Teton Realty Blog - Page 3 of 27 - Teton Region Real Estate Market Stats, Articles & News

Where are we relative to 2007?

November 1, 2018 By Tayson Rockefeller Leave a Comment

Being a real estate agent and a small-time real estate investor, not only do I closely watch localized trends, but also pay attention to National trends. I pay attention to articles about things that can impact the housing market, and I try to interpret how they will trickle down to my local market. Lately I have began seeing comparisons of home prices at the peak of our last boom compared to now, as an analytical point to understand where we are in our “expansion” cycle.

The general consensus of these articles is that we are on par with home prices in 2007. However, there are a couple of sticking points with this train of thought in my opinion.

First, this does not take inflation into account. While it has only been 10 years; with an average inflation rate of about 2.25% over the past 10 years, current prices are (arguably) about 21.75% higher than prices in 2007 according to the Bureau of Labor Statistics Consumer Price Index. I would interpret that to mean that a $100,000 home in 2007 would be $122,000 today not considering other Market factors, which these other analyses are also not considering. All things being equal, this should mean that prices are about 22% less today than they were in 2007, (assuming actual dollar amounts are similar) and that’s a big number.

Second, it does not consider difference in interest rates. Speaking in generalities, 30 year rates are about a full point less today than they were in 2007. While 1% doesn’t seem like much, if you take an average sales price of around $350,000, that can equate to $3,500 is a year in interest at the beginning stages of a loan. That’s almost $300 a month.

Third, if history repeats itself, that would indicate that we are about halfway through our expansion cycle, not at the end of the supply cycle. Based on local indicators, this would seemed accurate. Supply is still low, construction is underway. Usually the phase that follows expansion is high supply or oversupply. While construction costs seem to be keeping construction rates at bay, it wouldn’t be far-fetched to believe that things could pick up substantially and create an oversupply in two years’ time. if we aren’t careful.

In short, I truly believe that while we will experience a housing adjustment in the future, (not necessarily the near future) but also that it will not be as deep or have as much impact as the historic, most recent recession. I also believe that a recession will be followed by a period of expansion, and the thought process will repeat itself time and again as it has in the past. Until then, I’ll continue to read articles about National trends and take them with a grain of salt, then come to my own conclusions based on facts, data, historic data and my own experience despite how accurate or inaccurate they may be.

Idaho Homeowner’s Exemption

October 15, 2018 By Tayson Rockefeller 2 Comments

I figured it was high time to write something about the Idaho homeowners exemption, what it is, and how to take advantage of it.

Like most States, you receive a discounted rate for your property taxes for your primary residence located in Idaho. If you are taking advantage of the Idaho homeowners exemption in Idaho, you obviously can’t take advantage of a tax exemption for a primary residence in another state, and vice versa.

How much will you save?

In a nutshell, you will not be taxed on either 50% of the total assessed value of your home, or $100,000, whichever is less. No, this does not mean you will save $100,000 worth of property taxes.

How much you will save specifically depends on the rate of Taxation (the Mill Levy) in your area. Teton County Idaho has 16 Districts that range from about .6% to about 1% depending where you live for the most recent year and at the time of this article.

So, let’s assume that you have a home that is assessed at $300,000 (the County’s value, not what you paid ie. the market value) and you live in an area where the Mill Levy is 1%. Since $100,000 of the total value is less than 50% of the total value (or $150,000), you are going to save 1% of $100,000, or about $1,000.00 worth of property taxes for that year. Remember, if your home has a higher assessed value, you aren’t going to save any more than that $1,000.

When is the deadline for me to file the exemption to receive the discount for that year?

On existing construction it’s April 15th. For new construction, that deadline is moved to sometime towards the end of November, this year it’s November 26th.

What if there are multiple owners of the house?

An example here would be two people who live together that are not married. As long as both of the occupants can prove residency, they will receive 100% of the exemption allowance. If only one can prove occupancy, you’ll get half.

How do I prove residency?

The county used to accept different forms of proof of ownership such as a utility bill. That requirement has recently changed, you actually have to have the address of the home where you are claiming the exemption printed on your Idaho license.

