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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.

Will Renovations Pay for Themselves?

May 29, 2021 By Tayson Rockefeller Leave a Comment

This article, like many that I have written over the past 12 or 14 months may not be as relevant one year from now as it is today, but I have given the same advice on many occasions throughout my career in real estate.

The question is (as I renovate my own home) is it worth it? In my case, I am updating a kitchen that is as old as I am, and was somewhat budget oriented to begin with. It’s not that I don’t care what it might cost, but rather, I do not care as much about the value it will add to the home as I don’t plan to sell anytime soon. If you have the same mindset, I say go for it. Generally real estate improvements will at least pay for themselves, unless you’re doing something that is highly specified to your style or needs.

What about for resale? In this case, it depends on the market, and particularly right now, timing. At the moment (and I suspect you have noticed) appliances, carpet, roof shingles, windows… everything is in short supply and high demand. Similarly, labor is in short supply and as a result everything is far more expensive than it was a few Summers ago. It’s a seller’s market today and timing, coupled with supply and labor shortages is not on your side. With this combination, my current recommendation would be to leave well enough alone (if it is well enough) with the exception of a few examples below. In markets where time and materials are easier to come by, I think renovations should be considered on a case-by-case basis. Either way, the examples below well usually equate to a net gain.

1) Paint, where it needs it. Changing the laundry room from green to blue probably isn’t going to make a huge difference, and your time might be better spent cleaning the basement. On the other hand, freshening up a small room with an out-of-date color or poor paint job isn’t a bad idea. Another important aspect to painting is quality – tape those edges and use a hard, fine line brush where you can’t. Prime over top of those dark colors, and always do two coats.

2) Appliances, if you need them. It’s hard to get rid of a great appliance, they don’t make them like they used to. That being said, there’s something about those quiet dishwashers and stainless steel french door refrigerators that buyers tend to notice. Again, add a month to whatever delivery time estimate you receive.

3) Your trade, but be careful with this one! We live in an area that provides skilled labor for high-end real estate and as a result many are capable of improving some aspects of their homes. Why careful? I have seen plenty of hardwood flooring contractors “showcasing” their abilities in their own homes. While the herringbone transition to a diamond pattern of oak and dark walnut is respectable in terms of the skill, it’s probably not what buyers are looking for. Keep it clean, don’t overdo it.

4) Clean, this one is free (kind of). Declutter, depersonalize and freshen things up. buyers open closet doors, pantries, garages. This one is huge, and it might even help showcase how big a space is that otherwise might look smaller than it is.

5) Kitchens, bathrooms… I’ll bet if you hop online and do a quick search, this is going to be the first thing that comes up. True, buyers love fancy kitchens and shiny new bathrooms – but it’s hard right now. Things will get back to normal, but even in “normal” times, getting work done in a rural/resort area like this is difficult and expensive. It always has been, and it always will be. On that note, it’s easy to blow the budget and not be able to recover all of, or as much of the cost that you had hoped. Also keep in mind that these projects are often like picking at a scab. It’s never as simple as, “let’s replace the countertops!” Further, I’ve heard buyers ask why a seller would put such nice countertops on top of old, out of date cabinets. That’s a loss in my book. If a customer is questioning an investment you’ve made, you may have been better served not doing it in the first place.

I’m sounding a little pessimistic, but it’s probably my mood after wrapping up my own project. To be clear, I would rather sell a house with a new kitchen and master bath, and you will probably net out positive. Just remember the timing aspect mentioned above. Note that in any market things are probably going to take longer than you had hoped, and cost more than you expected. The best thing you can do is ask for your real estate professional’s advice before pulling the trigger if it’s strictly to improve the value of your home before listing it for sale.

Changing the way we negotiate

May 3, 2021 By Tayson Rockefeller Leave a Comment

I distinctly recall hearing stories from customers in different areas of the country before the recent real estate boom changed the real estate world, particularly in rural areas. Stories about negotiations pushing home prices 10% over the asking price seemed pretty crazy to me, but in some cases, here we are.

It’s important to look at the date on this article, this information is likely going to be accurate only for a few months, but it’s good to earmark where things have been. I’ve got articles from 2014 with much different advice.

Price: Asking prices and offer amounts seem to change weekly, if not daily in this market. With the lack of public sale information and the unknown as to how far things are selling over the asking price this one’s hard to nail down without the advice of an agent that is in the thick of current trends. I have seen sale prices anywhere from $5,000 to 15% over the asking price depending on the sector of the market. We will usually see significant increases over asking on condos and townhouses, but that does not preclude any other type of Real Estate depending on the initial asking price. I should also note that some things are still selling under, it’s all about the tactic of the seller.

Finance and Appraisal: This one has been incredibly tough for buyers looking to get into the market. It’s frustrating and disheartening when a finance contingency is holding up the ability to compete with cash buyers. As a result, we’ve seen buyers agree to waive appraisal contingencies, assuming they have the cash balance to cover the difference. Waiving appraisal contingency and providing a pre-qualification letter with 5% down is difficult, but we haven’t seen too many problems with appraisals. Appraisers seem to be in the know with real estate prices. However, cash is still king, and hard to compete with as mentioned.

Inspection: Fortunately we haven’t seen a shift in our market where buyers have been (or need to) waving inspection contingencies in order to compete. Deposits that are immediately non-refundable are rare, and personally, I hope it stays that way. These are big investments and buyers need the opportunity to vet properties inside and out. This market also produces a number of site-unseen offers (often there is no choice with the quick timing of things) and I believe it would be unreasonable for sellers to expect buyers to waive contingencies altogether as a result.

There are a handful of other negotiating tips and tricks like escalation clauses and the like, and there’s a time and place for different tactics to achieve maximum results. I know I sound like a scumbag real estate agent when I say this, but as mentioned above, it’s absolutely paramount to have a local agent that has a close ear to the ground.

It will be fun to come back to this article 2 years from now!

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