Real Estate Information Archive

You can see the effect of the tax credit in the four major metrics of the housing market. 1st is thew closed sales up 16% from last year. 2nd is pending sales a month after the credit expires down 12% 3rd. is active properties up 14% from last year and 4th the most dramatic is the single family building permits issued in Billings Down 86%. when you factor in that this time of year permits are normally headed up you really get the feel for the impact the tax credit has had on the housing market.

MARKET UP DATE AT GLANCE COMMENTARY JANUARY 6TH 2010

2009 IS IN THE REAR VIEW MIRROR, SO LONG AND I DON’T THINK THE YEAR WILL BE MISSED. 2009 FROM THIS SIDE OF THE FENCE CAN BEST BE DESCRIBED AS A GRIND OUT YEAR ALL SALES TOOK MORE TIME AND ENERGY TO ACHIEVE MY CLIENTS GOALS. WHEN 2009 STARTED IT APPEARED THE WORLD WAS FALLING OFF A CLIFF, WHICH IT WAS, THE QUESTION WAS WOULD THE FALL STOP.

FROM THE HOUSING PERSPECTIVE IN YELLOWSTONE COUNTY I THINK THE MARKET BEHAVED REASONABLY WELL BASED ON THE FACTORS INVOLVED. AT THE START PEOPLE WITHDREW FROM THE MARKET PLACE IN DROVES, REASONABLE WHEN IT APPEARS THE ECONOMY MAY END AS WE KNEW IT AROUND THE GLOBE. LUCKILY WE LIVE IN YELLOWSTONE COUNTY SO WE WERE SPARED THE WORST OF THE STORM.

IN FEBRUARY THE FIRST TIME BUYERS CREDIT STARTED AND SINCE EMPLOYMENT WAS GOOD AND PRICES IN YELLOWSTONE COUNTY NEVER OUT STRIPPED WAGES, FIRST TIME BUYERS CAME INTO THE MARKET THROUGH OUT THE YEAR, IN SEPTEMBER AND OCTOBER IT WAS A RUSH TO WHAT WE ALL THOUGHT WOULD BE THE FINISH LINE OF THE TAX CREDIT. BUT THE POLITICIANS FOOLED US. BEFORE THE END OF THE YEAR THEY EXTENDED AND EXPANDED THE TAX CREDITS TO HOUSING, SO IT BRIGHTENS THE OUT LOOK FOR THE BEGINNING OF 2010, MORE ON THAT LATER. THE BIGGEST INTERVENTION INTO HOUSING BY THE GOVERNMENT WAS ACTUALLY NOT THE TAX CREDIT BUT THE FEDERAL RESERVE BUYING MORTGAGES FROM FANNIE MAE AND FREDDIE MAC. Just SO YOU KNOW AS A TAXPAYER YOU CONTRIBUTED ABOUT 49% OF EVERY DOLLAR LENT IN 2009 TO HOME BORROWERS. IN TOTAL IF YOU COUNT ALL THE SUPPORT that WAS GIVEN TO HOUSING IT TOTALS ABOUT 2 TRILLION DOLLARS NOT A FIGURE YOU’RE LIKELY TO SEE IN 2010.

SO WHAT CLOUDS CAN WE PART AND SEE THE HOUSING MARKET IN 2010.

I WILL USE MY STANDARD DISCLAIMER ABOUT PROGNOSTICATIONS “IF I COULD ACCURATELY SEE THE FUTURE I WOULD BE RICHER THAN BILL GATES AND YOU WOULD NOT BE RECEIVING THIS FROM ME.” That BEING SAID HERE WE GO.

FIRST LETS LOOK AT CONSTRUCTION, CONSTRUCTION OF HOMES IS DRIVEN BY FIRST AND FOREMOST JOBS. ALTHOUGH YELLOWSTONE COUNTY IS FORTUNATE UNEMPLOYMENT IS ONLY 4.8% YELLOWSTONE COUNTY HAS 3804 FEWER PEOPLE EMPLOYED THAN THE PEAK OF EMPLOYMENT IN AUGUST OF 2007 WITH that IN MIND THE HOME CONSTRUCTION BUSINESS WILL PROBABLY SETTLE WHERE IT HAS BEEN IN THE LAST TWO YEARS ABOUT 250 SINGLE FAMILY HOMES IN 2010. that NUMBER IS ABOUT 200 HOMES LESS THAN BEFORE THE DOWN TURN AND 350 LESS THAN THE PEAK. ALTHOUGH YELLOWSTONE COUNTY CONTINUES TO GROW SLOWLY IN POPULATION IT IS JOBS that DRIVES NEW CONSTRUCTION.

