Jackson Hole Market for real estate halved
2009-09-30
A year after an economic meltdown hit
world markets, real estate sales in and around Jackson Hole are off by
half in terms of volume and value sold.
The number of sales in
the last 12 months through Sept. 25 was 46 percent of the previous
12-month tally, according to an accounting by Courtney Campbell of Art
Hazen Real Estate LLC. Her information comes from Teton County Multiple
Listing Service, according to her weekly real estate scoreboard e-mail
letter.
Actual counts show 176 sales in the last 12 months
compared with 382 sales during the previous year. The statistics show a
similar trend with dollar volume, when calculated on list price. It is
off 52 percent when comparing the last 12 months with the same period a
year earlier.
The scorecard shows $310 million in real estate
sales, based on list price, in the last 12 months compared with $635
million during the same period a year earlier. The drop is a staggering
one in a sector of Teton County’s business that came to define its
economy, almost beyond the valley’s hallmark as a tourist destination.
After
a fruitless property auction, William Burke of Progressive Auction
Exchange LLC in Pokomoke City, Md., said he has an assessment of the
valley real estate market. He has been auctioning properties in the
Jackson Hole area for the last three years under the banner Jackson Hole Auction Co.
This
month he put up a handful of properties in and around Jackson Hole,
ranging from a timeshare condominium week to a Jackson townhome, a
Wilson cabin and a 5,000-acre Idaho ranch.
“We had enough
bidders where we set the market price,” Burke said in a telephone
interview Tuesday. A well-advertised auction will achieve that
objective, he said.
But not a single seller would accept what
was bid, Burke said. For example, a four-bedroom Clusters townhome that
owners were hoping would fetch at least $400,000 received a high bid of
only $330,000.
“We put $3.5 million on the table and the sellers
refused it all,” he said. A “reserve price,” which is kept secret
during bidding, allows a seller to reject bids that don’t meet his or
her minimum.
“They weren’t dealing with reality,” Burke said of sellers. “We’ve delivered cash value, but the sellers turned down the money.”
Of
properties that have sold in the last year, the median and average
prices have not seen a uniform reduction or a slide as deep as that of
sales volume and value, according to Campbell’s scoreboard.
The
median listed price of property sold in the 12 months before Sept. 25
was $849,000. During the same period the year before, the figure was $1
million.
Average listed price of properties sold in the two different periods climbed from $1.6 million to $1.7 million.
At
Art Hazen Real Estate, managing broker and associate owner Tim Mayo
said the figures are not the entire story. Because the scoreboard
tracks closings, which can take between 30 and 90 days to finalize
following a buyer’s commitment, the year-on-year comparisons don’t
reflect the full impact of the financial crisis of September 2008, he
said. In other words, the scorecard was still registering in October
and November the purchases of those who bought homes and land in and
around Jackson Hole before the crash.
“You haven’t seen 12 months,” Mayo said Monday. “What you’ve seen is nine months.”
A year’s impact from last year’s crash won’t be available for several months, he said.
Figures showing a market at half pace don’t reflect the feeling at his desk, Mayo said.
“It
feels significantly worse than that,” he said. “What we’re seeing right
now is the knowledgeable real estate buyers for Jackson Hole are
hesitant to pull the trigger, not because they don’t think there’s
great value right now. They know there’s great value and we’re at the
bottom of the prices.
“But there is still a complete lack of confidence in both the national and world economy,” he said. “They are overly cautious.”
The
numbers may be off, but the market is not dormant. On the positive
side, there are 75 sales pending and there were four closings last
week, including one for $1.4 million. Properties sold have been on the
market for an average of 184 days this year, up from 146 last year.
“The market has shown sales at all different price points,” Mayo said.
Buyers
can find 970 active listings valued at a total of $2.3 billion. The
average list price is $2.4 million, and properties have been listed for
an average of 241 days.
Buyers are not the only cautious ones,
Mayo said. Lenders have instituted a new phalanx of controls given past
excesses that experts point to in characterizing the foundation of the
current economic doldrums.
“It’s a gantlet of paperwork and
restrictions,“ Mayo said of the mortgage maze. “Particularly, the
appraisals are creating immense problems in getting mortgage approvals.”
One
issue is a lack of comparable sales, Mayo said. In estimating market
value, an appraiser’s best tool is a similar property in a similar
neighborhood that sold recently. A lack of sales volume at a time when
lenders question the value of real property can lead to skittishness on
their part.
Lenders also are reviewing mortgage applications closely.
“Three
years ago appraisal review of mortgage underwriters hardly existed,” he
said. “Now they’re three deep. The pendulum has swung violently.”
Auctioneer Burke said sellers who rejected auction bids missed an opportunity.
“There’s been one time in seven years when the sellers turned down the high bid and got more,” he said.
“Reality”
to Burke means a log home with Teton views that sellers hoped to part
with for $1.1 million is worth only the $700,000 bid it brought in. And
a Wilson cabin on 5 acres appraised for $3.9 million is worth only its
$800,000 bid.
Don’t properties have to sell before a market price is set?
“We delivered what the properties are worth today, not yesterday, not a year from now,” Burke said.
Property
values there are down 30 percent to 50 percent from a 2005 high. In
Teton County, experts say values are off 30 percent to 40 percent.
Burke claims to have “reset” the local market with his auction.
“Now the local agents will take advantage,” he said.
“You’re
two years behind the rest of the country,” Burke said. “You guys are
just getting what others got hit with two years ago.
“I see
property values going down for another year to two years, laying flat
for two to five years and going up,” he said. “I think it’s a great
market. It’s insulated for all the reasons the values have held up.
It’s an investment over eight, 10, 12 years. This will be a speed bump.”
Mayo said he hopes for a turnaround in the spring.
“At
this point, it has more to do with peoples’ attitude about the national
and world economy than it does about our local real estate market,” he
said.
“We run a year behind the rest of the nation,” he said.
It’s historical. “The rest of the nation is showing great signs of
recovery.
“Hopefully, next spring we’ll start seeing those signs of recovery in our market as well.”
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