A stroll down the beautifully appointed corridor of Copper Ridge, a spectacular six-penthouse development in the heart of downtown Ketchum, is a lonely one. All six of the $2.5 million to $3.3 million condos have remained empty since they were built in 2004. Has the Wood River Valley’s real estate bubble burst? And where do we go from here?

Real Estate
Changing the Landscape or the Wood River Valley
Over the past three decades, Blaine County’s skyrocketing real estate prices have resulted
in many year-round residents struggling to
survive in a high-end resort town. How can
the Wood River Valley reconcile its undeniably attractive wealth with the real need to maintain a sustainable community? As the market stutters nationwide, Greg Stahl took this opportunity to examine the changing reality of the valley’s real estate. Photos by David N. Seelig.

Much has changed in 25 years, but maybe nothing quite as dramatic as inflation of property values in Sun Valley and the surrounding area. In 1982, the cumulative net value of all properties in Blaine County (which includes the cities of Bellevue, Hailey, Ketchum and Sun Valley) was $912.5 million. By 2006, those same properties were worth $11.72 billion. It was an explosion that affected all corners of the local economy. Realtors and construction companies rode the wave of inflation to prosperous careers while local elected officials struggled to stem the flooding tide with regulations encouraging smart, controlled growth.

The side effects were unmistakable. Facing ever-escalating home prices, people making lower or middle incomes were met with formidable challenges in their quests to secure permanent toeholds in the valley. In the late 1990s, local governments began to respond, but it is questionable as to whether they acted soon enough. Currently, Blaine County faces a 2.5 percent negative growth rate of its 20- to 39-year-old residents, according to U.S. Census data. And that is despite the fact that the county continues to experience 11 percent overall population growth.

The myriad of variables at work is astounding. Climbing home prices, which contribute to a mass exodus of the area’s youthful vitality, increasing government regulation, and a ceaseless influx of staggering wealth are all at play. “You can tell ’em I’m confused,” said Drew Sanderford, associate director of Blaine County’s affordable housing agency. “Tell ’em we sat out here for an hour trying to figure out how to tell this story, and we couldn’t. I mean, how do you explain this to people? You don’t. You have to live it to know it.”
 

Sorting out the stew
Blaine County is a complex demographic stew. Like many Western resort areas, it is well-known for its wealthy celebrity residents, but it is also very much a real community, a place where average people try to carve out average lives, and the presence of the über rich is just another part of everyday life. And that is one of the area’s most redeeming qualities, said 30-year local Realtor Sherry Daech, who specializes in high-end real estate. “That’s part of what makes this community special. Those clientele, they’re treated like normal people.”

But that clientele, and the reasons they’re drawn to the Wood River Valley, have an unmistakable role to play in the ever-inflating cost of a home here. As people with deep pockets arrive, able and willing to pay astonishing prices for second or third homes, the cost of the entire market goes up. Simultaneously, the money they bring feeds a sizeable chunk of the local economy. Without them, there would be fewer architects, fewer engineers, fewer restaurant employees, and, yes, fewer writers. It’s an ironic situation. Outside money makes it possible for middle-income people to live here and simultaneously puts local real estate out of reach for many.

What’s more, following 9/11 and the subsequent tanking of the stock market, investors began to look to real estate as a safe venture. Low interest rates only helped catalyze the feeding frenzy. Between 2001 and 2006, the county’s assessed property values soared, more than doubling from $5.6 billion to $11.72 billion. As momentum mounted, increasing numbers of people got into the game. The market fed itself. Prices spiraled upward, and Blaine County now has somewhere in the neighborhood of 400 real estate agents. That’s roughly one agent for every 50 full-time residents. “It was just happening. People were coming here. We have a fabulous place to live,” said Daech. “We are so lucky, and we still have a great sense of community, and we’re not as pricey as some other Western resorts.”
 

Local Realtor Sherry Daech is a self-made success story in a league of her own. She arrived in Blaine County some 30 years ago, young and practically penniless. Today, following an astoundingly successful real estate career, Daech is one of the most successful local women of her generation. Is it possible to mimic Daech’s success in the socioeconomic climate of today’s Wood River Valley?

Where there’s a boom…
As with all booms, there is the inevitable deflation. And while local commentators stop short of predicting a bust, they do concede that the real estate market has slowed considerably, both here and nationwide, in the last six months.
Daech and other local real estate agents say the “market is readjusting itself” following the boom of the last five years. But however you label it, streets throughout the valley are congested with real estate sales signs, especially in Hailey, as the area experiences a housing glut.

