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MARKET PERFORMANCE BY PRICE RANGE

Monday, May 04, 2009

by Howard Sumner

I AM IN THE PROCESS OF GETTING MY END OF THE MONTH REPORT READY AND THINKING THRU SOME ISSUES OF THE MARKET PLACE. YOU CAN SEE THE DRAMATIC EFFECT OF THE 8K FIRT TIME HOME BUY3R TAX CREDIT AND LOW INTEREST RATES. FOR FIRST TIME BUYERS BETWEEN 120K TO 180K UNIT VOLUME IS DOWN ONLY 18% BY IN 2009. BY PERCENTAGE OF THE MARKET PLACE THAT PRICE RANGE OF HOMES HAS GONE FROM 22% OF THE HOMES SOLD IN 2008 TO 29% IN 2009. WHEN YOU LOOK AT THE LOWER REGISTERS FROM THERE YOU RUN INTO AND AWFUL LOT OF JUNK HENCE THE DROP IN MARKET ACTIVITY. THE OTHER GLARING ISSUE IS THE STAND STILL BETWEEN 400K AND 500K ONLY 2 CLOSED IN THE COUNTY THROUGH MLS REPORTED THROUGH THE APRIL 30^TH TIME LINE.

THOUGHT YOU MIGHT FIND INTERESTING.

YELLOWSTONE COUNTY		THRU APRIL 30TH 2009
YEAR TO DATE COMPARISON BY PRICE RANGE
	YEAR 2008	YEAR 2009	% UP/DOWN


UNDER 100K	32	14	56%

100K TO 120K	24	12	50%

120K TO 180K	200	164	18%

180K TO 200K	70	48	31%

200K TO 300K	136	92	32%

300K TO 400K	38	22	42%

400K TO 500K	15	2	87%

ABOVE 500K	7	4	43%

YTD TOTALS	522	358	31%

Mortgage Regulation Z

Friday, May 01, 2009

by Howard Sumner

Interesting information about how lenders may issue both primary and second loans on homes. IT is a new part of regulation Z; which requires disclosure of terms and conditions of loan. the two major things that i see is it expressly prohibit lending to a property owner solely on the equity without regard to income of the borrower and the debt to income can not exceed 50% of the verified income of the borrower. the rules go into effect for lender in October of this year.

(a) Disclosures

(1) Specific disclosures

In addition to other disclosures required under this subchapter, for each mortgage referred to in section 1602 (aa) of this title, the creditor shall provide the following disclosures in conspicuous type size:

(A) “You are not required to complete this agreement merely because you have received these disclosures or have signed a loan application.”.

(B) “If you obtain this loan, the lender will have a mortgage on your home. You could lose your home, and any money you have put into it, if you do not meet your obligations under the loan.”.

(2) Annual percentage rate

In addition to the disclosures required under paragraph (1), the creditor shall disclose—

(A) in the case of a credit transaction with a fixed rate of interest, the annual percentage rate and the amount of the regular monthly payment; or

(B) in the case of any other credit transaction, the annual percentage rate of the loan, the amount of the regular monthly payment, a statement that the interest rate and monthly payment may increase, and the amount of the maximum monthly payment, based on the maximum interest rate allowed pursuant to section 3806 of title 12.

(b) Time of disclosures

(1) In general

The disclosures required by this section shall be given not less than 3 business days prior to consummation of the transaction.

(2) New disclosures required

(A) In general

After providing the disclosures required by this section, a creditor may not change the terms of the extension of credit if such changes make the disclosures inaccurate, unless new disclosures are provided that meet the requirements of this section.

(B) Telephone disclosure

A creditor may provide new disclosures pursuant to subparagraph (A) by telephone, if—

(i) the change is initiated by the consumer; and

(ii) at the consummation of the transaction under which the credit is extended—

(I) the creditor provides to the consumer the new disclosures, in writing; and

(II) the creditor and consumer certify in writing that the new disclosures were provided by telephone, by not later than 3 days prior to the date of consummation of the transaction.

(3) Modifications

The Board may, if it finds that such action is necessary to permit homeowners to meet bona fide personal financial emergencies, prescribe regulations authorizing the modification or waiver of rights created under this subsection, to the extent and under the circumstances set forth in those regulations.

(1) In general

(A) Limitation on terms

A mortgage referred to in section 1602 (aa) of this title may not contain terms under which a consumer must pay a prepayment penalty for paying all or part of the principal before the date on which the principal is due.

(B) Construction

For purposes of this subsection, any method of computing a refund of unearned scheduled interest is a prepayment penalty if it is less favorable to the consumer than the actuarial method (as that term is defined in section 1615 (d) of this title).

