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REAL ESTATE
Big Sky Weekly
Big Sky Real Estate Update: Reflections on 2011 and predictions for 2012 From the local experts at Sotheby’s International Realty, Jeff Helms, Tallie Jamison and Ryan Kulesza First and foremost, we want to welcome you back to Big Sky, the best place to enjoy the holiday season. Since your last visit, we’d like to bring you up to speed on our local real estate market. What follows is an overview of the last year’s activity in our entire region including the Meadow, Mountain, and Canyon areas, as well as the four resorts. There is a lot of data and doing the research on your own can be daunting, so we’ve done the work for you. We invite you to review the numbers in our data driven report on pages 30 and 31 or visit us next to the Hungry Moose for a personal overview.
A YEAR IN REVIEW
In 2011, we created a marketplace in which properties actually traded. That may sound insignificant, but in comparison to 2009 and 2010 where we saw a relatively inactive marketplace, we had difficulty determining values because there were so few sales. Thankfully, now, we can look at comparable data within distinct segments and discern true market value. Just over two hundred properties traded hands this year, for a total of $106,000,000 (excluding Yellowstone Club transactions). We hit an important milestone late this year: our inventory levels fell below 500, contracting by 38% since the highs of 2008, when we had over 750 listings in the entire Big Sky market. This absorption shows both confidence in the market and a correction in the balance of supply and demand. 75% of the transactions were under $500,000, leading buyers to seek value at price points over $500,000. We were encouraged to see many $1M+ sales in the fourth quarter.
BUYERS’ MARKET
The most important step a buyer can take towards making a purchase is to get an education on the finer points of their market segment. Well priced properties, foreclosures in particular, have seen
multiple offers within 48 hours and even sold over the listing price. Buyers need to know when to strike so they don’t miss a great opportunity. With the combination of decreased prices and very low vacancy rates in the long- and shortterm rental markets, investors have begun to allocate money to acquire income-producing properties. We expect 2012 to continue to be a buyer’s market, with high-end properties in particular.
DISTRESSED PROPERTIES
Short sales, foreclosures and bank-owned properties are still affecting our overall market. In 2011, 24% of solds were technically classified as distressed, while only 10% of our active listings are distressed. In other words, we have a high demand for distressed properties, but the supply has been diminished. Buyers continue to ask for a list of foreclosures; that list is shrinking. The opportunity to purchase top quality distressed real estate is now.
PREDICTIONS
We remain cautiously optimistic about the overall Big Sky market. Over the past year, we have watched Yellowstone Club stabilize, Moonlight Basin begin to emerge from bankruptcy, and Spanish Peaks Holdings II, LLC file for Chapter 7 bankruptcy with all services coming to halt. Through it all, Big Sky Resort seemed to make wise and prudent decisions in all facets of their operations. Resort areas rely heavily on real estate sales in order to sustain their business models. Thus, you can anticipate new product development and releases in the later half of 2012 in order to generate much needed revenue to sustain operations in both Yellowstone Club and Moonlight Basin. For example, we expect the release of the final phase of the Powder Ridge Cabins (4B), a ski-in ski-out condo development at Big Sky Resort.
We anticipate vacant land sales to increase in 2012 due to such low prices throughout Big Sky. Inventory levels in Moonlight Basin will continue to diminish into the first quarter of 2012, which will lead to an increase in value for many of the ski-in ski-out properties there. Yellowstone Club will continue to see absorption in their secondary market, which will eventually lead to new developer releases. They are launching built product that the consumer can purchase ‘turnkey’. Yellowstone Club will continue to be our glimmer of hope in the high-end luxury segment. As occurred in 1998 to 2001, when YC values improve, the rest of the market follows. We confidently predict that in 2012, absorption rates in Moonlight Basin, YC and Big Sky Resort will increase over 2011. We guarantee that Big Sky remains an incredible destination with quality of life unmatched by any other mountain resort community. Our advice to you is to begin tracking the data in order to stay in tune with market dynamics. Insider’s Edge The Big Sky real estate market can be difficult to navigate. It’s hard to predict true market values, so we rose to that challenge by developing a solution called the “Insider’s Edge.” On this portion of our website, we will simplify local news and real estate updates. Now more than ever, buyers and sellers need a knowledge-based resource to make informed real estate decisions. Jeff, Tallie and Ryan are an integral component of the leading real estate firm in Big Sky and are proud to live, work, and play here. See our Year End Review on pages 30 and 31 for an in-depth analysis of the entire Big Sky real estate market.
explorebigsky.com
December 16, 2011 29