“Things went up so quickly about a year and a half ago,” said Asa Chandler, an agent with Windermere Real Estate in Ketchum. “The market is kind of correcting itself right now. It’s a great time to be a buyer.” But what she didn’t say, and the kind of information real estate agents in general are not too likely to offer, is that if current trends continue, it may be an even better time to be a buyer in another few months, or maybe another year.

In the month of October, if you were looking to buy a home in Blaine County there were on average 1,100 of them to choose from, and that number may be growing. That’s about 400 more than this time last year. “It’s a good time to look around and make an offer because there are deals to be had,” said Jim Figge, president of the Sawtooth Board of Realtors. Correspondingly, prices have begun to drop, in some cases by more than 10 percent. Chandler referenced a Hailey home listed in September for $250,000. The asking price three months earlier had been $315,000.

Figge acknowledged that the residential housing market is unusually flat. “Our phones are more quiet than usual. I think there are a lot of people who have a sit-back-and-wait attitude,” he said. “Buyers are witnessing that our market is in a period of adjustment, and they’re electing not to buy. They’re waiting to see what the market will do.”
In October of 2006, the Sawtooth Board of Realtors’ Multiple Listings Service showed 1,038 residential properties for sale. That was down slightly from 1,079 on July 31 and up from 791 listed in July 2005. Including commercial properties and vacant land, there were 1,723 listings on October 8. Ann Tokareff, the board’s executive officer, explained that some of the listings are for homes outside Blaine County, but the majority are situated in the Wood River Valley.

Figge is hesitant to call the housing surplus a glut because it doesn’t apply to all segments of the market. Expensive homes fronting golf courses are still in high demand, but single-family homes, particularly in Hailey, are plentiful.

So, what’s going on with the valley’s housing market? Three things, said Figge. The market has leveled off and is readjusting following the recent real estate boom; interest rates are higher; and people are reacting to worldwide events. He also commented that some sellers have overpriced their properties. Now that the market has flattened out, they may have to lower them if they’re anxious to sell. “I don’t think anyone is chipping into their equity yet,” he said. “I think what sellers need to do is make it look like a deal, so it looks like if you don’t buy it, the next guy will.” If sellers can wait, though, prices are likely to go back up, Figge said. “Historically, our prices have not gone down, but just flattened. And how long we’re in this flattened mood, I just can’t guess.”

Dan Gorham, Windermere of Ketchum’s designated broker, agrees. “This market is still a very desirable place to live,” he said. “If people had the chance to move here, would they? Yes. But without job growth, it can only support so many people.”
 

Where have all the young people gone?
Job growth is a crucial aspect to this local quandary. Second-home owners and pleasure-seeking vacationers aren’t attracted to a town without vitality, and without jobs and affordable housing, that sense of community—which many people cherish and see as a selling point for this area—could wane.

Although the careers associated with the development of high-end real estate sales and construction have fed a significant chunk of the local economy, their product comes at the cost of affordability. “I was talking with a guy at work last week, and he’s lived here his whole life,” said Dan Gilmore, who’s called the Wood River Valley home since 1999. “I asked him how long it takes to be considered a local. He said about 10 years—long enough to see one full rotation of friends come and go.”

And so it is with many of the area’s 20- and 30-something residents. They come, and they go, but when they go they take slivers of the area’s youthful vitality with them. What’s more, evidence indicates that more of them are leaving than in times past. “It’s vacuous,” Sanderford said. “I mean, people are leaving.”

The U.S. Census Bureau backs Sanderford’s assertion. From 1970 to 1980, Blaine County experienced a significant jump in its 20- to 39-year-old population, from 26 percent of the total to 46 percent of the total. But it has been declining ever since, both in percentage and, occasionally, in overall numbers. From 1980 through 2004, the percentage of 20- to 39-year-olds dropped with each census, from 46 percent in 1980 to 37 percent in 1990 to 29 percent in 2000. The projected number in 2004 dropped still further to 26 percent.

Essentially, since 1980, the number of people in that age bracket has stayed the same, or even dropped slightly, while overall population boomed, from 9,841 people in 1980 to 21,103 in 2004.

Although many young people never intended to stay for the long term, some might have if it were easier to make ends meet. At the root of the matter is that area wages increase at an average pace while real estate shoots through the roof. From 2001 to 2004, average annual individual incomes in Blaine County actually decreased, adjusting from $31,802 to $31,770. In that same period, the assessed net value of Blaine County properties increased from $5.6 billion to $8.1 billion, according to a July 2006 Blaine County Housing Needs Assessment. Clearly, wages have not kept pace with the inflation of real estate. Somewhere, something has to break.

