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Title insurance on new construction?

March 12, 2018 By Tayson Rockefeller Leave a Comment

won’t go into too much detail on what a title insurance policy is, though you can read the article here: https://tetonrealtyblog.com/what-is-title-insurance/ which might be a good prerequisite to this article.

It dawned on me the other day that while it is common for almost all real estate transactions to be accompanied with some sort of title insurance policy, it’s important to remember that title insurance only covers the initial purchase price of a property. For example, if a claim is made and a defect in the title is found, the claim can only be made for up to the amount of the original purchase price. The next obvious question is, how about when a property is improved or the value of a property is increased?

With all of the new construction we are seeing throughout the area, I figured this was an opportune time to bring this to the attention of home owners and investors. Probably the most common example would be someone building a new home. With low residential home inventory and relatively affordable land costs, it’s becoming increasingly common to see people buying land with savings or home equity lines of credit then preparing to build in the future either with cash or a construction loan. When obtaining a construction loan, the lender will require a lender’s policy for the build (reference previous article), but there usually isn’t a seller involved to pay for a title insurance policy like a regular transaction between a buyer and a seller.

The result of the above scenario would be a home valued at several hundred thousand dollars with a title insurance policy protecting up to the value of the land, in many cases less than $100,000. If a defect is found in the title after the home is constructed, albeit an unlikely worst case scenario, it could be a very expensive proposition for the homeowner with inadequate title insurance.

Being that title insurance is extremely affordable and is only paid one time and is not recurring, this is something that anyone looking to build a home should consider. Fortunately all of our local title companies are experienced with writing these types of policies and can answer any questions that you might have.

Fire Ponds and subdivision compliance

February 13, 2018 By Tayson Rockefeller Leave a Comment

While it may not seem like a big topic to someone in the community not involved with real estate, fire suppression compliance, (or the lack thereof) has recently been a big topic for those in the real estate community.

If you’re familiar with many of the communities in Teton County, you might have noticed that most of the newer communities have beautiful ponds. While these ponds are aesthetically pleasing to most, it wasn’t because the developer was looking to improve the quality of the subdivision, it was usually a result of the requirement for a fire water storage system. Most developers installed these systems, sold out the lots in the community, and moved on. These communities formed homeowners associations for road maintenance and other aspects of neighborhood duties, but many were not privy on the requirement to have these systems tested annually.

The fact that they systems weren’t tested went largely unnoticed for several years due to the slow period of construction. Now that construction is picking up, those filing for building permits are in some cases being told that these systems must be tested for compliance prior to issuance of a permit. Overzealous real estate agents also have a tend to research issues on behalf of customers which sheds some light on these issues now that we are seeing more and more building sites selling per year.

I communicated with Teton County Fire Chief Earle Giles who reports that about 20% of Teton Valley’s subdivisions are out of compliance. Fortunately, it’s a relatively easy process for most homeowners associations to have their systems tested. These ponds are usually accompanied by a nearby hydrant which an engineer or a pump technician can connect to and test the flow which is measured in gallons per minute, or GPM. Earle was also kind enough to provide a couple of contacts for testing, and most of these contractors will be happy to put you on an annual test program to keep things in accordance. It’s affordable, and helps retain values when it’s time to sell!

-Grant Durtstchi – 208-705-7200

-AW Engineering – 208-787-2952

-Wilder System Solutions – 208-456-2287

December ’17 & Year-End Market Stats

January 27, 2018 By Tayson Rockefeller Leave a Comment

Residential Summary:

If you’ve been keeping an eye on market reports and property sales throughout Teton Valley in 2017 when compared with the year prior, you’ll notice that sale prices are on the upswing, the median home price has increased, and the total volume has also increased. This is all great news for our local real estate market, but what are the driving factors?

