So, Where Are We In the Cycle?

 

Anyone who follows the Jackson real estate market, if only casually, knows that volume is up and inventory is down. The more elusive question, however, is what’s going on with prices? Where are we in the cycle, and will prices continue to rise? It’s a tough question, as every home is different, and comparing yesterday’s sales to tomorrow’s activity runs the risk of attempting to navigate the road ahead while fixated on the rear view mirror.

 

To overcome this challenge, for a number of years The Clear Creek Group has tracked sales in two relatively homogeneous neighborhoods, Melody Ranch and the Teton Pines Cluster homes. Melody Ranch is a well maintained neighborhood of about 275 homes ten minutes south of the Jackson Town Square, catering primarily to full time, working residents, with sales prices generally in the range of $800,000 to $1,300,000. There are about 85 Teton Pines Cluster Homes, which are free standing single family homes, with a common architectural motif and prices generally in the range of $1.6 to $2.4 million, usually owned as vacation homes. While certainly values in these neighborhoods for individual homes will vary based on size, orientation, design, level of maintenance, and other factors, when looked at on a price per square foot basis over a period of years, with a large enough sample size (Melody Ranch and Teton Pines have recently averaged eleven and eight sales per year, respectively), meaningful trends should become apparent.

 
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As shown in the above graphs, prices peaked in both neighborhoods in 2008 at $406/sf in Melody and $668/sf in the Pines Clusters, then bottomed out in 2011 at $254/sf in Melody and $393/sf in the Pines Clusters. This decline of 37% in Melody and 41% in the Pines Clusters was somewhat more than the 30% decline generally accepted as our national average, but prices have rebounded since, and in 2015 sat at $360/sf in Melody and $572/sf in the Pines Clusters, both about 10% off their 2008 peaks. As sales prices in these two neighborhoods have increased at a compound annual rate of about 10% over the period 2011 – 2015, it is reasonable to expect that in 2016 prices will be back to their 2008 levels. Our prediction, then, is that prices will continue to rise after 2016 in these submarkets, but at a somewhat lower rate. Anecdotally, however, we believe that prices for properties at the luxury end of the spectrum have been growing at a higher rate, and will continue to do so as long as the supply of higher priced homes remains depressed.

 

If you are currently working with a real estate professional, we encourage you to continue that relationship. If not, and you’d like to learn more about properties in Jackson Hole, drop me an e-mail at phils@tccgre.com, or give call us at (307) 732-3400. I’d love to talk with you!

 

Phil Stevenson
Responsible Broker