Teton County Real Estate Year End Update 2009

Market Continues Correction Through 4th Quarter – Pace of Decline Slows

Sales volume in Teton County, Wyoming was less in 2009 than the preceding year, but showed a slightly smaller decline than had been noted between 2007 and 2008. Comparing sales statistics for 2009 to the preceding year, the number of residential property sales (single-family residences, condominium / townhouses, and residential building sites) showed a decrease of nearly 42.27%, slightly less than the nearly 46% decrease that had been noted from 2007 to 2008. As a result of this drop, and 13.52% drop in the average transaction price, dollar volume of sales decreased over 50% for the year. This decrease in dollar volume of sales was actually over 8 percentage points greater than the drop in dollar volume between the 2007 and 2008 years due to a higher average transaction price in 2008. Review of sales and re-sales of the same or similar properties over the 2008 to 2009 time period reveal value losses ranging from the mid-teen percentages to losses of over 40%.

	2007	2008	2009	2008/2007	2009/2008
Total Residential (Single-Family, Condo,Homesite) Transactions	716	388	224	-45.81%	-42.27%
Average Price of Transaction	$1,513,876	$1,606,595	$1,389,431.18	6.12%	-13.52%
Total Sales	$1,083,935,017	$623,358,973	$305,674,860.62	-42.49%	-50.96%

 

To further analyze the most current trends in the Teton County Real Estate Market, the market segments of single-family home sales, vacant homesite sales, and condominium / townhome sales will first be examined without differentiation between the higher-end resort segment of the market and the more moderately priced market segment. Each of these data sets was then allocated between its higher-end and more moderately priced components for further analysis and comparison to data from previous years.

Single Family Residences in Teton County Wyoming

 
Reviewing the year-to-date sales data for detached single-family residences for 2009 as compared to 2008, a decrease in the number of sales (-24.66%) was noted. While a substantial decrease, this decrease is considerably less than the 48.23% decrease that was noted between 2007 and 2008. The average transaction price of single-family homes decreased by 17.17% in 2009, which when considered with the decrease in number of transactions combined for an over 38% loss in dollar volume of transactions. While the amount of value correction varies between various market segments, value loses of 25% to 35% from 2008 peaks are not uncommon in the below-two-million dollar price category. The high-end home market in Teton County has fared relatively well, with number of sales being similar to that of 2003 and 2004, but well below that of peak 2005- 2007 levels. Value trends in this high-end segment are difficult to gauge due to the varying home types that comprise this market and the relative infrequency of sales. However, many area real estate professionals feel that this market has experienced some of the least levels of discounting.
The attached table arrays year-over-year comparisons of single-family home sales by analyzing the time period starting 2000 through year-end 2009.

Observing the attached table and chart, it is noted that the number of single-family sales that have occurred year to date has fallen to a level that has not been seen in the preceding eight years.

Allocation Between “Resort / Second Home” and “Local” Market

Historically, the Teton County Market Area has been able to be segmented into its components of homes having their greatest appeal to market participants whose income is largely dependent on the local economy, versus homes that are more likely to appeal to second home purchasers and investors whose wealth is not necessarily tied to the local economy. Examples of the former category would be homes in developments such as Cottonwood Park, Melody Ranch, and the incorporated Jackson area. Examples of the latter area include homes located on the “West Bank” of the Snake River, north of Jackson, and the Teton Village area. The following table allocates the single family homesites between these segments:

Single Family Residential Local Market

	2007	2008	2009	2008/2007	2009/2008
Number	144	78	52	-45.83%	-33.33%
Average	$1,000,080	$1,083,491	$927,413.46	8.34%	-14.41%
$ Volume	$144,011,553	$84,512,309	$48,225,500	-41.32%	-42.94%

Single Family Residential Resort/Second Home Market

	2007	2008	2009	2008/2007	2009/2008
Number	138	68	58	-50.72%	-14.71%
Average	$2,857,711	$3,259,779	$2,475,495.81	14.07%	-24.06%
$ Volume	$394,364,184	$221,665,000	$141,103,261.00	-43.79%	-36.34%

As shown in the previous table, the locals market has shown a decline of over twice the magnitude (when discussing number of sales) than that of the grouping of sales that have been classified as being pertinent to the resort market. Counter to this observation is the fact that the average transaction price of the resort market showed a decrease that is nearly 10 percentage points higher than the locals market. However, this is largely hypothesized to be a function of the changing composition of the inventory of sold properties, rather than an indication of a greater decrease in price of the resort segment as compared to the locals segment. The locals market showed the greatest decrease in volume when using dollar volume of sales as an indicator.

Luxury Home Submarket of the Resort-Orientated Market Segment

 

Included in the above-discussed resort orientated market segment is the submarket of luxury homes. Observation of high-end home sales reveals that 12 sales equal to or above $3,000,000 occurred in 2008. This number is similar to the numbers noted in the years of 2000 and 2004, but less than that of the most robust years of 2005-2007. While the number of high-end home sales has decreased, the existence of sales at the upper reaches of the value range, including one sale above $14,000,000 has caused many real estate professionals to feel that pricing in this market segment has experienced the least amount of discounting.

The attached table shows year-to-date data for this market from year 2000 through 2009.

 

Homesite Sales in Teton County Wyoming

Observing year end data for vacant homesites, a 34.92% decrease in the number of sales was noted in 2009. While a significant decrease, this number is far less than the 62.05% decrease shown between 2007 and 2008. However, as the result of an over 37.67% drop in average homesite price, the dollar volume of sales for single-family homesites dropped 61.42%, slightly more than was noted the previous year. The following table arrays year-over-year comparisons of vacant homesite sales in the Teton County Market Area.

