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Reflections on 2011 and predictions for 2012

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By 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
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 short term
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.
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
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.

Click here to see the full market report.

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