Welcome to the Teton Valley Report. This semi-annual report, published at mid-year and year end, is authored by Jennifer Dawes with Jackson Hole Real Estate Associates and focuses on the Teton Valley, Idaho and Alta, Wyoming market.
Consistent Demand and Reduced Inventory – Indicators of Recovery
Although in many ways the 2012 Teton Valley, ID and Alta, WY real estate markets looked identical, even slightly worse than in 2011, a significant decrease of inventory in the residential and land markets indicates that we continue to gradually correct and recover.
The number of residential and land transactions were very similar to 2011, with similar sale price ranges, but both markets experienced decreased average sale prices. Fewer listings available at the end of 2012, but similar demand to 2011, resulted in an increased absorption rate, typically the precursor to a recovering market. As well, 2012 saw a decreased dollar volume of foreclosures, which explains not only fewer short sales and REOs in 2012, but also a smaller number of these types of listings in the beginning of 2013.
The number of residential sales in 2012 was similar to that of 2011. There were 215 sales in 2012, just 5 fewer (-2%) than the previous year. Of the 212 sales that were reported, the range of sale prices was similar to the year before, with a range of $35,000 to $1.75M compared to $20,000 to $1.6M in 2011.
The average sale price for the residential sector had an 18% decline for the second year in a row ($313,000 in 2010, $257,000 in 2011 and $211,000 in 2012). A look at median sale prices over the last two years is telling too; $183,000 was the median in 2011 and $165,000 in 2012. The low end of the market continues to be the most active, with almost three quarters of the transactions being under $250,000. 77% of sales were in the $0-$250,000 range, 12% were in the $250,000 to $400,000 range, 8% were in the $400,000 to $700,000 range and just 3% were over $700,000.
Looking at the resort sector of the residential market separately, the most notable change was the number of sales. There were just 24 residential resort sales in 2012, down from 40 the previous year. These sales made up just 11% of the total residential market. This can be explained by a decrease in the number of distressed resort listings on the market. There were fewer resort “deals” to be had, so there were fewer sales.
Following the rest of the overall market, the average sale price was down slightly from $529,000 to $469,000. The major difference between the resort and non-resort residential markets was that the resort sales were evenly distributed in the $0-$250,000, $250,000-$400,000 and $400,000-700,000 price ranges, whereas 74% of the non-resort residential sales were in the $0-$250,000 range. A further look at the non-resort residential sector, which makes up 89% of the residential market, shows the average sale price was down slightly from $196,000 to $178,000 in 2012. In fact, the median sale price was just $150,000 for that sub market.
The good news is that residential inventory has decreased significantly over the last few years. At the end of 2012, there were 195 residential listings compared to 295 at the end of 2011. That is a 34% reduction of inventory, which is very promising. Supply is down and demand is consistent, positively affecting the absorption rate. Since the median sale price of the total residential market was $165,000 in 2012, let’s look at the change to the rate of absorption for that slice of the market. At the end of the year, there were 35 residential listings priced from $100,000 to $200,000. As there were 68 sales during the course of the year, that yields a rate of absorption of 5.66 sales per month and indicates a 6 month supply. In 2011 the supply was 11 months, so a Seller with a residential property listed in the most active category can now expect a significantly shorter marketing period. That is great progress!
The land market also saw a significantly increased rate of absorption in 2012. This inventory was down by 15% at the end of 2012 and there were 38% more sales (51 in 2011 and 82 in 2012), yielding an absorption rate of 6.8 land sales per month vs. 4.25 per month in 2011. In other words, at the end of 2011 a 12 month history of sales and existing inventory indicated that it would take 105 months (8.7 years) to absorb all of the land inventory and that length of time shortened to 57 months (4.8 years) by the end of 2012. This is very promising. A disheartening statistic, however, is the median land sale price in 2012: $37,000. That is down from $124,000 in 2011.
There is nothing particularly notable about the resort land market, when those sales are broken out. There were 18 resort sales again in 2012. That is just 22% of the land market. The sale price range was $9,000 to $250,000 and the average sale price was $47,000, down slightly from $55,000.