How do I file for the exemption?

After updating your license with the new address, bring your license or licenses in to the assessor’s office which is located at the second floor of the County Courthouse next to the DMV. Don’t be fooled, you update your license at the Sheriff’s Office, not the DMV!

Short-Term Rental Pricing

September 12, 2018 By Tayson Rockefeller Leave a Comment

Price-fixing:

No, I’m not talking about real estate in general, or even real estate commissions. We all know that real estate prices are a collaboration of all of the local real estate agents who determine the market and the commissions the consumer pays. I’M KIDDING.

What I am talking about, however, is vacation rental costs. In my spare time (which is usually between 10 p.m. and 12 a.m. and 7 a.m. and 8 a.m.) I spend countless hours burning my eyeballs out looking at my over-sized smartphone, usually something real estate related. The other night, that was vacation rental prices in along the Gulf Coast. Why? I don’t know. So, what did I learn?

I learned that unfortunately, vacation rental prices in some areas are way. too. cheap. I was looking at 4 bedroom homes along the Gulf Coast for $89 a night. I thought to myself, “How could this be?”then I remembered that I probably know the answer. The vacation rental market is likely saturated and the market is competitive. I love Airbnb, but when somebody down the road is willing to lease a bedroom for $16.37 for the night with a free light beer in the fridge, it makes it a difficult proposition for everyone else.

Being the proud owner of a vacation rental in the Teton Valley area, and having a great knowledge of property management and vacation rental prices after a decade of property management, it got my wheels turning. Are our prices too cheap? Are we headed towards a competitive market place with not enough to go around?

Again, I know the answer to this too. Yes, our prices are too cheap. And no, I don’t think the market is over-saturated with the exception of shoulder seasons, but I guess that’s like anywhere else. Nonetheless, I took a detailed look at some of Teton Valley’s short-term rental offerings through various vendors to understand how how many mistakes are being made with respect to pricing. No, like the title suggests, I’m not price-fixing. I’m simply educating myself with what my competition charges, and looking at how much activity there is during certain times of the year. During this exercise, (I checked out a few dates in July of next year) I learned a couple of things.

1) Fortunately, there isn’t a huge number of short term rental owners that are under pricing during peak season – but there are a few.

2) There are certainly some marketing mistakes being made. One title was talking about how cool the Fall nights are. I’m not looking in the Fall. I don’t plan my vacations last minute like all of you non-planners, fellow Millennials, and Generation Z’s (or whatever you are).

3) Nobody was offering free light beer with a single bedroom stay.

My point with all of this is that seemingly, our market is not making the mistake that I witnessed in the Gulf Coast. At least not yet. It really, really, (really) needs to stay that way. There were a few advertising between 10 and 20% less than they should be, (others more) but I don’t think that’s going to kill the market. It’s just going to kill their return on investment. But, these are also probably the people who complain about a management fee that would probably be absorbed by proper management.

Anyway, I then looked at rates during shoulder seasons. I had to double-check to make sure that I wasn’t back on the Gulf Coast location, because I learned:

1) At least people are taking the initiative to change their prices during different seasons, but it really doesn’t need to be this dramatic.

2) That one guy who has 500 reviews and is renting his guest house for less than a hotel room is an idiot.

3) Nobody was offering free light beer with a single bedrooms stay.

To conclude, we really need to be careful. Idaho is a very pro property rights state. There likely isn’t going to be any restriction with the exception of subdivision homeowners association restriction on short-term rentals anytime soon. This is a good thing and a bad thing. On one hand it protects our interests as short-term rental investors, but on the other it also invites future competitors. As I mentioned at the outset of this article, we have room to grow. We are gaining popularity as a recreational destination for good reason. But, some of these locations I was viewing on the coast were destinations in their own right. It only takes one guy with 500 great reviews to start a revolution, in a bad way. We need to be fair with ourselves as investors and property owners, and we need to understand that people are willing to pay for clean, comfortable accommodations in one of the most beautiful locations in the world.

On that note, cheers!

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