During the first quarter of 2018, the real estate market in Jackson Hole was red hot, particularly for homes under $1 million, starkly contrasting with the previous year.
According to the Jackson Hole Real Estate Market Report, which was released last Thursday, the number of transactions increased 22 percent over last year, with most of the movement taking place in homes under $1 million.
This is good news for homeowners and homebuyers.
In April, the report’s year-end analysis showed that housing inventory in Jackson was at a 30-year low, resulting in some of the highest-valued property in the area’s history.
“Much higher construction costs and land values make it impossible to build a new home in the valley for under $1 million,” the report reads, “putting the dream of owning a new home out of the reach for most locals.”
The primary cause of this sharp increase in value, according to the report, is that the upper-middle class is wary of selling its “affordable” property for fear of another economic downturn.
Ten years ago, an average homeowner might remodel and sell a condo to move up to a single-family home with a backyard and a garage, and then later sell again for a nicer home in a better location. Ultimately, that property would be sold for money to buy a piece of land and build a dream home.
“This type of trade-up allowed for a lot of turnovers and additional inventory,” the report reads. “Today, there is little to no ‘trading up,’ as most owners still remember the Great Recession and are concerned about overextending themselves.”
The available housing stock was further limited by the strength of the rental market. Investors who purchased foreclosed properties during the recession have maintained those properties as rentals due to the prices tourists will pay for stays in Jackson.
However, according to the data in the recent Jackson Hole Real Estate Market Report, this trend shows signs of slowing down and even potentially reversing.
In 2007, there were 116 sales under $500,000 in the first quarter. That number plummeted to just 10 in the first quarter of 2017. During the first quarter of 2018, that number doubled, and the number of homes sold under $1 million increased 40 percent.
“This suggests that the upper-middle class is trading up again,” said Michael Pruitt, the owner of Michael Pruitt Real Estate who compiles the market report every quarter. “It could also be from people moving in or purchasing second homes, but there was definitely a lot more action during the first quarter this year.”
But inventory remains scarce, suggesting that last quarter’s growth may merely be anomalous. The number of available single-family homes decreased 32 percent, and the number of townhomes and condominiums stayed the same.
These numbers are expected to change, however. The town has approved a number of large-scale housing projects that will result in over 300 new units this year, many of which are permanently deed-restricted.
Planners also hope that the town’s nearly completed rezone that allows greater density throughout residential neighborhoods will motivate developers to build more housing.
With a continuous source of additional housing supply, the Jackson housing market could begin to correct itself.
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Published by John Spina at 732-5911, email@example.com or @JHNGtown.