(2) Exception

Notwithstanding paragraph (1), a mortgage referred to in section 1602 (aa) of this title may contain a prepayment penalty (including terms calculating a refund by a method that is not prohibited under section 1615 (b) of this title for the transaction in question) if—

(A) at the time the mortgage is consummated—

(i) the consumer is not liable for an amount of monthly indebtedness payments (including the amount of credit extended or to be extended under the transaction) that is greater than 50 percent of the monthly gross income of the consumer; and

(ii) the income and expenses of the consumer are verified by a financial statement signed by the consumer, by a credit report, and in the case of employment income, by payment records or by verification from the employer of the consumer (which verification may be in the form of a copy of a pay stub or other payment record supplied by the consumer);

(B) the penalty applies only to a prepayment made with amounts obtained by the consumer by means other than a refinancing by the creditor under the mortgage, or an affiliate of that creditor;

(C) the penalty does not apply after the end of the 5-year period beginning on the date on which the mortgage is consummated; and

(D) the penalty is not prohibited under other applicable law.

(d) Limitations after default

A mortgage referred to in section 1602 (aa) of this title may not provide for an interest rate applicable after default that is higher than the interest rate that applies before default. If the date of maturity of a mortgage referred to in subsection ^[1] 1602(aa) of this title is accelerated due to default and the consumer is entitled to a rebate of interest, that rebate shall be computed by any method that is not less favorable than the actuarial method (as that term is defined in section 1615 (d) of this title).

(e) No balloon payments

A mortgage referred to in section 1602 (aa) of this title having a term of less than 5 years may not include terms under which the aggregate amount of the regular periodic payments would not fully amortize the outstanding principal balance.

(f) No negative amortization

A mortgage referred to in section 1602 (aa) of this title may not include terms under which the outstanding principal balance will increase at any time over the course of the loan because the regular periodic payments do not cover the full amount of interest due.

(g) No prepaid payments

A mortgage referred to in section 1602 (aa) of this title may not include terms under which more than 2 periodic payments required under the loan are consolidated and paid in advance from the loan proceeds provided to the consumer.

(h) Prohibition on extending credit without regard to payment ability of consumer

A creditor shall not engage in a pattern or practice of extending credit to consumers under mortgages referred to in section 1602 (aa) of this title based on the consumers’ collateral without regard to the consumers’ repayment ability, including the consumers’ current and expected income, current obligations, and employment.

(i) Requirements for payments under home improvement contracts

A creditor shall not make a payment to a contractor under a home improvement contract from amounts extended as credit under a mortgage referred to in section 1602 (aa) of this title, other than—

(1) in the form of an instrument that is payable to the consumer or jointly to the consumer and the contractor; or

(2) at the election of the consumer, by a third party escrow agent in accordance with terms established in a written agreement signed by the consumer, the creditor, and the contractor before the date of payment.

(j) Consequence of failure to comply

Any mortgage that contains a provision prohibited by this section shall be deemed a failure to deliver the material disclosures required under this subchapter, for the purpose of section 1635 of this title.

(k) “Affiliate” defined

For purposes of this section, the term “affiliate” has the same meaning as in section 1841 (k) of title 12.

(l) Discretionary regulatory authority of Board

(1) Exemptions

The Board may, by regulation or order, exempt specific mortgage products or categories of mortgages from any or all of the prohibitions specified in subsections (c) through (i) of this section, if the Board finds that the exemption—

(A) is in the interest of the borrowing public; and

(B) will apply only to products that maintain and strengthen home ownership and equity protection.

(2) Prohibitions

The Board, by regulation or order, shall prohibit acts or practices in connection with—

(A) mortgage loans that the Board finds to be unfair, deceptive, or designed to evade the provisions of this section; and

(B) refinancing of mortgage loans that the Board finds to be associated with abusive lending practices, or that are otherwise not in the interest of the borrower.

real estate SALES STATS homes

MARKET PERFORMANCES

Tuesday, April 28, 2009

by Howard Sumner

YESTERDAY I WAS READING ABOUT THE FORTUNE 500 COMAPNIES VALUE IS 13% BELOW THE VALUE OF 1998 SO YOUR INVESTMENT STARTING POINT IS OVER ELEVEN YEARS BACK. IF YOU HAD HAD BOUGHT HOUSES INSTEAD OF STOCK IN THE 20 LARGEST CITIES THE VALUE OF YOUR INVESTMENT WOULD HAVE ONLY GONE BACKWARDS TO JULY 2003 BASICALLY 6 YEARS OFF THE PEAK. IF YOU HAD INVESTED IN REAL ESTATE IN BILLINGS MONTANA YOU WOULD BE BACK TO THE END OF 2007 BASICALLY 2 YEARS OFF THE PEAK

SO THE QUESTIONS IF YOU ARE TRYING TO GET EVEN AND BACK INTO THE BLACK ON YOUR INVESTMENTS WHICH WOULD YOU RATHER BE 11 YEARS BACK IN STOCKS; 6 YEARS BACK IN REAL ESTATE IN THE 20 LARGEST CITIES OR ABOUT 2 YEARS BACK IN BILLINGS MONTANA.