Aaron Domini, 27, has lived in the Wood River Valley for three years and has worked for Citizens for Smart Growth and Ketchum-based Living Architecture. He said the relative absence of 20- and 30-something residents creates a unique social dynamic for people like himself who have chosen to stick around. “You end up expanding your social group,” he said. “I’ve got friends from 20 to 50. If I lived in a city, it would probably be very different.”

Domini stressed that the situation in the Wood River Valley is not unique. It’s endemic to mountain towns around the West, and, for the time being, the area’s boons far outweigh its pitfalls for him. However, if we want to keep Ketchum a desirable place to live with a vibrant community, it will take a diverse socioeconomic community and people of varying ages. The reality is that without young professionals as the backbone of our economy, we are creating an economy with no successors.”
 

NIMBYs
The real missing link, however, is housing that people of varying classes and demographics can afford. It’s a relatively new, sometimes contentious issue that has made progress on the affordable front sometimes difficult.

In the fall of 1998, during the local housing program’s infancy, affordable housing took center stage in Blaine County’s resort city of Ketchum as some citizens tried to initiate a recall of Ketchum City Council members who voted in favor of the city’s first affordable housing project. A slew of letters to the city offered varying complaints. Some were concerned that the “quality of construction” would not be up to par and would devalue surrounding houses. Some worried the two-bedroom condos, first planned as rentals but which were eventually sold at $135,000 each, would attract criminals as residents. “If you can’t afford to live (here), then leave,” one applicant for The Fields reported an anonymous caller saying in October 1999.

The recall petition failed for lack of signatures, and some might argue that shows overall community sentiment was accurately reflected in the City Council’s decision to give The Fields the thumbs up. The contradiction is nothing new in the affordable housing arena. NIMBYs (the not-in-my-backyard people) generally recognize the need for housing at all prices, as long as it’s in somebody else’s neighborhood. “In society in general, that’s always been a problem,” said current Ketchum Mayor Randy Hall, who was one of the three City Council members targeted by the petition. “But the needs of the many outweigh the needs of the few. It was the first project, and it came on the heels of a very emotional debate. I think we did pretty well on our first go-around. The project was a success.”

Still, local communities are far behind the curve. A 2002 study found a countywide deficit of 473 affordable housing units. That demand grew to 1,200 units by summer 2006. Yet, developers continue to build multi-million-dollar condominiums that sometimes sit empty.

This phenomenon continues to displace area workers. Sanderford has worked as associate director of the Blaine-Ketchum Housing Authority for more than a year. He said affordable housing is both important and contentious. More than that, he said, it’s simple altruism that drives it. The community must collectively decide that a sense of community is something worth making some sacrifices for. “When you think about it at a real visceral level, it’s the right thing to do. Community is a good thing.”
 

What does it all mean?
No matter how you cut it, the bottom line is still that Sun Valley and its surrounding communities constitute a magnificent place to live. People will continue to retire here. People will continue to carve out ordinary livings as best they can. And local real estate prices will probably continue to climb.

Daech, who is a self-made success story, arrived in Blaine County some 30 years ago, young and practically penniless. She fell in love with the place and made things work. She is one of the most successful Wood River Valley women of her generation. And, yes there are still success stories to be made here. But it is debatable as to whether today someone like Daech could arrive here with nothing and build such a resounding success.
Nevertheless, the bottom line is that places like Sun Valley will always be in demand, said Daech. “If we weren’t so unique and so small and such a wonderful community, I might think that (the market could take a downward turn), but I don’t,” she said. “I think we were all surprised by how much the market grew, but it’s there, and I think it’s going to stay there.”
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What you get for $650,000 in Blaine County?

In September 2006, writer and local resident Timi Saviers enlisted Realtor Barb Vanderpool for a tour of homes that could be purchased throughout the valleyfor around $650,000. A single price range was chosen in orderto illustrate the impact of location on a property’s price. Starting south of Bellevue and working their way north to Sun Valley, the pair discovered a variety of abodes in the price range, although not a wide inventory. A brief foray north of Ketchum found not one slice of acreage in the allotted price range.

