As Idaho continues to grow in population and developments, Teton Valley is joining the ranks of booming areas. Sean Brawner, associate broke, and Samuel Haack, sales associate, with Berkshire Hathaway HomeServices (Brokers of Jackson Hole Real Estate), have been busy as all types of markets are hot in Driggs, Victor and nearby cities.
This Q&A has been edited for length and clarity.
Why do you think demand is happening right now?
Brawner: There’s a couple different reasons.
Our big ski resort, Grand Targhee resort, that’s our big ski resort. It’s located in Wyoming but it’s only accessible through Idaho. It’s right in the backside of the Grand Tetons, absolutely gorgeous, but nothing has changed since 1975. And so, what happened during 2020 was that a lot of college students could live at their mother and father’s cabin and do their academics online and then go ski in the afternoon. And so, with that happening, what happened was there was no parking up there for the local passholders, longtime people that have been here for years and so Grand Targhee got a $22 million expansion approved last year. And so grand Targhee is expanding.
The area around here is expanding; there’s a new Marriott Element Hotel – a $45 million hotel – being built in Driggs. And so a lot of developers perceive this as Big Sky Montana 35 years ago. That’s kind of why I think we’re seeing a lot of the growth here, is that because of that perception, and everyone wanting to get in before it’s too late…wanting to get in on the ground floor of something really, really great. 2020 really popped it off around here as it did most ski markets and ski towns. 2020 really drove everyone here and a lot of them stayed.
There’s also this bike trail that is currently under federal review for funding, but it’s going all the way from Yellowstone, down into Jackson Pass. And, there’s no short-term rental regulations yet. And that’s really attractive for people who want to increase their profit margins and other real estate.
For historical context, how would you describe Teton Valley new construction and real estate markets before?
It never really got back from 2008; 2008 was the typical overdevelopment, and then the market crashed. I don’t think that we’ll ever see a crash like that again, because there’s too many checks and balances in place. It was very rural around here prior to 2020. And it’s kind of still the wild west out here.
How are the markets now with the demand going on? Is there a lot of new construction going up (or planned) to meet the demand?
A lot of developers came in here, sort of buying up these larger parcels and then plotting them out smaller; so we have 1,100 lots coming to market this spring, early summer, and we’re 12 to 18 months out to get a subdivision approved right now. We’re definitely keeping a good pace with the demand that’s there. But, we just don’t have the skilled trade workers – carpenters, electricians, the plumbers – around here to keep up with that. There is a lot of outsourcing from Bozeman, Montana, Salt Lake City…trying to get them here and put them up and just build the whole summer. We have a short window here.
In addition to the incredibly booming short–term rental market, what else is happening in the real estate market with current inventory?
Haack: As far as long term rental stuff, we want to start there. The best way that I describe it to prospective buyers, is we’re definitely experiencing that overflow at the southern end of the valley in Victor from Jackson, so, the people that have gotten priced out or realized the prices have just gone up so much and they’d rather get more for their money are coming over to Victor. So, we’re seeing a lot of developers create these planned subdivisions with houses in the $700,000 to $850,000 range, which is still in reach for those who are making $100,000–a–year salaries or $120,000–a–year combined couple salaries.
Brawner: On the commercial front there’s just not enough space here. The developers can’t build it quick enough right now. A lot of these people are leaving Jackson, like Sam was saying, commercial businesses are leaving as well because they have to pay so much money to their employees over in Jackson to make it pencil for them to live there. So we’re seeing kind of this flee from Jackson.
There’s really not a lot of hard data out there as far as the demand. But, we feel it, as real estate brokers; we have a lot of people and a huge list of commercial businesses who have reached out to us and want to move in.
In Treasure Valley, some neighboring areas described their need as a certain number of rooftops in order to attract commercial. Is that similar out there in Teton Valley, or is it more that the land hasn’t been developed, zoned, etc.?
Brawner: It’s kind of both.
Haack: I always like to lean back on the fundamentals of supply and demand and my economics degree, and it’s like, Jackson: we’re approaching, if not completely fully, built out; all the land that’s developable has been spoken for. Teton Valley has more developable land but it’s hard to build over here and supply chains to transport all the materials and then labor again to build actual structures have been stressed big time. What we can say anecdotally, from any new commercial email that has been sent out to the board of realtors saying we have this commercial space available, it’s gone in a week or less. Vacancy rate is probably in the single digits or low 10s.
What do you both see as the construction and real estate markets looking like in the coming months?
Haack: With residential, we’ve tried to develop relationships with developers and builders, because with inventory so low, we’re kind of creating new inventory alongside them, finding them private funding in order to create these new units.
I think there’s a bit of hesitancy with optimism as far as builders go, because a lot of these builders are in their 40’s, 50’s and have lived through a few cycles and they knew what happened over here in 2008. So I think they’re throttling it back a little bit from a year and a half ago…Investor cash and 1031 exchanges are still alive and well, but the number of buyers decreases a bit with interest rates going up.