Nothing would indicate any significant change to the state of the Alta market at the end of 2012. There were 6 residential sales in 2012, which was pretty consistent with the last three years (5 in 2010, 6 in 2011 and 6 in 2012). The sale price range was $130,000 to $800,000 and the average sale price was down just 18% to $474,000. There were 19 homes listed at the end of 2012, up from 13 at the end of 2011, which is the only case of an increase in inventory in any of the market categories identified in this report. There is no defendable explanation for this increase. It is possible that Sellers have gained some confidence in the market as the Jackson Hole real estate market recovers and as the Teton Valley market shows signs of improvement, influencing them to list. Wyoming property owners may also be speculating that Buyers looking to avoid income tax by claiming Wyoming residency may look to buy in Alta, WY now that inventory is drying up in the Jackson Hole area and price increases there will inevitably follow.
Land sales in Alta were similar to 2011, with just 3 sales, but the sale price range and the average sale prices shifted. The average sale price was down to $132,000 in 2012, down 54% from 2011 and the sale price range decreased from $165,000 to $370,000 in 2011 to $115,000 to $160,000 in 2012. The inventory was down to 21 at the end of the year, which was just 2 two less listings than in the end of 2011, so the absorption rate was fairly unchanged.
According to Alliance Title and Escrow in Driggs, ID, $38M was foreclosed on in 2012, which is a significant decrease for the second year in a row ($110M in 2010 and $55M in 2011). According to county records, there is $14M scheduled to foreclose in Q1 of 2013, the majority of which Alliance Title thinks were foreclosures that were postponed in 2012. They predict that 2013 will again have fewer foreclosures, bringing fewer REOs with listing prices below market value to the market.
REOs and Short Sales
Alliance Title and Escrow estimates that 50% of their closings in 2012 were REOs, 20% were short sales and 30% were non distressed sales. Even though the number of distressed sales still make up 70% of the market, they made up 90% of the market in 2011.
With inventory diminishing, a faster rate of absorption, fewer distressed listings hitting the market and favorable interest rates, it can be expected that 2013 will keep this pace and bring continued recovery. It can be expected that demand will grow as the population of “choice” properties diminishes and less desirable properties remain. It will remain a Buyer’s market until the selection of homes is unattractive enough to Buyers to give Sellers a long awaited advantage.
Chad & Dianne Budge, Owners/Associate Brokers
Rebekkah Kelley, Sales Associate
What makes up Teton Valley, Idaho?
For the purposes of this report, Teton Valley, shall be defined as Victor, Driggs and Tetonia, Idaho.
What makes up the “Resort Market” in Teton Valley?
For the purposes of this report, the resort market in Teton Valley shall be defined as property located within the following resorts: Teton Springs, Teton Reserve, Huntsman Springs and River Rim Ranch.
What is distressed real estate?
It is a property that has to be sold in order to pay arrears on a mortgage. There are three types of distressed real estate: foreclosures, short sales and REO’s.
What is foreclosure?
Foreclosure is a legal proceeding to terminate a borrower’s interest in real property, instituted by the lender, to either gain title to the property or force a sale in order to satisfy the unpaid debt secured by the property.
What is a short sale?
A short sale is when the proceeds from the sale of real estate fall “short” of the balance on the loan. The lender agrees to accept less than the amount due on the loan due to financial hardship on the part of the borrower. Generally, lenders won’t discuss short sale requests unless the borrower is already far behind on mortgage payments.
What is a REO?
The property is owned by a lender, most often a bank, and after a failed attempt at selling the property at an auction, it is returned back to the bank. After the 90-day redemption period in Wyoming the bank will most likely place it on the open market, normally below market value to get it off their books quickly.
*The statistics used in this report are from the Teton Multiple Listing Service (MLS), unless specifically referenced otherwise. Any opinions expressed are that of Graham-Faupel and its team members and not of Jackson Hole Real Estate Associates as a brokerage.
* This report does not go into detail on every segment of the market, but is intended to offer an overview of general market conditions, changes in number of transactions and average sales prices. The values of individual properties will most likely vary from these graphs.
*All statistics are supplied by sources that have been deemed reliable but are not guaranteed.
*Average sale price is the total combined dollar volume divided by the number of sales.
*The term “Market Value” means; the value of a property in terms of what it can be sold for on the open market; current value.
© Copyright 2011-2013 by Jennifer Dawes and Graham-Faupel LLP. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without explicitly written permission from Jennifer Dawes and Graham-Faupel LLP