You don't need to be a real estate guru to realize the housing market in the Wood River Valley is in the midst of some kind predicament. A short walk through Ketchum will include mountain vistas, warm weather and a propagation of "For Sale" signs that can leave a prospective homebuyer feeling like a kid in a candy store—albeit, an expensive candy store.
Like other resort communities, northern Blaine County is in many ways an anomaly when compared to the national housing market. Local real estate is largely driven by second-home owners, many of whom have the financial wherewithal to weather a downturn in the market and wait for a rebound to sell at a desired price. Anyone who's ever taken Economics 101 can extrapolate the disparity between supply and demand that will result from this trend of price stagnation. However, as prices begin to drop in accordance with surplus inventory, the $64,000 question remains: Will prices continue to dip, or will buyers finally decide that the time is right?
The North Valley
The area comprising Ketchum, Sun Valley, Elkhorn, Warm Springs and north of Ketchum is the home of the "convenience seller," as Jeannine Williamson, a consumer loan specialist at the Ketchum branch of Zions Bank, calls them.
These are the people who can afford to put their homes on the market and wait for a rebound in order to make a nice return on their investment.
"There are still people thinking their house is worth what it was two years ago and not facing reality," said Rick Green, vice president of Resort Real Estate at Zions Bank.
Statistics provided by Nicole Buckwalter, president of the Sawtooth Board of Realtors, show that while the total number of sales in this "resort area" are down by approximately 30 percent, compared to the same time period last year, the median price has remained around $2 million.
Buckwalter explained that for the summer season, the volume of sales plus homes reported to be under contract is down 4 percent compared to the same period last year, although "high-end" homes over $3 million continue to sell.
"We are gaining momentum," Buckwalter said. "The market has leveled off and is showing signs of improvement."
However, Green said he wasn't sure if this was the bottom or if there could be another slow season next year.
"This isn't a doomsday thing," Green said. "Real estate here was so good for so long that people who got into the market in the last five to 10 years haven't seen a downturn before."
Green said the market moves in roughly five-year cycles and that there is no doubt it will come up again, but perhaps not until 2009. Green explained that a surging stock market and the upcoming presidential election could both be factors in the timing, as people are currently garnering greater investment returns through Wall Street and could wait to see what changes in national policy are in store for the country. He also said that as prices start dropping, potential buyers could stay on the sidelines in hopes of saving even more.
While prices have yet to plummet precipitously, especially in the condominium and townhouse segment, where the median price is up almost $200,000, and in the mid-valley, where both sales and price have increased, those in the real estate industry agree that it's a buyer's market.
"This is a mountain town that's not being overrun with growth," said Dan Gorham, a broker based in the Ketchum office of Windermere Real Estate. "There are winners and losers in this, and for buyers, there's a lot of inventory here."
Hailey and Bellevue
Like the area to the north, home sales in Hailey have decreased as well, with volume down 26 percent this year to date. However, free-market forces seem to be working smoothly, with the median price dropping from $519,900 in 2006 to $427,000, according to the Sawtooth Board's latest statistics.
Buckwalter estimated that the total number of units sold will have actually increased by the end of the summer season, which is always the strongest for the market.
"The current state of the market has hurt homeowners in neighborhoods like Woodside," Williamson said, explaining that many residents in the south valley don't have the luxury of waiting for a buyer at a certain price like second-home owners.
While prices have come down, Green refuted rumors that the dip has caused a high number of foreclosures.
"People with no equity are struggling," Green said, explaining that a defaulted loan is more likely to result in lenders trying to find a creative way to restructure rather than end up owning a house.
He said there is no indication that there is any kind of crisis here, as has been widely reported in the media for many other parts of the country.
"This is a great time to buy, especially in Bellevue," Green said.
With the median price down just more than $35,000, 19 units have sold in Bellevue, compared to 11 at the same time in 2006.
"Obviously, Bellevue was where the deals were made," Buckwalter said.
With a surplus inventory, a logical question follows regarding the necessity of the new units coming onto the market in the near future.
The largest housing development in Hailey, the Sweetwater project in Woodside, will have 20 units of the 106 planned for Phase 1 on the market next spring, said Janine Bear, the team leader for Sotheby's International Realty, during an interview in late June. At that time, Bear said five or six units were under contract.
In downtown Ketchum, the Chilali Lodge condominiums are expected to be finished by the end of November, said Chris Lankhorst, the sales team manager of Playground Destination Properties, the project's broker.
And in Bellevue, the City Council has three large development annexations in front of it that would add more than 1,000 units if all were approved.
Using year-to-year changes of address on tax returns, the IRS tracked migration data from county to county, estimating an increase of 580 full-time residents in Blaine County between 2000 and 2005.
"Even this doesn't explain why developers are putting forth projects when there isn't the demand," Gorham said.
Buckwalter said that one thing has proven to be true time after time.
"No matter what's out there, we always absorb inventory."
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Rick Green, Zions Bank Resort Real Estate vice president, said the housing market in the Wood River Valley moves in roughly five-year cycles and that there is no doubt it will come up again, but perhaps not until 2009. Photo by Willy Cook
