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Fall ’21 Market Update

September 27, 2021 By Tayson Rockefeller Leave a Comment

The Teton Valley real estate keeps humming along. A few sectors of the market seem to be cooling off, but nothing earth-shattering.

LAND

The second quarter of 2021 seem to be a high point in the market with 190 land sales, consistent with the huge increase in sales since the real estate craze began in 2020. Total volume was just over 42m with sales prices exceeding list prices in many cases, but averaging 91% of the asking price. Of the 190 sales, just over 10% of them were financed.

The third quarter in 2021 brought newfound inventory, likely due to our newfound average sales price for land of just under $220k in 2021 (YTD) compared with an average sales price of just over $121k in 2020, though that average increased significantly as the year came to a close. Total volume was a touch over 38m. While the average sales price is up and sales prices are holding fairly firm at just 4% under the ask, inventory is also up and the number of sales are down over the last quarter. These are indicators that the increase of supply seems to be providing a sense of relief for buyers. We’ve seen a fair share of price reductions, but this is mostly attributed towards overzealous sellers beginning to understand that the current trajectory of land prices likely isn’t sustainable. Of the 138 sales, almost 14% were financed, a bit of an increase compared with last quarter.

RESIDENTIAL

The residential market continues to exceed expectations, likely due to the low inventory of just 58 active listings at the time of this writing and a dismal 14 new construction offerings. The third quarter of 2021 saw 93 residential sales at the time of this writing with home selling on average between 1 and 2% under the ask, with many selling above. The average sales price per square foot was $428 per square foot during this time which included land, this number is fairly consistent with the cost of construction not including land – the biggest factor when considering the lack of new inventory. Teton County reported about 38 new building permits for residential properties which included garage apartments and remodels. Builders have been turning away work with schedules booking several years in advance, but if you canceled projects because of unexpectedly high building costs have created just a few openings with custom home builders.

Roofs, Property Value and Peace of Mind

July 29, 2021 By Tayson Rockefeller Leave a Comment

A family friend reached out a few weeks back about the potential impact of a certain roofing system compared with another and how it might impact the value of their property down the line. It resonated with me as I am currently in the process of replacing the original roof on my 35-year-old home. My own experience has been somewhat tempestuous as we struggled with replacing an uncommon roof type and battling some significant damage we uncovered along the way. My home is an old family cabin that my wife and I have renovated over several years, and the old roof was an uncommon stone coated metal cold roof. We don’t have any plans to sell, so resale wasn’t on our minds. We wanted something that would blend in with the forest setting and perform well for a long period of time for the reasons mentioned above. Ultimately, we chose a very thick, shake-like asphalt shingle. We simplified the roof rakes and beefed up the Boston ridge to create a slightly more modern look, which we are happy with. In our case, we probably did increase the value of our home, and we are happy with the look of the new shingles even though we were concerned with it.

Anyway, when comparing the two roofing systems my friend was considering I didn’t feel one would significantly change the property’s value. In their case neither option would have been unusual for the home, but one was clearly more expensive. It was difficult for me to answer whether or not they would see a return on the investment for the more expensive roofing system. To answer the question, this is where I shifted focus to the overall picture. Sometimes certain home improvements, materials used or construction methods do not have a direct impact on a property’s value, but can when viewed in conjunction with the rest of the home and it’s finishes. I distinctly remember an incredible custom home of which the owner spared no change or effort throughout, but installed vinyl floors which was (honestly) just his preference. However, when helping him with the sale, it was a sticking point when comparing the finishes through the rest of the home on such a high dollar listing. Similarly, I remember walking through a property where the owner did some light renovations in anticipation of a sale. The fresh paint was great, but the Viking dishwasher felt odd to me. Yes, it was undoubtedly expensive and was certainly a talking point, but it didn’t fit well with the rest of the finishes and I don’t think that homeowner saw a return on that investment. The moral of the story, underdoing it and overdoing it are both bad, but in different ways.

Okay, if you’re still reading, on to the peace of mind part. I have probably written about this in other articles, but I wanted to touch on a few other considerations, particularly as we see new construction ticking up.

1) Snow slides. In my case, a metal roof was not an option. I have a wraparound deck that the snow would absolutely destroy in the event it were to slide off. My old roof never slid, and I hope my new roof never slides. In other cases, you want the snow to slide. Low roof pitches or shed roofs can be a good example.

2) Ventilate! I can’t think of very many circumstances where I would not recommend installing a ventilated or cold roof to help mitigate ice damming. This will usually include some form of screen or vent along the roof soffit and a vent in the gable ends or along the ridge of the home.

3) Ice Damming. Believe it or not, we get snow and ice up here. I believe code requires ice and water shield along the roof edges and valleys, but I usually suggest putting it everywhere, if you can. There are better ways to prevent ice damming as mentioned above in the ventilation section, but make sure you are protected in the areas mentioned and it never hurts to have the extra protection, particularly on roofs with a lower pitch.

4) Pitch. Speaking of pitch, be careful with this one. The modern, low sloping or flat roof systems are becoming more and more popular, but they can pose significant challenges when it comes to snow accumulation and ice damming. I’ll never forget all of the struggles I’ve had over the years with commercial building management where flat roofs with drain systems are common. The moral of that story, make sure you have heat tape in those drains, and monitor them closely. It doesn’t take long for these to plug up with ice creating a swimming pool on top of your roof.

