What is the new norm and why is it important to identify? This phrase gets thrown around time all the time and feels like another version of, it is what it is.
April of 2022 was our market’s cut off point. The Covid mountain migration acceleration came to a halt as interest rates finally went up and the market slowed down BIG TIME. The remainder of the year was shaky as the money markets took a dip as well and our real estate market didn’t really start showing signs of life until late fall. Granted inventory still remained pretty slim yet we started to experience consistency in transactions taking us into 2023.
Last year we had some story lines that brought back consumer confidence in that most folks involved in the money markets experienced roughly 30% gains and there was heavy talk of interest rates being cut which eventually came to fruition.
In our current state we are seeing more positive growth over the start of 2023 yet showing similar signs. To me, we are now in the new norm which is low inventory, statistics that are reflective of more expensive sales, a tighter competitive median market, and a consistent amount of transactions week to week and month to month. It’s this consistency that is selling me on this idea.
If we reflect on the ten years prior to the pandemic that norm was its own thing as well. We have roughly three years where the market blacked out and when it came to, ten to twenty transactions a week became to the expectation level. Slightly more cyclical than seasonal and still minimal inventory choices, unless you are buying a newly built home in Ketchum in which case that might look more like picking out jeans a Prada’s version of the Boot Barn. Thus, here we are and loving every minute of it.
Why is it important to identify the new norm? It creates a new baseline of perspective to compare our current market against something we know. Kind of like, since the reign of Michael Jordan we compare all great basketball players to him. Before that was Dr. J or Magic. How do we talk about the relevance of the real estate market without anything familiar to compare it to? I’m arguing we’ve established that.
Condos in the first quarter are lagging. They have the potential to do well with new and total inventory and total inventory. There’s even 33% more pending this time, but closings have not yet occurred enough and that’s why its total sold volume is down 37%. Good news for buyers is the average sales price is dropping. Condos are closing at 98% of ask, up 1% over last year, and tells me that sellers are accurately pricing their properties which means there are plenty of comparable sales. No surprise Ketchum was the meat of the market up 15% in sales volume while the rest of the areas were down.
Single family homes ripped in the first quarter of 2024. Their total sales volume was up 92% over last year and I believe speaks to the confidence buyers have in our real estate and money markets. Further, maybe these folks understand what our new norm is. Like condos, active listings are up, new listings are up, the amount under contract is up, and unlike condos they are closing. Now, please note when you look at the average sale price, keep in mind that number is up because bigger more expensive units are selling. We do have quite a bit more high-end inventory that is moving. Median inventory is too, it’s just that there’s less units in the market to bring down the average. The only side to this market that didn’t scorch in the first quarter were homes listed outside of the immediate valley which makes sense as that make up is primarily of more unique property whose time comes in the summer.
In the vacant residential land sector, the only thing that I can point to is folks are also getting hip to the new norm in building or are more confident in the timelines builder are giving them because this sector was hot and heavy in the first quarter. Inventory is up 40%, new inventory is up 48%, under contract up 200%, and closings were up 169%. Thus, sold volume is up 385% and the average sale price too. Even Sun Valley had inventory to choose from in the first quarter. The fact that land is selling for 96% of ask, up 7% over a year ago, tells me buyers want what they want are willing to pay for it. This is all good news for the building industry in our area as the well doesn’t appear to be running dry any time soon.
As we should all know by now farm and ranch’s time comes after the winter and certainly explains their numbers. There does appear to be a robust amount of inventory and if you’ve studied the inventory and are still looking for something big and splashy please get in touch, wink wink. Two ranches have sold with four more pending which is a great sign for this market and only one farm has sold.
The thing about now, fundamentally it is a seller’s market like always, yet buyers do have negotiating power during the due diligence phase. They do in pricing as well in some rare instances. Sellers have had to work with the buyers on these purchases so in essence there is a balance of compromise that is occurring during these transactions.
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