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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.

The (Summer) 2020 Real Estate Craze

August 16, 2020 By Tayson Rockefeller Leave a Comment

I try not to write articles about market statistics. It creates references in time that may not be relevant a year from now, or even a month from now. I am working with a customer as I write this that brought up an article I wrote back in 2012, and how much things have changed. It goes back to using old real estate data to value something today. Appraisers like to use the most recent data possible, and rarely look at anything over a year old. There’s a good reason for that. With the above said, let’s get into it.

What’s Happening? If you are reading this article today, I don’t have to tell you how crazy the real estate market is. If you are reading this article 8 years from now, it’s crazy. Everything is flying off the shelf. To put things into perspective, In 2019 there were 281 land sales throughout Teton Valley. Year-to-date we’ve had 189. This isn’t that crazy. Add in the number of pending transactions and that number jumps to 292 – and August isn’t even over yet. There are over 100 contracts on vacant land out there today. Here’s another one. In 2019 there were 21 sales throughout Teton Valley in excess of $1m. YTD there have been 15, but there are 20 pending sale. I can do this in pretty much every sector of the real estate market.

What Caused This? I think it’s pretty clear that COVID-19 has something to do with it. People flocking to rural America is a conversation I’m almost tired of having. I thought about naming the article in the name of the catalyst – but I’m not even going to go there. This is a touchy subject that has impacted millions of people. Regardless, I’m sure we are in a little bit of a perfect storm. Another thing I’ll hate to admit for future readers sifting through old material, interest rates are at historic lows. Even the interest rates are tied to the pandemic, however. Teton Valley was waiting to be discovered? Yeah, we’ve been saying that for a long time. I wrote an article not long ago about the common comparison of the future of Teton Valley to the next Park City or Sun Valley. In that article, I basically made a claim that we have too much available land and we were quite a ways off from that happening. Now I remember why I don’t make predictions.

What’s Going to Happen? Hey, I just said I don’t want to make predictions. I will provide a few scenarios, however.

Scenario 1: We do become the next big destination. Targhee expands, all of those 3500 building sites throughout the Valley that everyone said would never get purchased are snatched up. Construction goes wild, and commercial expands. Teton Valley becomes as recognizable as Sun Valley.

Scenario 2: All of the bad stuff happening in the world catches up to us, and gets us back into reality. Everyone working from home and moving to Teton Valley realizes that we do have a Winter season, and it is a long one. Inventory levels creep back up and the market stabilizes, or sags.

Scenario 3: We know there is turmoil in the economy, but not all economic downturns impact real estate. After all, most historic data shows that since the 50s or so, we really only had one drop in real estate prices, and that was in 2007. It’s fresh in my mind because that was a big chunk of my career, so that probably always causes me to be conservative or even pessimistic in some fashion or another. Anyway, certain areas of the Valley are changed forever. All of the golf clubs become more exclusive, and the high-end real estate becomes less obtainable. Many of these land purchases remain vacant land, but residential inventory rises over time. Those city dwellers tired of winter adds to that inventory, and the market stabilizes, or at least normalizes. Real estate prices aren’t dramatically affected because construction costs remain high, and much of the land purchased today is redistributed into the market over the next generation. COVID-19 and the Summer of 2020 changes the landscape of Teton Valley forever, and traffic increases with visitors who have finally discovered our beautiful home.

Remember, I don’t make predictions. But if somebody gave me all three of these options, I think this is the one I would probably put my money on.

Covid-19 and its effects on our Market (May 2020)

May 7, 2020 By Tayson Rockefeller Leave a Comment

In general, I have moved away from market updates when it comes to my real estate blog. We are moving those updates over to the brokerage. If you’d like to receive both, sign up on Teton Valley Realty’s website. I’ll always include the latest blog post. I want to try to keep all of the content for these posts relevant for as long as possible, and markets can change on a moment’s notice. This market update will definitely go down in the history books, so I think it’s appropriate.

The real estate market has remained surprisingly active. I seem to be working harder than ever – you know, when the going gets tough… as they say. I am doing a TON of videos and virtual tours, and surprisingly, have found pretty good success with “sight unseen” contracts. It definitely feels like the younger generation buyers have slowed and taken the issue with a little more concern. On the flip side, older generation buyers have ramped up with an increase in contacts, showings and contracts. I might be making this up, but to some degree, it makes sense. Younger generation buyers probably have more of our local tourism-related jobs, which have been hardest hit. The past several years of expansion have been great for almost everyone, but it would seem that the younger crowd probably hasn’t had as many opportunities to capitalize as those taking advantage of expanding markets and real estate values. On an interesting side note, the younger generation also seems to have a greater level of concern with respect to social distancing and being very careful about guidelines. This seems to contradict what we are hearing in the National news about younger people getting back to everyday life, or ignoring recommendations.

If you know me, I stay away from predictions. If I do make them, they are information-based, and never definitive. That being said, I’m going to guess we are going to see a continuous stream of people hoping to move away from populated areas and into rural America. If it were me, this is the first place I would look. I have read National Real Estate resource predictions of home values dropping 2-4% if things get back to “normal” soon, and 5-6% if things move slower in terms of recovery. I predict that it is less likely that rural areas will see contraction, but if they do, it will be further down the road – probably months after urban areas see an impact.

Virtual Tours

March 24, 2020 By Tayson Rockefeller Leave a Comment

Back in July, I started to write an article about virtual tours. I do this frequently, losing interest in the article or saving it in my inbox for another day, probably part of the reason why I always have 50 or more emails in my inbox.

I started thinking about the article again in the midst of the current covid-19 virus. Back when I first started thinking about this, the gist of my article was that while I felt virtual tours could help in many cases, they can also hurt. Virtual tours, high quality photographs, drone footage and even videos can be deceiving. As a seller, I might be concerned that someone may not like my home before they even have a chance to see it. As an agent, I want to showcase the great qualities of a listing that I represent, and when possible, I prefer to do that in person. If you know me, you know that I am not, by any stretch of the word, a pushy salesman. I like to think that I point out good qualities, and try to be proactive about finding ways to work around problems for my listings. I also try to recognize when a potential buyer just isn’t interested in a property, and do my best to find something suitable. More than anything, though, I like meeting people. I like shaking hands, and I like getting to know potential clients as we hit the road to explore the beautiful Teton region.

The above being said, I’m curious to see how the current situation will shape the future of the home-buying process. I think, and hope, that things get back to normal. But I also think that our world is changing. Fortunately, I have a pretty good handle on most of the technology available today. We use a number of tools within the brokerage that help us streamline our transactions and processes. I still think that there’s going to be value and bigger demand for virtual tours and videos, but I also think we’re going to have to be careful about how we present media. Sellers are going to rely on us to sell their property, and buyers are going to rely on us to make travel plans to come look at one piece of property, in many cases across the United States or from another country. I believe there is going to be an ever-evolving balance between accurately expressing real estate through virtual media and doing our best to properly represent all of our customers and clients.

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