As a final bit and disclosure, I’m a real estate agent, not a roofer. I have experience with some of these things, but am in no means an expert when it comes to the construction types and methods best for your situation. Always consult with your contractor and local roofer, and keep in mind our unique climate when it comes to architects. People tend to bring their local architect with them from dramatically different climates which can often lead to incompatibility with local contractors and issues with construction methods down the line.

Real Estate themes of 2020

January 4, 2021 By Tayson Rockefeller Leave a Comment

As you might imagine, the common real estate theme for 2020 was the craze of city dwellers looking for a rural escape. 2020 was one of the busiest years on record (if not history) when it came to sales volume, velocity and dollar volume. We didn’t quite hit 700 land sales in Teton Valley and Alta, but it was darn close. That’s a far cry from 281 land sales in 2019. Residential sales likely would have been the same had there been the inventory to promote those sales.

Aside from the market itself, I didn’t hear as much in terms of tiny homes, which I would have easily identified as the “theme” for 2019 and the years leading up to 2019. Interestingly, there wasn’t much talk of tiny homes in 2007 either, the last memorable real estate boom. In fact, most people were going big as opposed to building small.

I did hear quite a bit about was vacation rentals. While I believe many of the land sales were simply the usual group that wants to own a piece of Teton Valley, many did ask about the viability of renting in the areas they shopped. This isn’t all that uncommon though. The year started out with what I described, those looking to transition to the area permanently which led to a number of questions related to the school system, hospitals, internet speeds – everyday life in Teton Valley. The last half of the year is where I noticed an influx of second homeowners. Much like those seeing the window close on their opportunity to own a piece of land, it seemed others had a similar feeling when it came to purchasing a home. To justify the increasing costs, and to capitalize on income to offset the cost of ownership, I had quite a few discussions about vacation rentals.

I’ve written articles in the past about short-term rental restriction, mostly a power that only homeowners associations possess. With such a variety of owners and investors in each development, it may become challenging to amend subdivision documents to restrict short-term rentals, but I can foresee that becoming a topic in the years to follow.

2021 will surely be an interesting year in real estate. Most builders are booked out one to two years, and rising construction and material costs haven’t seemed to subside. If the majority of current construction is custom work for individual homeowners, inventory will likely remain low. Property owners that have been waiting in the wings may identify 2021 as the time to sell, if the inventory remains low. I am personally interested to see how National trends and factors impact the market, interest rates and the overall economy can have substantial influence as well. Regardless, I’m looking forward to “normal”, whatever that is.

2020 Real Estate Market Report & Past Predictions

November 29, 2020 By Tayson Rockefeller Leave a Comment

# Sales
Earlier this summer I wrote about the sudden market craze and it’s impact on land sales. Then, there were 292 (August 16th) land sales with around 100 more pending sale.  I predicted by year end we would hit 600 sales in Teton Valley & Alta. We’ve hit 582 as of this writing with 100 more pending sale. We’ll see how many of those close this year.

While we’re talking sales, residential is also way up in terms of # of sales. 365 YTD with another 75 pending, to be exact. That’s way up from 2019 with “only” 289 sales, but land is what stands out here.

Sales Prices
Sales prices, as you might guess, are also up significantly. Both land and residential averages are slightly skewed as a result of a few seemingly fantastical sales prices, but the average land price is down, likely due to affordable lots being snapped up.

The averages sales price in 2019 was $132,821 while 2020 is down about 20% to an average sales price of $118,775.

The average residential sales price in 2019 was $449,732. The average price based on sales to date is $585,480, up nearly 25%.

New Homes & Construction
Building and building permit (and building costs) numbers are strong, but rising build costs seem to be keeping things at bay. The county is reporting 112 permits (not including city permits) for the Spring & Summer season. Not having historical data, I’ll use sales data to make a point;

2020 YTD has seen 145 sales built in 2019 and 2020.
2019 saw 175 sales built in 2018 and 2019.
2007 saw 302 sales that were built in 2006 and 2007.

Past Predictions
I’ll bet that the market will outpace my 600 land sales prediction by year end, possibly by a significant margin. This is historical. After all, 2007 (my universal point of reference) saw only 626 land sales. While digging through past posts I found an article I wrote in 2016 about the potential impacts of the 2016 Presidential election. The post didn’t have much to do with elections at all (I think the point was that elections don’t usually impact real estate) but more with Real Estate cycles in general. It quoted a Harvard article written by Teo Nicolais talking about market cycles. Using his methodology (barring any major interruption such as global war) we should be in the midst of a Hypersupply phase on the cusp of a slowdown with rents on the verge of dropping. This is clearly not the case, but I would certainly call the Covid-19 pandemic a “major interruption”. No, it hasn’t slowed real estate or refinances with historic rates, but I would argue that it has slowed construction and speculative real estate as a result. If construction costs don’t come down, or worse, continue to rise, will this create (or continue to inflate) a bubble? Possibly. It all depends on how the market reacts to the increasing prices and sales volume such as that data provided above.

On that note… (Sorry, I’ve got to say it) – It is a great time to consider selling NOW. If it’s in the cards, let us provide some data to help. It’s easy, free, and no one in our firm is pushy. Learn More Here.

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