Teton Realty Blog

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.

Pending, Contingent… What’s the Difference?

November 2, 2020 By Tayson Rockefeller Leave a Comment

With the unprecedented number of real estate transactions of late, I seem to be getting the same question quite a bit; what does contingent mean? If it says “Continue to Show”, should we look at it? What is the/a contingency?

First, let’s get “contingency” out of the way. I’m not pulling this out of the dictionary, but in my line of work a contingency usually means that there is an event that needs to take place before the contract can move forward, and provides an opportunity for a Buyer to withdraw from a contract without ramification. Common examples of contingencies include a buyer who has a contingency to obtain financing, or a buyer who has a contingency to complete a home inspection or a due diligence period. Contingencies can also include circumstances where a buyer needs to sell a property before they can close on the subject property, but this is rare in markets that are as busy as ours has been. The reason this is less common is because sellers in hot markets are less inclined to accept major contingencies beyond the common ones I mentioned above.

Moving on…

At the time of this article, there are 3 classifications of properties that are under contract, or in other words, have an accepted offer with another party. These classifications are for the Teton MLS, note that other areas and real estate associations label contingencies or classify properties with an accepted contract differently.

1) Pending

If a property is labeled as “Pending” it usually means that the seller has accepted an offer that has no contingencies. It might be referred to as “Pending”, “Accepted Offer” or “Under Contract” when speaking with an agent. Certain Real Estate websites may also label listings this way.

2) Pending, Contingent

A listing that is labeled as “Pending, Contingent” normally means that there is an accepted offer, but there is some sort of contingency in place. Usually these are common contingencies such as an inspection period or financing as mentioned above. Similar to “Pending” listings, these types of listings are often referred to as “Pending”, “Accepted Offer” or “Under Contract”.

3) Pending, Continue to Show

Properties that are labeled “Pending, Continue to Show” usually indicate that there is a more substantial contingency like an extended inspection period, the Buyer needs to sell a home before closing, or another form of unusual contingency. There’s a caveat to this, it’s common in Jackson for agents to use this label more generally, even if there is not a significant or unusual contingency. Some websites May identify these types of listings as “Continue to Show, but they’re usually just classified as “Pending Contingent” or “Contingent” like other listings that have an accepted offer.

As a final note, agents often don’t change the status of a listing as contingencies are removed. Listings that are under contract and identified as contingent or mention that the property should continue to be shown may not have contingencies at all and the listing classification simply hasn’t been updated. In addition, it may or may not be fruitful to inquire about a listing that is under contract, but it never hurts to ask. It’s easy to follow up with your agent to obtain the status of the contract to see if it’s something that might be coming back to the market or have a contract that is on shaky ground.

What are Homeowners Associations like in Teton Valley?

October 2, 2020 By Tayson Rockefeller Leave a Comment

Throughout the course of my career I have been struggling to explain the difference between a homeowners association in Teton Valley and what a potential buyer might be used to. There is a huge demand for real estate outside of a subdivision, but I think a lot of that has to do with the perception of what a subdivision usually is in more populated areas. I can distinctly recall many initial conversations to understand a buyer’s wants and needs. Many of them are looking to build a 2400 square foot, 3 bedroom home with a blend of wood siding and mountain moss stone. They’re looking for something with protected views in an area with other similar homes. This is a textbook “preferred design” for many subdivisions that help create building envelopes or guidance on preserving views, yet they don’t want to be in a subdivision. Usually, most buyers warm up to the idea of a rural, Teton Valley subdivision by the time they ultimately pull the trigger on a purchase, particularly when they find out the annual dues simply cover the road plowing and maintenance at a few hundred dollars a year, and everyone is pretty good about minding their own business around here.

To elaborate on subdivision life; there are subdivisions that allow and welcome horses, even a few that allow chickens. Most have a minimum home size between 1200 and 2200 per SqFt. Many subdivisions have landscaping standards, but few abide by them in a strict sense. I’m not aware of any where pets are not welcome, and almost all of allow a privacy fence or dog run. Some have a board of directors, others do not. Some subdivisions have only a few homes where each homeowner takes care of their own snow removal as the development fills out. While I have seen a few circumstances where a landowner has to find a unique way to obtain a view because of the next door neighbor, I have not personally seen a circumstance where a neighbor has deliberately blocked someone’s view. I would guess the average association fee is about $400 per year, and this is usually only to maintain roads and fire ponds. Most subdivisions have the convenience of utilities in the roadway, and a building site that is more or less ready to be built upon. We’ll see if this changes with the influx of buyers, but for the most part, both Teton Valley locals and new members of our community are reasonable, kind, and easy to work with when it comes to resolving issues. Remember that most subdivisions have building sites with an equivalent of two and a half acres or more, but even subdivisions with smaller lots get along all the same from what I can tell. Finally, most subdivisions do not restrict rentals of any kind (at the time of this writing).

Properties that are not within a subdivision can have their downsides, too. If you’re looking to buy 20 acres or more, it usually doesn’t gain you much to be inside (or out) of subdivision. Your neighbors are usually far enough away that the extra few utility trailers they collect won’t bother you much. Regardless, there are a few reasons why being in a subdivision just isn’t going to work out for some:

1) Home Sizes

This is probably the biggest one, and it ties in with the next category. Tiny homes, and in many cases, building guest houses before main houses can be difficult within a subdivision. The concern is making an exception for one person, and setting a precedent. There have also been many circumstances where a guest house is built, but the main house never follows.

2) Manufactured and Modular Homes

This one makes sense. If you invest in an expensive home in a nice development, you would probably like to keep the appearance and value of the homes similar. No, you really won’t find any tract housing in Teton Valley, and values can vary significantly from one street to the other even in the same development, but this is usually where a line is drawn. I should clarify – some modular home companies build an extraordinary product so I would call this case by case with each development.

3) Restriction on Out Buildings

Some developments will be restricted on room, others on that view preservation we talked about earlier. Either way, most subdivisions (even if there is room) would prefer that you don’t convert a potato cellar or quonset into a shop. Many do, however, allow for a barn or detached garage.

4) Conditional Use

Almost all developments restrict commercial use (note that Idaho generally does not recognize rentals as a commercial use) save for an artist studio or in some cases a home business that does not impact the neighborhood. With that said, if you are looking for some sort of conditional use permit for commercial use as viewed by the city or county, you can bet that you aren’t going to get through the homeowners association.

5) Goats, Pigs and Chickens

This one hasn’t been coming up as often as it used to, but with the exception of a few communities, goats, chickens, pigs, cows and other livestock are generally not allowed.

To summarize, it’s best to use your judgment. I understand that there are strict rule followers out there that won’t feel comfortable purchasing in a neighborhood that restricts something, even if everyone else is breaking that rule. With that being said, the drive-by test is the best solution in many cases. Look at each neighborhood. If you’re driving through a golf community and all of the lawns are well manicured, then you are probably going to have to have some sort of landscaping, and you are probably going to have to keep it maintained. If all of the neighbors have horse trailers or campers, you can probably feel comfortable with your camper. You can do the same for building style, building materials, how the neighbors have helped preserve views and so on. Do I know the ramification for breaking the rule(s) when everyone else is doing the same? No, I don’t. Regardless, some people are comfortable with the “cowboy” way of life and unspoken rule of law, and some aren’t.

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.

Recent Testimonials