The Best of Big Sky Blog
Caveat emptor or Caveat venditor?
Caveat emptor or Caveat venditor?
The tables are turning…slowly. The shift is not quite as lethargic as Glacial recession, or climate change or the spring snow melting, but there is an inevitability that seems as irrefutable as spring following winter.
While Sellers have been playing defense for the last three plus years, some Buyers are finding that being on the offense in this “buyer’s” market is not all that its cracked up to be. A combination of drastic price reductions and Buyer overconfidence in the weakness of Sellers can lead to competition and disappointment.
If it seems like its been quite a while since a Buyer had to “beware”…indeed, it might seem like quite a while since there were buyers at all… active buyers in some segments of the Big Sky market may have to be more aware than they have become accustomed for a few years. While the quantity of listed property, both raw land and improved property, is still hovering at just over 600 units, one simple metric would suggest that there is about a 4 year supply of inventory at current annual absorption (say, 160 MLS reported sales)… however, the asking prices have readjusted to the point where we’re seeing multiple offers, and reluctance by sellers to accept what sometimes seems like a buyer’s expectation of infinite downward price elasticity.
Indeed, with improved property listings representing about 60% of current market availabilities (607 listings: 377 improved, 230 land), there’s just a bit over 2 years “improved” inventory supply to go through and “absorb” (based on 160 sales last year…2010)…but look at that 377 number again, and fully 1/2 of all listed property is priced at $520,000.00 or less, precisely the most active segment of the market. (The median price of improved property is about $520,000, with 1/2 of property listings below $520,000 and 1/2 of property listings above $520,000). So if absorption was 160 units in 2010, and most of those properties were sold at prices under $520,000, and 1/2 of the number of listed properties are priced at under $520,000, or about 182 properties, and there are no new speculative development project “starts” to report (although there has been a slight resurgence in the singel family building space), there is just over a 12 month supply of opportunities available on the market….then when one actually surveys a market segment to identify a property that is likely to satisfy a requirement, the number of suitable matches, desirable locations, realistic price point, the real number of alternatives drops even father.
Sure, the well armed and informed buyer who has been mining the internet for Big Sky area real estate data since last Fall, could still arrange to drive around to look at 10-15 properties, but the exercise becomes one of elimination: as when one sits down at a classic Greek Diner with a 300 item, 10 page menu of delicacies…you thought you knew what you wanted to order, but so many unanticipated menu choices look so tantalizing that confusion sets in, and then the realization that the task becomes to eliminate those items that really just don’t fit the need, and to focus and concentrate on what will actually work.
This news by no means is meant to suggest that the tea leaves are predicting a rapid market recovery leading up to an inflationary trend, but it does suggest that value perceptions between serious sellers and serious buyers are closer to realignment.
So, Buyers, and Sellers, beware… the market here is speaking and changing, and, while its a bit premature to rely too much on these early signs of recovery and ignore all of the risks that are still lurking in the shadows, improvement, by definition, is a good direction to anticpate and allows for growth to flourish.
By Eric Ossorio
Prudential/Ossorio Real Estate
406 995 4060