Market Report – Spring 2010

Teton County Real Estate Spring 2010

Decrease in Sales Price Encourages Increased Sales Volume at “Corrected” Price Points

In 2008, the Teton County real estate market was slow to acknowledge the effects of the economic downturn that was gripping the majority of the United States. However, by the third quarter of 2008, the Teton County real estate market had slowed as the result of the financial “meltdown” that had signified that the economic slowdown was more than a minor setback and was, in fact, a full-blown recession. As a result, 2008 sales numbers only moderately reflected a declining market. In comparison, 2009 was the first year with sales numbers being reflective of a full calendar year where real estate market participants acknowledged a contracting market. Resultantly, 2009 data revealed a dramatic decrease in sales volume. This slow down was exacerbated by the reluctance of many sellers to fully acknowledge the new lower price points that would be accepted by the market. The first four months of 2010 show an improvement in sales volume from 2009 numbers, with the number of transactions of residential real estate increasing over 190% from the same period during the previous year. However, this increase in volume is, in part, due to seller’s finally beginning to acknowledge the lowering of market pricing. The decline of the market’s average price levels was somewhat mitigated by a flurry of higher-end single-family home and attached home sales. However, while this phenomenon skewed the averages upward, closer examination of price point of individual properties reveals that value loss between 20% and 50% (depending on market segment) has occurred from high water marks observed in 2007-2008.

2008 2009 2010 2009/2010
Total Residential (Single-Family, Condo,Homesite) Transactions 164 29 85 193.10%
Average Price of Transaction $1,461,371.42 $1,679,698.66 $1,689,539.88 .59%
Total Sales $239,664,912.94 $48,711,261.00 $141,921,350.00 191.35%

The above-described increase in sales activity is clearly seen in the preceding table when comparing the 29 sales of 2009 to the 85 sales of 2010. However, the number of sales is still far below that of 2008 (164). Notably, this comparison shows a small increase in average sales price. However, this is opined to largely be a function of the composition of the inventory of homes that was sold, rather than an increase in sales price. 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 on an April 30th year to date basis 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.

Single Family Residences in Teton County Wyoming

Reviewing the year-to-date sales data for detached single-family residences for 2010 as compared to 2009, an increase in the number of sales (131.58%) and dollar volume of sales (160.94%) was noted. The average price of single-family home transactions increased by 12.68% during this period. However, this is theorized to be the result of a changing composition of the property types which sold. As an example, in 2010, 18 sales of homes with sales price equal or greater to $3,000,000 sold. This equates to over 21% of total number of sales. By comparison the 14 sales in this price bracket only accounted for 5.67% of the sales numbers. The higher percentage of sold properties in the upper price echelon has caused a higher average price to occur in the aggregate data. However, comparison of the sales and re-sales of similar properties shows examples of value loss between 25% and 50%.

The attached table arrays year-over-year comparisons of single-family home sales by analyzing the time period starting 2000 through April 2010.

Observing the preceding table and chart, it is noted that the number of single-family sales that have occurred year to date represents a rebound in sales volume, but it is still at a level that is significantly below the sales volume noted prior to the beginning of the “mortgage crisis” in 2007.

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

2008 2009 2010 2009/2010
Number 26 11 23 109.09%
Average $1,042,249.96 $1,045,318.18 $931,369.57 -10.90%
$ Volume $27,098,499.00 $11,498,500.00 $21,421,500.00 86.30%

Single Family Residential Resort/Second Home Market

2008 2009 2010 2009/2010
Number 13 8 21 162.50%
Average $2,601,538.46 $3,440,407.63 $3,828.571.43 11.28%
$ Volume $33,820,000.00 $27,523,261.00 $80,400,000.00 192.12%

As shown in the previous table, the local and resort markets have both increased in transaction volume, with the local market increasing at a lesser rate (109.09%) than the resort market (162.5%). The indication that the local market has declined while the resort market has held its ground (or appreciated), is revealing in that it shows a pricing decline in the local market. However, the increase in the resort markets average sales price, as previously discussed, is due to a skewing caused by a higher percentage of luxury homes selling this spring, and is not indicative of property appreciation.

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 sales reveals that 14 sales equal to or above $3,000,000 had occurred as of the end of April this year. This number is greater than any year previous and indicates that the luxury home segment of Teton County is perhaps the healthiest segment of the market.

attached table shows year-to-date data for this market from year 2000 through April 2010.

Homesite Sales in Teton County Wyoming

Observing year-to-date data for vacant homesites similarities with the single-family homesites are noted in that an over doubling of the number of sales of vacant land has been noted between what occurred year-to-date as of the end of April 2009 as compared to 2010 for the same period. However, while perhaps significant as a percentage, this growth in lot volume only represents a growth of six lots. Average price increased slightly (5.7%). The change in this metric is attributed to the changing composition of the sales, as comparisons of sales and re-sales (and active listings) show devaluation ranging from 25% to over 40%. The following table arrays year-over-year comparisons of vacant homesite sales by analyzing the time period of January 1st through the end of April.

