Telluride, first and foremost, is a ski town with great summer activities. Because of the nationwide financial crunch, we are forced to examine the underlying basics of our local economy, cultures, lifestyles and priorities. When I get enough of the local and national media financial reporting frenzy, I go back to look at the basics.
    Telluride is a wonderful tourist destination in both summer and winter and despite the economic turmoil we are holding our own. Our lifestyle and culture are extraordinary. It may possibly be adjusted but not likely to change. Our priority still is to enjoy, contribute and support our community. Telluride’s motto used to be “the most beautiful place you will ever ski” but its recent trends demonstrate “Telluride is the most beautiful place you will ever live”. With telecommunication a reality, many people have chosen to move to places a little more rugged and beautiful with a strong sense of community to enjoy the outdoors and raise a family. I do not see these basics changing. The markets will swing, the banking crisis will pass and the liquidity will return; it is a business cycle. Now how is this affecting real estate in Telluride? What is my home, condominium, land or ranch worth in these uncertain times? If I had to sell, how deep do I need to discount or if I want to buy, what bargains are out there? Telluride’s real estate market is small and a handful of sales in any market segment will be a perceived boom. Undeveloped or unbuilt lots or land are probably the least affected, but with proper research there is value to be found. Improved property, homes and condominiums, are a different story. Having been part of the building industry, I look at these conditions more in depth, analyzing the premiums paid or discount taken off the replacement value of improved property. For example, how much is the land value and how much will it cost to build this home. The discounts compared to replacement value have never been deeper. The last time I observed these types of deep discounts was in the inflation era of 1979-1983. There are a few contributing factors of course, in recent years construction costs have seen a significant increase. This is not only due to wage and price increases, but also level of detail and use of materials that are of significant higher quality, cost than ever before. These construction costs will be adjusted down in the future, but not to previously low levels. My advice for buyers is: Analyze what you can afford, do your research, connect with a competent broker who has extensive market knowledge and with superior local connections who knows who is truly motivated to sell and who is not. The reason for a buyer to act now is no building permits are being issued; the inventory will not increase. The largest selection is now available and the best bargains will go first. Lock in with the current low interest rates; when inflation surfaces rates will go up. My advice to sellers is if you do not have to sell, take your property off the market. Current buyers are sophisticated and will not be paying premiums for dreams or emotion; it is a buyer’s market. Be realistic in your expectation of value in today’s market conditions; an offer from two years ago or what the neighbors sold for is no longer relevant. If you can afford it, offer seller financing. This will most likely get you a better price. Also, talk to your listing broker and ask the hard questions: If this property has to be sold in 30 days, what would the price have to be?
    The market pendulum has swung too far in the opposite direction and as with any cycle, it will start moving to equilibrium. But after all, the mountain will be here, the tranquility will continue to sooth us no matter how much chaos is occurring beyond our mountains.
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