Real estate sales prices in recent months in the Wood River Valley have run the gamut, from a record $10.5 million sale in the Lake Creek neighborhood north of Ketchum to a $40,000 sale of a three-bedroom home in Bellevue.
The inventory of low-end homes for sale is decreasing. Does this mean a sustained recovery of the housing market in Blaine County is under way?
Bloomberg news reported Monday that prices for single-family homes rose during the last quarter in almost 88 percent of U.S. cities, with an average rise in Western states of 20 percent. The national median price for an existing single-family home in the U.S. was $178,900 in the fourth quarter, up 10 percent from the same period last year.
Real estate agent Dan Gorham was recently elected to serve a one-year term as president of the Sun Valley Board of Realtors, a self-supporting collective of real estate entrepreneurs that tracks local governmental issues and offers professional support for about 250 real estate agents in Blaine County.
Gorham is a broker at Windermere Real Estate in Ketchum. Like many local real estate agents, he owned investment property during the real estate crash in 2007, and suffered while watching its value plummet.
“It was like a tsunami. A lot of agents, like our clients, did not think it would go as far down as it did,” Gorham said.
Now that banking regulations have tightened up lending standards, Gorham thinks local real estate is poised for a turnaround.
“There’s a return of a sense of urgency at the lower price points,” he said. “It’s not unusual to see multiple offers under $200,000.”
Gorham said a presenter at a recent meeting of 150 Windermere brokers in Seattle asked how many other markets were seeing a decrease in inventory at lower prices.
“On hundred and fifty hands went up,” Gorham said.
Windermere’s annual report on real estate sales statistics reports that the number of sales increased 42 percent in 2012 in Blaine County, with the largest jump by far in the south valley. Perhaps the prices there are just too low to resist for buyers that have been waiting in the wings to buy. Last year’s prices per square foot for single-family homes in Hailey, about $133, were the lowest since 1999.
The north valley saw fewer sales, but rising values in some areas. North of Ketchum, the average per-square-foot sales price rose from $325 to $472 in 2012. Ketchum’s rose from $339 to $387.
Warm Springs and Elkhorn prices per square foot dropped slightly, from $275 to $257, and $311 to $300, respectively.
Gorham said the increase in prices began last spring. He said the last six months of 2012 showed an increase in average per-square-foot prices rise from $100 to $120.
“Many people can see now that in some neighborhoods it’s cheaper to own than to rent,” he said.
Gorham has been tracking the number of bank-owned properties and foreclosure sales, which, he said, over the last year served to drive down home values.
“Last year, there were 90 at this time. This week, there are nine, with half of them under contract.” he said.
Gorham has also tracked the so-called “shadow inventory” of bank-owned homes that have not yet been put on the market, using online Blaine County mapping and title data. Fears have been expressed that these homes will go on the market, driving down prices further.
“Five months ago, there were only five of them,” he said. “Banks are not in the real estate business. It’s in their interest to get them cleaned up and sold.”
At least some of the low-end deals have already been bought and resold, after improvements, at higher prices.
“There are several contractors we know who are buying homes and investing $20,000 to $25,000 in improvements and reselling them,” Gorham said.
One such home went for $144,000 in 2011 on Elm Street in Hailey, and resold in 2012 for $189,000, he said.
In 2010, Gorham read “The Big Short” by Michael Lewis, about how hedge fund manager John Paulson made billions of dollars betting against the sub-prime housing market.
“When Paulson saw strawberry pickers in the Sacramento Valley living in $400,000 homes, he called his partner and told him to double down the bet,” Gorham said.
Gorham continues to read Paulson’s predictions about the housing market online. Today, he’s bullish on the market.
“Paulson said if you don’t own a home, borrow money from a relative to buy one. If you already own a home, buy another,” he said.
The Jackson Hole Report, an annual report of sales data from Jackson, Wyo., states that single-family home sales in that market rose 31 percent last year, compared to 2011, with average sales values up 33 percent. In Jackson, the most active sales were for under $1 million.
In Jackson in 2008, the least expensive home sold for $553,000. Last year, 47 homes sold for under $500,000, with three selling for under $300,000. The last time a home sold in that market for under $300,000 was 2002.
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