The attached table arrays year-over-year comparisons of vacant homesite sales by analyzing the time period of 2000 through year-end 2009.

As was done with single-family residences, the market for vacant homesites was, for analysis, allocated into its component parts of the “resort” and “local” markets. The following table summarizes this allocation:

 

Residential Homesite Local Market

	2007	2008	2009	2008/2007	2009/2008
Number	41	23	10	-43.90%	-56.52%
Average	$588,592	$843,717	$393,611.11	43.35%	-53.35%
$ Volume	$24,132,269	$19,405,500	$3,542,500	-19.59%	-81.74%

Residential Homesite Resort/Second Home Market

	2007	2008	2009	2008/2007	2009/2008
Number	125	40	31	-68.00%	-22.50%
Average	$2,406,910	$2,683,838	$1,512,174.17	11.51%	-43.66%
$ Volume	$300,863,800	$107,353,500	$45,365,225	-64.32%	-57.74%

As shown in the previous table, the locals market has shown a larger decline in sales on a percentage basis than that of the resort market when considering both number and average transaction price of sales. As a result, the locals market showed the greatest drop in dollar volume of sales, with an over 80% drop for this metric.

Condominium and Townhome Sales in Teton County

Observing year-to-date data for condominiums and townhomes, a decrease in sales volume (number of sales) of 59.22% is noted. This is the largest drop in number of sales of the three market segments (attached homes, lots, single-family residences). Combining this drop with a nearly 12% drop in the average transaction price of this market segment, a 64.58% in dollar volume of sales is noted, which is also the largest of all three market segments. Contributory to this drop is the lack of financing available for the condo-tel segment of the market and a “whipsaw” reaction to prices of previously more affordable attached homes that had become inflated in price during the period of lax lending policies.

Please see attached document for a chart and a graph related to condominium and townhome sales.

 

 

Allocation Between “Resort / Second Home” and “Local” Market

As was done with single-family residences and homesites, the market for attached homes for analysis, was allocated into its component parts of the “resort” and “local” markets. The following table summarizes this allocation:

Condominium/Townhouse Local Market

	2007	2008	2009	2008/2007	2009/2008
Number	136	80	38	-41.18%	-52.50%
Average	$507,140	$645,563	$499,288.64	27.29%	-22.66%
$ Volume	$68,971,049	$51,645,037	$18,473,679.68	-25.12%	-64.23%

Condominium/Townhouse Resort/Second Home Market

	2007	2008	2009	2008/2007	2009/2008
Number	132	99	35	-25.00%	-64.65%
Average	$1,148,425	$1,401,794	$1,398,991.28	22.06%	-0.20%
$ Volume	$151,592,162	$138,777,627	$48,964,694.94	-8.45%	-64.72%

 

As shown in the previous table, both the locals and resort markets have shown similar decreases in value, with both of these segments reporting losses in dollar volume of sales approximating 64%. This equity in loss between the market segments is likely due to the resort segment’s having most of the condo-tel product being balanced by the value correction of being noted in developments that had price inflation fueled by loose financing practices and have now experienced significant price corrections.

The Supply Side

When considering the health of a real estate market, it is important to consider available inventory as well as historical demand. In this regard, signs of a market slowdown are evident as well.

The attached table arrays the increase in listed inventory in the major market segments of Teton County. Areas such as the condominium market north of the Town of Jackson or the market segment south of the Snake River Bridge were not specifically addressed due to the inconsistencies typically caused by the limited amounts of data points in these areas. Overall, this analysis shows that, on average, buyers have approximately 20% more inventory to select from when property shopping in Teton County this year than last year. This increase is much smaller than the 47.56% noted from 2007 to 2008. Interestingly enough, the smallest change in inventory was noted in the hardest hit market segment of attached homes, perhaps indicating that saturation occurred earlier in this market segment. The largest increase in listings for attached homes was noted in MLS area 2, the area comprised of the Aspens and Teton Pines. The largest increase in inventory was noted for single-family homes in Teton Village. Homes on the “West Bank of the Snake River showed the most favorable change in single-family home inventory, with active inventory actually decreasing by 5.19% for this segment However, in absolute numbers this only represented an increase in seven listings.

In Summary

 

The Teton County Real Estate Market had, in recent history, experienced robust growth in sales volume and price. This trend largely continued through 2007, with the onset of recessionary tendencies triggered by what has come to be referred to as the “mortgage crisis” in mid-summer 2007 not causing a significant impact to 2007 numbers. However, review of mid-fall 2008 numbers indicated that a market slowdown had settled on the local real estate market with year-end price points and active listing data signifying that a price correction has occurred. By year-end 2008, evidence of the correction had become tangible in most market segments in regard to decreases in the number of sales. However, at that time, a stand off between buyers and sellers created a situation where little hard evidence of value loss had occurred, leaving such claims to intuition. Review of 2009 data has shown that value loss has indeed occurred; with the average transaction price showing double digit declines in all the market segments (attached home, homesite, and single-family residences). That said, some indication of abatement of downward trends were noted in the segments for single-family residences and homesites, with sales volume decreases still being evident, but occurring at a rate approximately one-half of that which was witnessed the previous year. And, while a decrease in rate of market decline is not as positive an indicator as a market turn, it at least presents the possibility that we are approaching that turn.

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