One statistic that is hard to attain is: How many of these sales are resales that occurred over the last 10 years, or prior to the last market boom? Unfortunately the only way to obtain this information is to look at the history of each listing provided by the Teton Board of Realtors. Most of this is accurate, and a quick run through every residential sale in 2017 shows that approximately 40% of all sales that occurred had also sold within the last decade. That means that all of these sales, likely, were for a profit.

This information would indicate that our market inventory might be less than what we think. If the majority of the resale inventory is behind us, and spec home construction remains slow, we should anticipate much lower supply in the coming year unless something changes. As I’ve mentioned in previous articles, spec home supply is directly tied to construction costs which we know are currently high.

If the supply of residential inventory remains low, the residential market must climb to meet the rising cost of construction. If this occurs, we should anticipate list prices, and presumably sales prices to continue to rise over the coming year.

Building Site Summary:

Building site sale volume has steadily increase since 2012. Total volume for 2012 including Alta Wyoming totaled 89 sales. 2013 increased to 114 sales, 2015 again increased to 206 sales, 2016 increased to 222 sales, and 214 sales occurred in 2017.

2017 saw an average sale price increase from $82,692 in 2016 to $92,980.

The median sales price in 2016 was $66,292 and the median sales price in 2017 was $65,417.

The statistics over the last 2 years would indicate that buyers tend to be opening their wallets for more expensive parcels with an 11% increase in the average sales price. The median sales price along with the number of lots sold over the past two years would indicate that parcels seem to be selling at the same rate, and approximately the same price.

As with 2017, we have determined that the number of sales was 214. If we divide that by 12 months in a year, we come up with 17.83 sales per month. If we divide this by the number of current listings which is 518, we have 29 months worth of listings currently on the market. This is far fewer than projected numbers provided by professionals throughout the market recession. It is, however, anticipated that the number of new listings will meet the approximate number of parcels currently being absorbed into the marketplace as the number of active listings has been similar over the past several years.

Is the rental market changing in Teton Valley, Idaho?

December 11, 2017 By Tayson Rockefeller Leave a Comment

Those of you with a pulse on Teton Valley long-term rental market have probably noticed a bit of a lull in terms of occupancy and a small increase in availability. This tends to happen every year after the ski season begins and before the holidays. Those looking for something to rent for seasonal work have already found something in most cases, and long-term residents are generally settled in for the winter.

This year, most property managers have noticed things are a bit slower than the last couple of years, at least with existing inventory, specifically in Driggs and the North end of the valley. This is caused mostly by a supply spike in Victor, where people prefer for the Jackson commute. Several modulars along Highway 31, though lacking amenities, have filled quickly because of their location. Several more units are soon coming available on Dogwood St, and it is yet to be seen how many will be reserved for long-term renters. The new Clinic on Main Street will likely have long term rental availability. These newly completed, or soon-to-be completed projects in addition to a few others seem to have mostly satisfied the shortage, at least in the short-term interim.

I don’t believe this influx of availability will have any long-term effect on the market based on how deep the rental shortage actually is. Once the holidays are behind us, we will begin to better understand inventory levels compared to recent history. It’s been a long time since we’ve seen an oversupply (and I’m not suggesting at all that we are back to anywhere near an oversupply, or even sufficient supply) and even when we did, it was an oversupply of rentals that were not originally meant to be rentals. Throughout the downturn of 2008 we saw a number of vacancies, but these vacancies were second homes converted to long-term rentals, or even vacation rentals which weren’t performing well enough to satisfy debt service. In fact, there haven’t been too many private back-to-back projects built specifically for long-term rentals in a long time. We saw some housing projects near the Sage Hen condos, and of course the Fox Creek Apartments, but all told, not too many dedicated rental properties.

With the headlines being rental shortage you will call me crazy, but we will have to monitor the number of dedicated long term rental projects, apartment buildings and so forth in order to sustain a healthy environment with a good mix of tenants and available rentals to keep vacancies at a minimum and our rental market healthy. It will be interesting to see new major projects and how well they absorb into the marketplace in the near future.

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