The attached table arrays year-over-year comparisons of vacant homesite sales by analyzing the time period of 2000 through April 2010.

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

2008 2009 2010 2009/2010
Number 8 6 N/A
Average $1,200,875.00 $1,198,000.00 N/A
$ Volume $9,607,000.00 $5,990,000.00 N/A

Residential Homesite Resort/Second Home Market

2008 2009 2010 2009/2010
Number 19 5 5 0.00%
Average $3,276,842.11 $992,000.00 $899,000.00 -9.38%
$ Volume $62,260,000.00 $4,960,000.00 $4,495,000.00 -9.38%

As shown in the previous table, no sales of vacant land occurred in what has been classified as the locals market in 2009, making a percentage comparison not possible. However, it can be noted that 2010 sales numbers are similar to that of 2008 for this market segment. Sales numbers occurring in the resort market are identical to that of the previous year.

Condominium and Townhome Sales in Teton County

Observing year-to-date data for condominiums and townhomes, an increase in sales volume (number of sales) of 500% is noted. Notably, this increase is as much attributable to the dearth of sales noted for 2009, as opposed to a long-term strengthening of this market segment. Comparing 2010 volume numbers to years previous to 2009, it is noted that current year sales to date approximate only one-third of the sales volume that was noted during the more robust years of the market. While, the average price of attached homes (as shown by the aggregate data) increased slightly (4.36%). This is concluded to be due to the changing composition of the body of sales, as comparison of sales and re-sales (as well as active listings) provides the indication that this segment of the market as devalued in a magnitude that is perhaps greater than other market segments.

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

2008 2009 2010 2009/2010
Number 38 1 11 1000.00%
Average $659,093.08 $303,000.00 $586,886.36 93.69%
$ Volume $25,045,537.00 $303,000.00 $6,455,750.00 2030.61%

Condominium/Townhouse Resort/Second Home Market

2008 2009 2010 2009/2010
Number 60 4 19 375.00%
Average $1,363,897.95 $1,106,625.00 $1,218,900.00 10.15%
$ Volume $81,833,876.94 $4,426,500.00 $23,159,100.00 423.19%

As shown in the previous table, both the local market and the resort market have increased in sale volume dramatically on a percentage basis. However, this interpretation must be tempered by the reality of these increases being relatively small in absolute numbers. Both market segments show an increase in average transaction price. However, as with the other markets, this increase is due to a small sample size and the changing composition of sales. As an example, in the case of the local market, a Walden Pond Townhouse was noted to have sold in the neighborhood of $340,000 this spring, whereas previously such units were being sold in the $700,000 range. This represents a devaluation of over 50%. Likewise, a Lodge at Granite Ridge recently sold for approximately $3,600,000, whereas, in April of 2008, such units had traded in the range of $4,500,000. In this example a 20% devaluation is noted. The greater loss of the preceding comparisons is attributable to a data point in the local market. It is hypothesized that the attached home market for local properties has been one of the harder hit market segments due to the very dramatic tightening of lending policies for this property type (and, by comparison, the very lax lending policies prior to the “mortgage crisis”).

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 4.73% more inventory to select from when property shopping in Teton County, Wyoming as compared to the this time last year. This increase is relatively small and shows an encouraging trend of smaller annual increases in inventory over the past two years. The greatest increase in listing inventory is noted in the market segment of homesites, which grew 42.36% in active listing number. In contrast, the market segments of attached homes and single-family residences both showed decreases in inventory levels. Overall, inventory levels are up 330.56% since the spring of 2007 (prior to the “mortgage crisis”). However, 2007 was viewed in most market segments as representing a shortage of inventory, which may indicate that current inventory levels are not as onerous as might be thought. As an example, the “West Bank” market area currently has a single-family home inventory of 63 homes, while 14 homes are noted to have sold in this market segment through the first 4 months of the year. As this sales rate equates to 3.5 sales per year, this implies a current inventory of single-family homes of 18 months. This inventory level may increase as summer approaches in earnest. However, for the time being, it is at least encouraging that the previously observed growth in inventory appears to be slowing down.

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 2008 numbers showed the effects of what had become a world-wide recession of larger magnitude that had been seen in recent history. The calendar year of 2009 was the first full year where Teton County market participants transacted business with the acknowledgement of a deeply affected real estate market. As a result, the sales numbers reported for 2009 showed a significant drop in volume and average price. However, falling prices appear to have generated some market interest and volume numbers for 2010 through the first four months showed a solid increase in most market segments. In many instances, the primary interest generated was that of “bargain shoppers” with the result being a continued slide in price points in most market segments. The high end of the resort market is noted to have held its ground better than other market segments, with lower-end condominiums that became inflated due to previously-existing lax lending policies being the hardest hit market segment. Inventory growth during 2010 has continued. However, this growth has decreased in rate significantly from that observed in 2008 and 2009. The number of real estate transactions that will occur in the coming year is difficult to estimate, but is already appearing to be better than that of the previous year. The likelihood of this continuing is good, as sellers are forced to acknowledge that lower price points have become prevalent in many market segments.

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