Brawner: For commercial, what we’re finding out is it’s the model: commercial below, affordable housing in the middle and then the penthouses up top. That’s what pencils for investors here right now in the downtown cores. So we’re starting to see some more development. They just broke ground for affordable housing for the new Element Hotel and that’s what investors are going to be building; we’re gonna be seeing a lot more of those.
Haack: That all–in–one investment, like Sean was saying, makes more sense for investors and business owners. If you have housing attached to your business, it’s quite a big plus. Otherwise, you’re doing multiple transactions to find or to secure housing for your employees. Because there’s no sense in buying a big commercial property if then your workers can’t find anywhere to live. I know we’re talking about Idaho here but we always use Jackson as a point of reference for some things. It’s required over there (in Jackson) now that if you build new commercial you have to either add housing to that commercial or you have to offset it by building housing off premise. So that’s an extra hoop for developers to jump through.
Brawner: The planning and zoning (P&Z) teams around here, they’re small but mighty and they’re getting so much work thrown at them right now. A lot of these big developers are noticing that if you do provide affordable housing for your employees, those projects are getting fast–tracked through P&Z, because they know the demand is being caught up to.
Haack: One example I can give is one of our clients, who’s an investor, he says, ‘Go find us multifamily,’ and we basically have to put the ball back in his court and say, ‘Doesn’t exist.’ Maybe there’s like three in all of Teton Valleys; (units are) not apartment buildings, they’re condominium complexes and sold to individual owners for higher prices. And investors will, and also have, come in turn apartment buildings into condominiums, just to reap a quick return on investment. So a developer will be more successful over here than an investor because you have to create what they’re looking for.
How are the communities adapting to what’s going on with the housing situation right now?
Haack: Businesses that are made of individuals have gotten smarter and said, ‘OK if we can’t find anyone to live and work around here, we’re gonna go to ancillary communities and pick them up and bring them in’ (such as by bus). That’s an added cost for them, but the transportation cost may offset their labor costs because they can still pay a great wage, but not the (traditional) Teton Valley wage.
Brawner: General contractors around here are wearing many hats; before it was like everyone kind of has their own discipline. But a general contractor has to know how to do everything and hop in and because – like we were talking about earlier – those trade skill jobs are just not there. We desperately need those people.
Haack: And then from an individual level, as far as affordability goes, I think a lot of people assume you have to be creditworthy, and have a downpayment, and everything yourself. But of course, you can always team up with a partner, whether you’re married or otherwise to purchase something, and do tenants in common or other legal ownership structures, where you have a group of friends maybe that all are on the deed, and a group of friends are all being evaluated through multiple incomes and multiple credit scores to make that work, and maybe even create some value in that property with turning it into a duplex if it zoned for that or a triplex and do a bit of cohabitation over the years until you can save money or your property appreciates for it and you can all agree to sell and then trade up in your own homes. But getting unconventional with the buying and owning process is something people have to be open to if they can’t do it right off the bat themselves.
Brawner: A lot of house hacking going on.
Haack: We don’t have it over here really yet, but over in Jackson they have a lot of deed–restricted units as well, where they just say it’s capped at a certain appreciation rate and you have to meet certain income requirements or employment requirements. That’s not out of the question for over here, but for now it’s more free market compared to Jackson.
What other areas – like childcare – are being affected by the housing situation and adapting?
Brawner: It’s on our radar; we’re just trying to bring awareness to the city. Our mayor here in Driggs, she comes from a childcare background. It’s like the cart and horse situation: Do you build the affordable housing or do you have the childcare first? We’re walking on this tightrope right now to try to get this all figured out. But the nice thing is that people are taking action as stuff is being built…it‘s good stuff.
Haack: I think from a macroeconomic view, there’s a shift happening out of necessity. Capital has dominated for so long, as far as business owners creating and taking most of the profits. But now they really have to shift that over to labor and pay their workers more to keep them around and just be OK with taking less profit and making less money. They might be able to scale more to maintain or grow profit but the labor just creates such a dynamic where you really have to respect it and you really have to treat your workers well, to keep them.
Brawner: We have a solid bus system here that’s already in place.
Haack: That’s an interesting one; we have a good relationship with Jackson and their bus system and they know how critical Teton Valley is to the Jackson Hole economy, so they spend tax dollars on our citizens over here to support them.
Brawner: Yeah, Jackson understands the importance of Teton County, Idaho to their success over there because only 4% of the entire valley can be occupied by humans; the rest of it is elk conservation. That’s kind of the data on that and why there’s no land over there and we have it all over here.
I guess to sort of conclude: It’s refreshing to be a part of a community that’s actually taking action and doing stuff – and there’s so much going on here – as opposed to just being talked about.
Haack: As as our community does develop and get more expensive and has a more luxurious feel, I hope that we we stay in touch with with the culture of Idaho and and don’t get written off as part of Jackson Hole annexed, and also keep in mind that the more wealth that comes into our area, the more tax dollars are also flowing back. So we’re here for the state of Idaho, not just for Teton County.