For those of you reading the news, you probably noticed some significant changes planned for the Huntsman Springs development. In a nutshell, they are to:
-Consolidate a variety of parks scattered throughout the project into one large 7.5 acre public park at the entry of Huntsman Springs across from the Teton County courthouse.
-Add acreage to the project, but lower the overall density of the project to include larger ranch-style acreages on the North end of the development.
-Privatize internal streets with gates, and take over the maintenance of these streets.
-Solidify a location for future employee housing for the project.
In a public hearing and city council meeting on April 10th, there were obviously some concerns with the public. The public was in favor of the consolidation of the parks and overall density reduction of the project, though some were opposed to the privatization of the streets. A number of homeowners in the community East of the proposed employee housing also expressed concern.
It was concluded that the project amendments would be granted preliminary approval with the contingency that a final determination is made with respect to the location and accessibility of the employee housing site, amongst a few other clerical items as required by the city and county.
Though some expressed concern regarding the privatization of the internal roads, it was concluded that the benefit of overall maintenance reduction would be reduced significantly, even with the future maintenance required for the proposed park to be built in phases over three years.
I’ll be interested to see how the development changes. I am speculating a name change, and I understand we will see an increase of amenities for members.
November ’18 Market Stats
For November 2018’s Teton Market Update, I compared Teton Valley sales stats compared to November of 2017. In a nutshell, sales are down 24% from one year ago, while dollar volume is only down 18%. My interpretation of this was that supply remains low, which is driving prices up. This is consistent with the data for 2018 vs 2017, the average sales price in Nov. ’18 was around 350k, while Nov. ’17 was about 5% less. Sales volume is down due to inventory levels (as mentioned) which is likely because of high construction costs, which has been the trend for the past few years.
Victor, ID seems to be building a healthy supply, so we’ll see if these numbers switch places in the coming months.
Where are we relative to 2007?
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.
Q3 2018 Market Update
The Region’s real estate market remains healthy with srong sales, and seemingly sustainable construction levels. Unlike the last expansion period, we should be able to liquidate existing inventory, even if sales slow. This is a good thing with respect to keeping supply levels in check. Part of this is because of increased construction costs, I have talked about in previous articles.
Sales prices, and certain Market sectors seem to have plateaued, I expect a more historical growth pattern with respect to these markets as time goes on. Some areas, however, still have room to grow. My opinion is that we will continue to see higher-than-normal appreciation with vacant land and luxury homes above $700,000 to keep up with construction costs, and demand.
Commercial real estate remains slow, but I anticipate some of the highest levels of growth and appreciation with respect to this Market in the near future. Keep your eyes out for a relative Bargains today, this may be an opportunity for investors and business owners looking to own real estate.
