The supporting data is piling up and the trend lines are clear. By all metrics, it can now be considered a buyer’s market for Jackson Hole real estate.
One of the earliest lessons of my real estate career was a version of the “Four Stages” theory of home sales. Some break down the dynamics of the sales cycle into six, nine or as many as 10 stages, but they all say the same thing: when prices have fallen far enough, and the inventory has risen past the point of saturation, buyers will return to the market. When prices rise and inventory thins, sales will eventually plateau before falling off precipitously. Wash. Rinse. Repeat.
One of the clearest and most concise summaries of the many available online was found at the 37th Parallel Properties Web site.
1) Buyers Market Stage 1: At this stage of the Market Cycle you have an over-supply of properties in the market. Housing prices are falling, and yet demand is low. Unemployment is high and real estate loans are hard to find as lenders qualifications are stricter. Most new construction of new homes has come to a halt. Yet, as prices fall investors are purchasing properties at low prices.
2) Buyers Market Stage 2: When this stage occurs in the Market Cycle the government will give incentives to business owners to create jobs for the populace. The government will also create alternative financing to encourage individuals to start purchasing homes again. While demand slowly increases the over-supply of homes starts to decrease, job growth will slowly increase and the economy will start to get stronger. At this time demand starts to increase hence prices start to increase and the economy is on its way to recovery. Investors are continuing to buy properties, but are aware that they need to be patient and stick to their Money Rules when making purchases.
3) Sellers Market Stage 1: At this stage of the Market Cycle demand for housing is rising and prices are also increasing. Supply is typically low at this stage due to the demand for housing and the built up desire that people think they can make a lot of money with prices going up. This is where you see multiple offers on existing housing as well as people starting to wait in line at new housing developments to purchase new homes. Housing prices are starting to increase more rapidly. Unemployment is low and the general economy is doing very well.
4) Sellers Market Stage 2: At this stage of the Market Cycle job growth is strong and very stable. Due to strong demand, new construction and existing houses can’t keep up with supply. People are literally waiting in lines to purchase new homes, and you see existing houses sell in one or two days with prices increasing every week, sometimes daily. At new housing developments you will see each phase (group of homes released to new buyers) much higher in price than the phase before. At this stage there is a lot of “so called investors” purchasing properties and then immediately flipping them to make a profit.
Clearly, the current state of the Jackson Hole real estate is best described by the first paragraph, “Buyer’s Market Stage 1.” High inventory? Check. Falling prices and relatively low demand? Absolutely. Stagnant construction and restrictive lending policies? I hear these stories nearly every day.
As regular readers of this blog know, the uptick in Jackson Hole real estate sales in recent quarters has been driven by aggressive buyers and/or investors taking advantage of a decline in value as much as 50 percent off the highs of 2006-08. Despite the continued downturn in the local and national economy, the average sales price in 2010 soared to nearly $1.5 million in Teton County.
So far, working families and traditional second-home buyers have yet to return to the market in significant numbers, which means the entry-level and short-term rental property segments still remain weak. However, the average sales price has been falling during the first quarter of 2011 to below $1.2 million and there have been 10 full-ownership sales in Teton County below $260,000. More and more homes are completing the foreclosure process, bringing several well-priced REO homes on the market. To compete, banks involved in short sales have become much more nimble and willing to work with sellers to avoid foreclosure.
Is it the best time to buy property in Jackson Hole? Well, that depends on the property and the buyer, of course, but all indications are that current conditions are considerably more favorable for buyers than sellers in the coming months.
Please contact me for specific market data to support this post, including MLS sheets for sold properties, Comparable Market Analyses and additional resources. Your successful, savvy real estate purchase begins with the accumulation and assimilation of all pertinent Teton Realty information. Let me get you started Today.