Housing Hell: New report reiterates what most Hole-dwellers know — the price is too damn high

By on February 7, 2018

According to the report, the dearth of available “affordable” housing is due in part to those who already own it holding on to it for dear life. (PHOTO: MATT SHIFFLER)

A report issued recently by The Jackson Hole Report confirms empirically what a lot of people in the valley already knew; available housing is getting harder to find, and it’s practically impossible to find any housing if you don’t have at least a half-million dollars to spend.

The report, compiled from data about every free-market property sale in the valley in the year 2017, showed that the available housing stock in the valley is at the lowest point in decades, and the amount of housing available under $1 million has decreased to perilous numbers with only 79 homes under $1 million having sold in 2017. Only five of those were priced under $750,000, according to the report.

The number of property sales are down 31 percent compared to the time prior to the great recession, and inventory levels are down 23 percent since then. The lack of supply has caused prices to spike to an average sale price of $1.3 million, a near-record level.

For those who work in Jackson but live out of the area and must commute long distances during the Teton region’s severe winter weather, the data show that there is little hope indeed of a family earning the median wage in Teton County ever purchasing a home in the valley.

“The under $1 million market is slowly slipping away, representing only 34% of all home sales in 2017,” the report read. “This segment continues to reflect brisk activity and the ever-intensifying appetite for properties priced below $1 million: When a well priced [sic] home hits the market in this segment, a bidding war is sure to ensue within 72 hours.”

At the time the report was compiled, there were 14 single-family homes for sale in the valley under $1 million. Five of those were priced under $750,000.

According to the report, the dearth of available “affordable” housing is due in part to those who already own it holding on to it for dear life. Prior to the 2007 economic downturn — which was fueled in large part by a collapse of a housing market bubble — many local residents in the valley looked at their home as part of their retirement portfolio, the report said.

To build up their retirement nest egg, many residents of the valley would upgrade their housing every 3-5 years. “they may have owned a two bedroom condo and traded up to a three bedroom house with a small backyard,” the report said. “Then they would trade up again to a home with some acreage, and a larger or newer home.”

This time around, however, it seems those who own some of the more modestly-priced housing in the area — at least by Jackson standards — are not so ready to gamble with the value of their homes and are staying put. The report said some homeowners cite the lack of housing they can upgrade to, as well as fears of overextending themselves on a larger mortgage payment as reasons they were holding on to what they have. For many, the losses in equity they suffered during the great recession is still fresh in their minds, the report said, convincing many to not rock their financial boat by taking on more debt.

The report also cited a lack of new construction as a factor limiting housing options, and it also noted that exploding construction and materials costs have also contributed significantly to the valley’s housing shortage.

“This combination of factors has created a limited supply, and prices have accelerated to the point where most local buyers can no longer afford to enter our market,” the report read.

That analysis was backed by sales data. In 2005, there were 1,122 annual sales in Teton County. Of those, 429, or 38 percent, sold for under $500,000. In 2017, only 604 properties sold in the county. Of those, 90 properties sold for under $500,000, a paltry 15 percent of the total properties sold.

The Housing Affordability Index, or HAI, for Teton County places it among the least affordable places in the nation for a typical person earning the median area wage to buy a house.  The HAI is calculated using an area’s mean home price, mean income and mortgage income requirements. An HAI of 100 indicates a family earning that area’s mean wage can afford a mortgage at that area’s mean home cost. A number over 100 indicates housing is more affordable. A number below 100 means housing is less affordable.

Teton County’s HAI is estimated at 53, according to data analysis by ESRI, a California-based analytic software company. The share of income to mortgage, the amount of the area’s median wage that would be consumed by the area’s median mortgage payment, was 47 percent. Nationally, the HAI for the final quarter of 2017 was 159, according to the National Association of Realtors.

Because of pent-up demand for homes under $1 million in the valley and the lack of available properties, the Jackson Hole Report predicts prices for those properties will go up during 2018.

A lack of availability is not only affecting “cheap” homes in the valley, according to the report. Based on the number of properties for sale over the course of 2017, the year will go down as the one where property was the scarcest for 30 years, with a 17 percent decrease in available inventory over 2016.

Single-family homes saw a 7 percent increase in average sale price, and a 15 percent spike in median sale price. In the valley, the median list price for a single-family home was $1.3 million, and the median list price was $2.65 million, which the report said was the “highest median list price ever.”

Condos and townhouses saw sales across the valley increase by 1.5 percent, coupled with a median sale price decrease of 3 percent, to $575,000. According to the report, condos and townhouses under $500,000 accounted for 33 percent of 2017 sales, but with only eight sub-$500,000 properties listed, the report warns that a price increase in condos and townhouses is to be expected.

At the time the report was published, the cheapest single-family home in the valley was a two-bedroom, 1388-square foot home in Hoback Junction that was listing for $575,000. The most expensive was an 11,500 square foot 4-bedroom house with a private golf course for $28 million. The lowest priced condo or townhome was a 608 square foot home for $345,000, four-and-a-half times Teton County’s median household income of $75,594.

According to the formula used to calculate HAI, the housing affordability index for that condo for a family making Teton County’s median wage would be 102.4. For the cheapest house available, the HAI would be 61.

“With current interest rates holding at all-time lows, mortgage payments can still be less than monthly rent,” the report said.  “If you can afford a 30% down payment and have a good credit score, you should buy a condo and start building equity.”

For a $345,000 condominium, a 30 percent down payment would be $103,500. According to a 2017 study by the Economic Policy Institute, the average savings of a family with a head-of-household aged 31-37 is $31,644. The median savings for such a family is $480. PJH


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