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Teton County Real Estate Year End Update 2010

Value Losses Continued in 2010 Despite Increases in Number of Sales
Entry Level Housing Hit Hardest

Although downward trending in individual property values was still evident, the number of sales in Teton County, Wyoming in 2010 was up by over 32% over the preceding year. Furthermore, despite the continued value erosion, the relative strength of the higher end segments of the market kept averages prices nearly level, with this measure showing a 4% increase. The increase in both number of sales and the influence of high end transactions combined to increase overall dollar volume of sales by approximately one-third. Review of sales and listing data reveals value losses from historic highs that, in very extreme examples, have been over 70%. However, such magnitude of loss has been limited to areas where distressed properties are most prevalent (such as entry level attached homes). Value loss for this market segment was ongoing throughout 2010, with losses of 30% in some cases being compounded onto losses of similar magnitude that were experienced in initial correction subsequent to the fall of 2008. Less distressed areas of the Teton County market have been, to date, able to limit total loss to between 30% and 40% of peak values, with a majority of this loss having occurred from late 2008 through 2009.

2008 2009 2010 2009/2008 2010/2009
Total Residential (Single-Family, Condo,Homesite) Transactions 388 224 296 -42.27% 32.14%
Average Price of Transaction $1,606,595 $1,404,296 $1,462,113 -12.59% 4.12%
Total Sales $623,358,973 $314,562,360 $416,702,350 -49.54% 32.47%

To further analyze the most current trends in the Teton County Real Estate Market, the market segments of single-family home sales, vacant homesite sales, and condominium / townhome sales will first be examined without differentiation between the higher-end resort segment of the market and the more moderately priced market segment. Each of these data sets was then allocated between its higher-end and more moderately priced components for further analysis and comparison to data from previous years.

Single Family Residences in Teton County Wyoming

Reviewing the year end sales data for detached single-family residences for 2010 as compared to 2009, an increase in the number of sales of 25.45% was noted. This placed single family home transaction numbers at a level approximately 5.5% less than 2008 numbers, but not even totaling 50% of the transaction numbers noted in 2007. The average transaction price of single-family homes increased by over 12% in 2010. However, this is due to a prevalence of higher-end transactions, not an increasing value trend. In fact, the observation of sales and resales of the same or similar properties indicates that home prices during 2010 have, at best, lost from 0% - 10% of value in some high-end segments, while experiencing double digit value loss (on top of price erosion experienced in 2008 and 2009) in the most affected neighborhoods. The following table arrays year-over-year comparisons of single-family home sales from 2000 to 2010.

The attached table arrays year-over-year comparisons of single-family home sales by analyzing the time period starting 2000 through year-end 2010.

Allocation Between “Resort / Second Home” and “Local” Market

Historically, the Teton County Market Area has been able to be segmented into its components of homes having their greatest appeal to market participants whose income is largely dependent on the local economy, versus homes that are more likely to appeal to second home purchasers and investors whose wealth is not necessarily tied to the local economy. Examples of the former category would be homes in developments such as Cottonwood Park, Melody Ranch, and the incorporated Jackson area. Examples of the latter area include homes located on the “West Bank” of the Snake River, north of Jackson, and the Teton Village area. The following table allocates the single family homesites between these segments:

Single Family Residential Local Market

2008 2009 2010 2009/2008 2010/2009
Number 78 52 59 -33.33% 13.46%
Average $1,083,491 $927,413 $720,491 -14.41% -22.31%
$ Volume $84,512,309 $48,225,500 $41,068,000 -42.94% -14.84%

Single Family Residential Resort/Second Home Market

2008 2009 2010 2009/2008 2010/2009
Number 68 58 79 -14.71% 36.21%
Average $3,259,779 $2,442,298 $2,827,381 -25.08% 15.77%
$ Volume $221,665,000 $141,653,261 $220,535,700 -36.10% 55.69%

As shown in the previous table, the locals market has shown a modest increase in the number of sales. By comparison, the grouping of sales that have been classified as being pertinent to the resort market has increased by over 36%. Furthermore, the average price of a transaction in the locals market decreased by 22.31% while the resort market had an average sale price that increased by over 15%. As a specific example, one attached home development in West Jackson experience prices for a three bedroom unit in early 2008 of $622,000. By the end of January of 2010, a similar unit had sold for $450,000, a loss of over 27%. Presently a unit in this development is listed for sale for $355,000. Were it to sell for 90% of list price, it would represent another increment of value loss of 29% and an over 48% value loss over all. By comparison, an approximately 2,300 square foot home in the Wilson area is currently pending at a list price of $1,245,000. Were it to sell for 90% of this price, it would represent a total loss of 30% from average peak values for this type of a property noted in 2007.

