like Aspen, never has the correction been as big. A correction of this magnitude has never before been offered in Telluride and when it is over I wonder if I will ever see one like this in my career again.
When the national housing market recovers and one wants to be invested in real estate in addition to a personal residence, does one want to be invested in a rental suburban market where there are years of inventory or in a finite market where development is very restrictive, the property can be used for family vacationing, and its location has scenery that few places in the world can match?
Every week I look at the San Miguel County foreclosure sales schedule. It is interesting to monitor because most of the properties are getting delayed or cured. I have yet to hear from any broker or any other source about a great deal on a property that was sold on the courthouse steps. The reason for this is that the quality properties that are on the list are getting offers prior to the sale date.
Telluride also continues to be one fantastic place to live and to visit. Our summer festival season is in full swing. This year’s Mountainfilm Festival was fantastic. If you have never been to Mountainfilm, always over Memorial Day weekend, I highly recommend it. The last month has been unseasonably rainy, which is making the hills look as green as I have ever seen them in the summer months. For those flyfishermen, the water flows have been higher than normal due to the rain and rapid snowmelt, so the coveted Stonefly hatch should start late this week and continue for at least two weeks. Book your flights into Montrose and come enjoy an entertaining summer in Telluride.
For those of you that will be in Town Wednesday June 17th, I am hosting and I welcome you to attend a private party for One to One. In the spirit of Bluegrass, John Cowan, will be playing. The One to One program is like the Big Brother Big Sister Program and I am the current President. The party will be limited to about 100 people and held in Town. A donation of $100 will get you into this intimate event.
As always I value your thoughts and comments. I look forward to speaking with you soon.
RICK FUSTING
Peaks Real Estate Sotheby's International Realty
c. 970-708-5500
rickf@telluridecolorado.net
www.telluride-colorado.com
Artfully uniting extraordinary homes with extraordinary lives
P Please consider the environment before printing this email
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