Teton Realty Blog

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Real Estate themes of 2020

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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

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# 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

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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)

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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.

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