Notably, while the increase in the resort market’s average price was due to the type of home being sold in that segment (and not an appreciating trend), an indication that the resort single-family home market segment is currently on better footing is implied by this data. That said, transaction volume has been relatively low, even in what appear to be the more resilient segments and more data will need to be observed to discern if the resort market segment will continue to resist downward pressure.

Luxury Home Submarket of the Resort-Orientated Market Segment

Included in the above-discussed resort orientated market segment is the submarket of luxury homes. Observation of high-end home sales reveals that 23 sales equal to or above $3,000,000 occurred in 2010. This number is similar to the numbers noted in the years of 2000 and 2004, but less than that of the most robust years of 2005-2007. While the number of high-end home sales has decreased, the existence of sales at the upper reaches of the value range has caused many real estate professionals to feel that pricing in this market segment has experienced the least amount of discounting. Notably, the tallyfor 2010 could be argued to be as many as nine sales higher (total of 32) where the Cabins at Shooting Star included, as these homes are a platted "Townhouse Subdivision" -- but have many of the attributes of a single-family residence.

The attached table shows year-to-date data for this market from year 2000 through 2010.

Homesite Sales in Teton County Wyoming

Observing year end data for vacant homesites, a 19.51% increase in the number of sales was noted in 2010. Despite this increase in the number of sales, an approximate 24.84% decline in the average transaction price resulted in a net decline in the dollar volume of sales for this market segment of 17.51%. The following table arrays year-over-year comparisons of vacant homesite sales in the Teton County Market Area.

The attached table arrays year-over-year comparisons of vacant homesite sales by analyzing the time period of 2000 through year-end 2010.

Allocation Between “Resort / Second Home” and “Local” Market

As was done with single-family residences, the market for vacant homesites was, for analysis, allocated into its component parts of the “resort” and “local” markets. The following table summarizes this allocation:

Residential Homesite Local Market

2008 2009 2010 2009/2008 2010/2009
Number 23 10 15 -56.52% 50.00%
Average $843,717 $849,250 $381,654 0.66% -55.06%
$ Volume $19,405,500 $8,492,500 $4,961,500 -56.24% -41.58%

Residential Homesite Resort/Second Home Market

2008 2009 2010 2009/2008 2010/2009
Number 40 31 34 -22.50% 9.68%
Average $2,683,838 $1,560,169 $1,310,625 -41.87% -15.99%
$ Volume $107,353,500 $48,365,225 $41,940,000 -54.95% -13.28%

Observing the data when allocated by market segment, it is noted that both the local and resort segment showed similar growth in sales numbers. However, the average transaction price of the resort market was only noted to decrease by approximately 16% while the average sales price of the local market sales devalued by 55%. As a result, the locals market showed the greatest drop in dollar volume of sales, with a 41.58% drop for this measure. It should be noted that, as with the previously-observed increases in the average price of some segments, an average value loss of 55% does not imply a homesite worth a particular amount at the beginning of 2010 is now worth 55% less. Taking percentages of an aggregated inventory of property can be misleading in this regard. As an example, one listing of a vacant site in Melody Ranch is currently in the mid-to-low $300,000 range. Individual comparisons of this nature show value loss in the local market for homesites more along the 20-25% range during 2010.

Condominium and Townhome Sales in Teton County

Observing year-to-date data for condominiums and townhomes, an increase in sales volume (number of sales) of 49.32% is noted. This is in stark contrast to 2009, which saw a drop in sales volume of nearly 60%. The result of both the dramatic up and down swings of this market in the past two years, the number of sales of condominium now equates to 39% of the sales recorded in the peak year of 2007. Average sales price of attached homes showed an increase of 10.9%. However, this gain is attributable to the closing of nine cabins in the Shooting Star development with the average price of these units being in excess of four million dollars. These sales are felt to skew the data due to their being pre-construction contracts that were written in more favorable economic times. Removing these sales from consideration, the average price of attached home transaction is noted to actually decrease from 2009 in an amount of 15.6%.  

Please see attached document for a chart and a graph related to condominium and townhome sales.