AND THEY BLAME REAL ESTATE FOR THE COUNTRY’S PROBLEMS

I KNOW WHERE THE EASIEST BREAK BACK TO POSITIVE ON MY INVESTMENT IS.

real estate SALES STATS

MARKET UPDATE MARCH THE NUMBERS

Sunday, April 05, 2009

by Howard Sumner

Market update at glance		3/31/2009		Year	Percentage Increase or -Decrease
Yellowstone County				2008	2009

Residential Closed Sales Units				429	295	-31%

Residential Pending Sales Units				255	225	-12%

Residential Active Property Units For Sale				733	796	9%

Average sales price Single family Home				$200,445	$196,735	-2%

Average Square feet Single family Home				2267	2278	0%

Median sales price Single family Home				$180,600	$178,550	-1%

Median Square feet Single family Home				2114	2160	2%

Average Days on Market Till Offer Received
Single Family Home				69	78	13%

Absorption rate -	TIME IN DAYS
Time it would take for all existing					239
properties to sell with no new inventory coming
into the market place - residential

SINGLE FAMILY PERMIT ISSUED FOR MONTH			thru 3/31	30	13	-57%

SINGLE FAMILY PERMIT ISSUED FOR YEAR			thru 3/31	71	30	-58%

Average Number of Rentals Advertised Sundays				108	133	23%

Average Asking Price for a Rental Home				$1,114	$1,088	-2%

Average Asking Price for a Rental Apartment				$678	$696	3%

statistics real estate SALES

MARCH MARKET UPDATE COMMENTARY

Sunday, April 05, 2009

by Howard Sumner

MARKET UP DATE AT GLANCE COMMENTARY THRU MARCH 2009

IN LIKE A LION OUT LIKE A LAMB, THAT SAYING ABOUT THE WEATHER OF MARCH, I WOULD ALSO USE TO DESCRIBE THE WAY THE REAL ESTATE MARKET BEHAVED IN MARCH. AS MENTIONED IN THE FEBRUARY REVIEW AN INCREASE IN buyers coming into the market (first time buyers) were responding to their best self INTEREST WITH historically low RATES AND THE first time buyer tax credit.

the most active SEGMENT of the market was between 120k to 180k(PRIME FIRST TIME BUYER PRICE RANGE), that price range saw it’s share of the market place jump from 22% by unit volume in 2008 to 27% by unit VOLUME in 2009. thE SECOND MOST ACTIVE SEGMENT WAS TH2 200K TO 250K INDICATING A MOVE UP MARKET TREND BEGINNING.

the question that will unfold over the next couple of months is, did buyers that would have been in the market later in the year purchase earlier, due to the tax credit. IF that proves to be the case we will see a SOFTENING of the pending sales compared to 2008 as we come into LATE spring EARLY SUMMER.

THE inventory levels have moderated TO AN INCREASE OF 9% FROM a year ago, FROM 25%COMPMARED TO FEBRUARY A YEAR AGO, THE decrease from a month ago is AFFECTED by the increase in pending SALES.

CONSTRUCTION numbers in MARCH, single family permits, still show a very SIGNIFICANT decline FROM LAST year. to put it in PERSPECTIVE the first 3 months of the year are as follows 1. 2009 30 single family permits, 2. 2008 71 single family permits, 3. 2007 98 single family permits. the new CONSTRUCTION market will struggle this year BECAUSE OF constrained funding and the DIFFICULTY of COMPETING against EXISTING homes that are priced SIGNIFICANTLY lesS THAN CONSTRUCTION cost would be to build a SIMILAR home. as i have stated previously the slowing in home construction is a POSITIVE in the overall market place because it reduces inventory, yet THAT DECREASE in new CONSTRUCTION sales also has an impact on sales price and size of homes that go iNTO the mix of sales.

the home sales prices below SHOW a slight price decline year to year YELLOWSTONE county has seen about a 2% DECLINE in closed price. the actual sales price number is affected by the slow down in THE above 250k range and the SIGNIFICANT INCREASE in sales in the 120K to 180k range mentioned above.

the THREE POSITIVE forces in the MARKET are the STRENGTH of the below $200,000 (STARTING TO ALLOW SOME MOVE UP MARKET), no SIGNIFICANT FORECLOSURES of HOMES AND HISTORICALLY LOW INTEREST RATES 4.75% FOR A 30YEAR LOAN...

THE $200,000 and below STRENGTH is CAUSED, I BELIEVE, FOR two primary reasons #1 unemployment in YELLOWSTONE IS SUB 4.7% COMPARED to the state average of 6% and the NATIONAL of 8.5% giving people who want to own their home a job and A BELIEF that they will be employed, along with HISTORICALLY low INTEREST, approximately 4.75% on a 30 year fixed rate, and you have a good case for buying a home if your intention is staying put three plus years.

THE #2 POSITIVE IS NO SIGNIFICANT FORECLOSURE activity. the importance of this fact can not be UNDERSTATED. when you look at other market places AND THE case /shiller index declines, the driving force is FORECLOSED properties sold by lenders.

the #3 positive is the $8,000 refundable tax credit for first time home buyers

IF YOU NEED AN ADDITIONAL L INFORMATION PLEASE CALL OR E-MAIL

Billings statistics real estate SALES