Mark Twain wrote that the real religion in America was the lust for the greenback, stocks, and gold. He called these three, the Father, the Son, and the Holy Ghost, and admitted that he spent a great deal of his life chasing money and gold, eventually ending up in Virginia City Nevada during the gold rush, and lost everything, filing for bankruptcy. The Pure Golden Age of the ski towns, Aspen and Telluride, started in the late 60′s and ended abruptly in 2007, with the bank and Wall street meltdown. The old saying of miners in these two towns was “Only a few find the gold.” In the early 70′s those that invested in a home or land in Aspen or Telluride, eventually found lots of gold, and the numbers of winners were quite high. Ski bums, carpenters, plumbers, ski patrolmen, and a lucky few that were already rich, who bought low in the 70′s, cashed out in the 90′s through 2007 did astonishingly well. Some made 150 times their initial investments, with low downs to local families. Skiing became a cover for closet dirt and pad junkies. It was real, it was powerful, and lasted 27 years, the Golden Age of ski towns. In 1982 Birdman bought a home across from Keith Carradines mansion. He paid $49,000 for a duplex, put $5000 down, remodeled and sold for $950,000 in 2002. That is an astonishing 170 bagger. That is an 8.5 bagger each year for 20 years. It beat the stock market with a $42,500 increase per year, while Birdman slept and worked, and rented out the extra unit to pay the small mortgage. The town of Aspen increased in value around 30% per year since the late 60′s and had one minor correction in 1982 during the high interest rate (21%) recession caused by Paul Volcker. The following years (82-2007) saw steady increases until the Category 5 hurricane hit, that destroyed the dream. Telluride homes doubled in two years (2000) when the heir to the Sony Corp bought the ski area, Joe Morita. Then the houses and lots collapsed dramatically from 25% to 50% or more in value, starting in 2007. Go to www.estinaspen.com, and you will see the reality of the huge correction in Aspen homes. Trophy homes in greed-head city, have sold for half their original price, taking 3 to 4 years to get an offer. There are still Judas Duck real estate agents and promoters in each town, cheer leading the recent increase in sales in 2010 and 2011. They have Judas Duck reports and promotion, hyped up analysis, on the meager increases in sales. They forget to mention that sales have dropped 50% to 65% and more, from the last boom years of 2006-2007. Nobody on Wall street, except a few hedge funders, (described in the book,”The Big Short”), predicted or knew about the looming Category 5 Hurricane. There was not one line in the Wall Street Journal, warning of a coming disaster. The Golden Age in these two ski towns, Aspen and Telluride, was a unique Perfect Storm. People adventurous enough and lucky enough to have arrived in either town in the early 70′s, and had any grasp of the upside of buying a home, were rewarded in a giant manner. If they were caught in 2007, still owning the same properties, they still may have gained a lot, if they cashed in early, or lost all their equity in the meltdown. The addiction to real estate during the Golden Age, was powerful, and became the dominant culture. Even ski magazines wrote constantly about the phenomenon. The end of the boom-boom years has dramatically altered this opportunity, and made the search for gold, a search for escape back to another reality, and lower prices for everything, and no lifts at your doorstep. Now a large percentage of Telluride homes are owned by the banks that are holding a huge number of Deeds of Trust. The low down, high leverage, huge upside phenomenon may never happen again. You may see in the future, these two towns fade into a Newport Rhode Island status, where mansions became museums, and went out of style as havens for the rich. What a great life for the ski pioneers, and a sad ending for the two ski towns. Where is the next New Big Thing? Stay tuned.
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