Wednesday, September 25, 2013

Housing market shows signs of improvement

New home construction still far below peak levels

Express Staff Writer

Housing in Blaine County has always been considered expensive, and now residents can expect prices to rise even further. According to a yearly market comparison from Bob Crosby, government affairs director for the Sun Valley Board of Realtors, the median sale price of all homes in Blaine County has risen from $190,000 in 2012 to $255,000 in 2013.
    “My advice for those looking to buy a house is, ‘Hurry up, because property values are going up,’” Crosby said.
    In 2010, a total of 424 houses were sold in Blaine County. In 2011, 522 houses were sold, followed with another increase to 744 sales in 2012. Since the beginning of 2013 to Sept. 10, 517 houses have been sold.
    Another sign of an improving housing market in Blaine County is the 17.8 percent increase in the median list price of $339,000 in 2012 to $399,500 in 2013, as of Sept. 10.
In Ketchum, the median value of single-family homes sold has steadily decreased since the housing crash of 2008. In 2008, the median value of single-family home sales in Ketchum was $1,350,000, falling to $1,200,000 the following year. In 2010, the value fell again to $980,000, followed by successive drops to $730,000 in 2011 and $560,000 in 2012.
Meanwhile, in Hailey, the values of single-family homes are on the upswing. In 2008, the median sale price was $379,000, but fell to $288,000 in 2009. A year later, in 2010, the median rose to $340,000 but plummeted back down to $169,000 in 2011. Last year, the median rose to $185,000.
Bellevue single-family home sales prices are steadying after three consecutive years of falling in value. The median sales price of single-family homes in Bellevue was $296,000 in 2008, falling to $281,000 in 2009. An even deeper fall occurred in 2010 when the median stood at $206,000. However, the median value in both 2011 and 2012 was steady at $160,000.
The most drastic drop in median single-family home values occurred in Carey. The median value of homes there plummeted from $226,000 in 2008 to just $89,000 in 2009. In 2010, the median value hit its low point of the recession at $57,000. However, Carey saw median home values stay steady at $85,000 in 2011 and 2012.
Unlike Hailey and Bellevue, Sun Valley experienced a decline in the median value of single-family homes since 2008. In 2008, the median value of a single-family home in Sun Valley was $1,820,000, falling to $1,480,000 the following year. The median value increased to $1,580,000 in 2010, but that proved to be temporary when the figure fell to $1,200,000 in 2011. The median value fell below the seven-figure mark in 2012 when it decreased once again to $950,000.
The trend in median values of single-family home sales in Blaine County as a whole is similar to Sun Valley’s. In 2008, the median value was $550,000, falling to $370,000 in 2009. In 2010, the county experienced an uptick, just as Sun Valley did, to $390,000. In 2011, the median decreased to $273,000, followed with a slight descent to $259,000 in 2012.
Executive Director of ARCH Community Housing Trust Michelle Griffith said she is concerned about the impact that rising property values may have on affordable housing.
“ARCH was trying to buy homes in Hailey and Bellevue, and was outbid by investors who were putting out all-cash, no-contingency offers on homes,” she said.
That impacts affordable housing because those homes are investments, and while some of those investments are affordable now, they won’t continue to stay affordable.
    “Investors purchase these properties as an investment tool, so they have no obligation or interest in keeping rental prices affordable,” Griffith said. “They’re looking for a return on their investment. They’re actually going to aggravate the situation.”
With investors seeking to capitalize on Hailey housing opportunities, she said people may have a difficult time in the future finding affordable rentals. She noted that in the wake of the housing crash the affordable housing focus has shifted from a need to find affordable home-ownership opportunities to an increasing need for affordable rentals.

“My advice for those looking to buy a house is, ‘Hurry up, because property values are going up.’”
Bob Crosby
Sun Valley Board of Realtors

She also said home sales in Hailey are firming up more than in other cities. She said the trend does not surprise her because it was the segment of the market with one of the biggest drop-offs in home values and is now the most attractive investment.
As a result of the housing crash of 2008, Griffith said she thinks people will have different attitudes towards home ownership.
“The big question out there is, ‘Will home ownership be viewed in the same way that it has been?’” Griffith said. “Is home ownership not going to be perceived as the stepping stone to the American Dream because people have experienced negative results from being homeowners?
    “I suspect that it will be less of an emotional decision than it has been in the past and more of a financial decision. People are probably going to be more inclined to look at that rent-versus-own decision based on the numbers rather than this ideal that in order to be a piece of America, you have to afford your own house.”
    Windermere Real Estate Managing Broker Dan Gorham said home sales have been amazingly consistent, and that “sales are not nearly as seasonal as everyone thinks they are.”
    The likelihood of increasing property values can be partially attributed to a growing diversity in properties and price ranges available.
Crosby said, “I think now particularly coming out of a recession, the community has much better balance in terms of availability on all price points than it had prior to the crash. As a result, we can offer a higher level of affordability while at the same time still having the prime and second homes available, allowing us to have a more diverse range of price points.
“We’ve always believed that compared to other Western destination resorts with similar outdoor amenities that we offer a stronger community and much lower housing prices.”
Gorham, who is also president of the Sun Valley Board of Realtors, said the two types of home construction both shift in value based on different factors.
“There are two types of construction. There’s the primary-home construction, and then there’s the second-home construction. It seems like primary-home construction is driven by inventory in the marketplace and help of the local economy, which allows people to build and buy these homes.
“So, jobs would drive the primary market, while in the secondary market, that’s more of the national economy, with how the stock market is doing and the health of the economy for someone who’s making a discretionary buy and chooses to purchase a second home. If the number of second homes is in short supply, people will build more second homes to sell to those people.”
Crosby explained how the two different types of housing have led to a contrast in housing markets between the northern and southern portions of Blaine County.
“The community at the north end is much more affected by the national economy because that’s where the second-home discretionary buyers are,” he said. “The community in the south portion of the county is less influenced by the out-of-town buyers. So, you’ve got this combination of impacts.
“Typically, though, since tourism is such a big part of our economy, if the national economy isn’t working, it still impacts the local housing buying decisions because a lot of jobs are tied into the businesses that are being impacted by the national economy.”
    Crosby said he is not worried about the future of the housing market as a whole, but is concerned about the potential for interest rates to increase in the future.
    The total number of building permits filed in the past 10 years reached an apex in 2008, and has continuously decreased since the housing crash. In 2008, there were 694 permits, dropping down to 520 the following year. In 2010, the total dropped slightly to 501, with 100 less in 2011 and a total of 393 last year. Most of those were remodels, not new units.
    “I think the building trend is really interesting,” Sustain Blaine Executive Director Harry Griffith said. “We’re looking at a steady state level of building permits in both residential and commercial properties. It’s going to be a linear trend going forward for the future.”

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