Allocation Between “Resort / Second Home” and “Local” Market

As was done with single-family residences and homesites, the market for attached homes for analysis, was allocated into its component parts of the “resort” and “local” markets. The following table summarizes this allocation:

Condominium/Townhouse Local Market

2008 2009 2010 2009/2008 2010/2009
Number 80 38 50 -52.50% 31.58%
Average $645,563 $496,347 $532,872 -23.11% 7.36%
$ Volume $51,645,037 $18,861,180 $26,110,750 -63.48% 38.44%

Condominium/Townhouse Resort/Second Home Market

2008 2009 2010 2009/2008 2010/2009
Number 99 35 59 -64.65% 68.57%
Average $1,401,794 $1,398,991 $1,465,829 -0.20% 4.78%
$ Volume $138,777,627 $48,964,695 $82,086,400 -64.72% 67.64%

Observing the attached home sales when allocated between the local and resort market, it is evident that the resort market was the driving force behind the up tick in the condominium and townhouse market. However, it needs to be reiterated that much of this recovery was attributable to contracts at the Shooting Star development that were written prior to the economic correction. When reviewing the inventory of active attached homes from the local market as well as some rental oriented condominiums from the resort segment, it is noted that influence from distressed sale situations are likely to challenge an immediate recovery in this segment. As examples of this, it is currently noted that a Ponderosa Condominium is currently listed for $99,000 as a short sale. Admittedly short sale listings can be deceiving, as there is no guarantee a bank would accept offers below loan balance. However, were this unit to sell for 90% of its asking price, it would represent a 76.5% devaluation from previous peak prices. A similar situation is noted in a bank-owned condominium near Snow King that would imply a 65% devaluation if it were to garner 90% of its asking price. While there is a temptation to dismiss such properties as being anomalies due to the atypical motivations involved in distressed sales, when distressed sales comprise a significant enough share of the available inventory, their effect on value cannot be ignored.

The Supply Side

When considering the health of a real estate market, it is important to consider available inventory as well as historical demand.

The attached table arrays the increase in listed inventory in the major market segments of Teton County. Areas such as the condominium market north of the Town of Jackson or the market segment south of the Snake River Bridge were not specifically addressed due to the inconsistencies typically caused by the limited amounts of data points in these areas. Overall, this analysis shows that, on average, buyers have slightly less inventory (a decrease of 1.04%) to select from when property shopping in Teton County at the end of 2010 as compared to 2009. A move of this magnitude does not represent a significant decrease in available inventory, but is positive in the fact that inventory, on average, did not expand. However, comparing current inventory levels to those experienced during the more robust market of 2007, it is noted that inventory has nearly doubled in the market segments of single-family homes and attached homes. The largest category of increase in inventory is Teton Village vacant land. However, this is due to a relatively small starting inventory of six lots. Following this segment in magnitude is the attached home market for Jackson and south of Jackson market area, which showed an inventory growth of 171%. West Bank single-family residences showed the next greatest inventory growth between 2007 and 2010 (141%). However, the low starting inventory of 34 homes in 2007 may also be contributory to this greater percentage. To date, the West Bank property segment has been one of the more resilient in limiting value loss despite this inventory buildup. This resiliency may be due to a lesser prevalence of bank owned listings and short sale properties in the resort segments than the “in town” and “south of town” market areas. Currently, the Teton County MLS reports that the concentration of homes that are either bank-owned or have the potential to be a short sale is 59.38% greater than in the West Bank market segment and 22.36% greater than in the Teton Village and Aspens/Pines market area.  

Single-Family and Attached Home Properties Listed as Bank Owned or Short Sales

Market Area # of Listings Bank Owned or Short Sale %
Teton Village 86 8 9.30%
Aspens - Pines 43 4 9.30%
West Bank 56 4 7.14%
North of Town / Buttes 73 1 1.37%
Jackson / South Park 167 19 11.38%

Source: Teton County MLS

In Summary

The Teton County Real Estate Market had, in recent history, experienced robust growth in sales volume and price. This trend largely continued through 2007, with the onset of recessionary tendencies triggered by what has come to be referred to as the “mortgage crisis” in mid-summer 2007 not causing a significant impact to 2007 numbers. However, review of mid-fall 2008 numbers indicated that a market slowdown had settled on the local real estate market with year-end price points and active listing data signifying that a price correction has occurred. By year-end 2008, evidence of the correction had become tangible in most market segments in regard to decreases in the number of sales. This correction solidified itself during 2009, with all but the luxury real estate market demonstrating value loss of at least 30%. During 2010, downward value trends continued in most market segments. At the close of 2010 there appears a chance that the mid-to-upper-level market segments are stabilizing. However, entry level housing appears poised for more devaluation, until the inventory of distressed properties can be worked through.

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