South of Bellevue
List Price: $699,000
Bedrooms: 3
Bathrooms: 2.5
Interior: 2,021 sq. ft.
Lot Size: 20 acres
Date Built: 2001
This area of the valley has a true country feel and is a 40-minute drive to Ketchum. A comfortable single-family home with a few nice touches, such as high ceilings, alder cabinets, custom closets and a country porch, the 20 acre lot would benefit from some landscaping to create privacy and ambiance.


Bellevue
List Price: $649,000
Bedrooms: 4
Bathrooms: 3
Interior: 2,794 sq. ft.
Lot Size: 0.28 acres
Date Built: 2006
This single-family home is newly constructed, has quality interior finishes and ample living space. It has cathedral ceilings, hardwood floors, granite counters, slate tiling, spacious bathrooms, walk-in closets, a custom fireplace and a guest/bonus room with bath and excellent views over a large garage.
 

Hailey
List Price: $649,000
Bedrooms: 3
Bathrooms: 2.5
Interior: 2,305 sq. ft.
Lot Size: 0.59
Date Built: 1991
Situated on the northern edge of Hailey this single-family home is a short bike ride to town and a conservative 20-minute drive to Ketchum. Located on a bench lot in an upscale neighborhood, this is a very livable home. High ceilings, custom closets and a practical floor plan create a comfortable
living space. The kitchen is in need of an update and a few cosmetic touches are required throughout, but the home has a clean and quiet feel with several large
windows looking out onto a private and nicely landscaped yard.
 

Mid Valley
List Price: $699,000
Bedrooms: 5
Bathrooms: 3
Interior: 2,628 sq. ft.
Lot Size: 0.66 acres
Date Built: 1971
This home with “potential” is in the beautiful and sought-after East Fork area. With lots of sun, mature trees and access to many trails, the location is great. A darkly cabinesque home with an awkward floor plan, everything about this house looks original, 35 years old and vintage. However, it is not easy to find a place for this price between Hailey and Ketchum (no condos), and the location can’t be beat.
 

Ketchum
List Price: $695,000
Bedrooms: 3
Bathrooms: 2
Interior: 1,166 sq. ft.
Date Built: 1999
This condo is a short walk to the River Run lifts and steps to the bike path. On the second floor, the condo has a short, but dark and under-a-freeway-bridge-like entry corridor. Just hurry and get that door open because inside it is bright, warm and welcoming. The kitchen is a dream with thick, rich, granite counters and spacious bathrooms with designer finishes. The living room, though not large, has a high ceiling, a lovely fireplace and French doors onto the deck with Baldy views. The main bedroom also has French doors opening onto the deck with more sun and more views. All this and it comes nicely furnished, too.
 

Warm Springs
List Price: $682,000
Bedrooms: 2
Bathrooms: 2.5
Interior: 1,598 sq. ft.
Date Built: 2006
Utilitarian elegance describes this Pine Ridge townhouse. The well-thought-out floor plan, radiant heat cement floors and great closet space make it a practical home, while the finishing touches, such as slab granite and travertine in the kitchen and bathrooms, alder cabinets, solid doors, high ceilings and architectural details lend a custom feel. Throughout the home, large windows bring in plenty of natural light and views of surrounding mountains. The courtyard is thoughtfully landscaped with native mountain ash and pine and there is plenty of storage for cars, skis and bikes in the attached two-car garage. Close to town and one mile from Warm Springs lifts, this place seems to have it all.
 

Sun Valley
List Price: $605,000
Bedrooms: 2
Bathrooms: 2
Interior: 980 sq. ft.
Date Built: 1967
Located across from the Sun Valley Reservoir, this condo is steps away from Sun Valley Village, ice-skating, tennis and swimming pools and is a short walk to Dollar Mountain lifts. The condo is quite small but clean and seemingly solid. It looks like all the original interiors are intact: wood-beamed ceiling, darkly paneled walls and craggy, volcanic rock fireplace. The kitchen and downstairs bath are clean but tiny. The bedrooms are upstairs and, though small, have nice windows with views over the treed grounds.
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History of a valley property

The following is information on one property from the Sawtooth Board of Realtors’ records. A three-bedroom, two-bathroom, 2,300 sq. ft. home in the Ketchum neighborhood of Third Avenue and Edelweiss Street was on the market for $135,000 in 1986, $319,000 in 1996, and now goes for somewhere in the region of $1,185,000. That’s a rise of more than $52,000 a year. However, home prices in this valley are still reasonable when compared with other Western resort towns. In Aspen, Colorado, $650,000 will get you a one-bedroom, one-bath, 543 sq. ft. condominium built in 1970. Even with a softening housing market, the Wood River Valley is still a good investment.