EXISTING HOMES ACTUALLY ENDED THE YEAR UP 13 UNITS FROM 2008 that WAS DRIVEN ENTIRELY BY THE TAX CREDIT. IN 2010 WE HAVE NOT ONLY THE FIRST TIME BUYER CREDIT WE ALSO HAVE THE EXISTING HOME BUYER CREDIT FOR THOSE WHO HAVE LIVED IN THEIR HOME FOR AT LEAST 5 OF THE LAST 8 YEARS. THESE TWO FACTORS COMBINED WITH THE FEDERAL RESERVES COMMITMENT TO CONTINUE BUYING MORTGAGES THOROUGH MARCH OF 2010 SHOULD PROPEL HOUSING INTO THE NEW YEAR WITH A FAIRLY SUBSTANTIAL PUSH.

That WILL MEAN PRICES SHOULD BE STABLE WITH NO DOWNWARD PRESSURE FROM FORECLOSURES AND, AT LEAST IN THE FIRST FOUR MONTHS OF THE YEAR, ENOUGH DEMAND TO BALANCE WITH INVENTORY.

WITH ALL PROGRAMS WHEN YOU PUSH ON ONE SIDE, SOMETHING MOVES ELSEWHERE, THIS IS ALSO TRUE IN HOUSING AND WITH THE POSITIVE SALES SIDE IT HAS CREATED A SOFTER RENTAL MARKET. THE AVERAGE ASKING PRICE FOR AN APARTMENT IN YELLOWSTONE COUNTY DECLINED 1% YET AVAILABILITY INCREASED BY 33% SO WE SHOULD EXPECT SOFTNESS IN THE PRICING ARENA FOR RENTALS FOR MOST OF 2010 UNTIL THE EFFECTS OF THE TAX CREDITS WEAR OFF IN THE SALES MARKET.

MY BELIEF IS 2010 WILL BE MORE STABLE THAN 2009 YET THE RESULTS BY THE END OF THE YEAR WILL MOST PROBABLY BE VERY CLOSE TO 2009 IN TERMS OF SALES YET MORE STABLE PRICING THROUGHOUT THE YEAR

HERE’S TO WISHING NOTHING BUT THE BEST IN 2010!!!!!!!!!!!!!.

MARKET UP DATE AT GLANCE COMMENTARY THRU NOVEMBER 14TH 2009

I’LL BEGIN  WITH THE COMMENT “cash for clunkers EXTENDED AND EXPANDED” and a race to the MOVED finish line (NOW APRIL 30^TH 2010) THE BEST WAY TO DESCRIBE THE WAY THE REAL ESTATE MARKET IS BEHAVING this fall.

WHEN YOU LOOK AT THE NUMBERS THE THING that JUMPS OUT AT YOU IS A 67% INCREASE IN THE NUMBER OF PENDING SALES YEAR TO YEAR, YOU COULD SHOUT ABOUT THE INCREASE (SEE THE CAUSE IN THE FIRST LINE), YET WHEN YOU NOTE THAT LAST YEAR AT THIS TIME THE BUYERS WITHDREW FROM THE MARKET PLACE AND CAUSED A PLUNGE IN PENDING SALES, IT TEMPERS ENTHUSIASM. I BELIEVE we are in AN EXTENDED AND EXPANDED race with first time buyers ($8,000 CREDIT) WANTING TO PURCHASE WITH tax credit AND EXISTING HOMES that BUY A DIFFERENT PRINCIPAL RESIDENCE ($6,500 CREDIT).

THIS BRINGS UP A GOOD POINT IN THE OVERALL NUMBERS WE WILL EXPERIENCE THE REST OF THE YEAR. THE MARKET FELL FROM THIS POINT FORWARD FOR THE REMAINDER OF 2008. THIS YEAR APPEARS TO HAVE STABILIZED WITH INVENTORY AND PENDING SALES REMAINING IN A SOLID RELATIONSHIP TO EACH OTHER. THAT FACT BRINGS MEASURED OPTIMISM.

the most active SEGMENT of the market HAS REMAINED between 160k to 180k(PRIME FIRST TIME BUYER PRICE RANGE), that price range  share of the market  13% by unit volume in 2008, INCREASED TO  17% by unit VOLUME AT THE END TO september 2009. THE UPPER RANGE SEGMENTS 300K TO 500K WILL SEE AN INCREASE IN MOVE UP TRAFFIC WITH THE EXPANSION OF THE TAX CREDIT TO EXISTING HOME BUYERS. i SUSPECT A lag in timing, UNTIL AFTER THE HOLIDAY SEASON WE WILL WATCH CLOSELY AS THE PENDING SALES AFTER JANUARY 1^ST 2010.

THE inventory levels have CONTINUED TO STAY IN A NARROW BAND ALL YEAR WITH A slight A DECREASE IN PROPERTIES FOR SALE OF 5% FROM a year ago, AS COMPARED TO 41% HIGHER IN JANUARY AND 9% HIGHER IN MARCH A YEAR AGO, THE decrease from a year ago is AFFECTED by the increase in pending SALES AND STABLE INVENTORY..

THE PENDING SALES LEVELS CONTINUE HIGHER, AN INCREASE OF 67% FROM a year ago, AS COMPARED TO 37% LOWER IN JANUARY AND 12% LOWER IN MARCH. THE CONTINUED INcrease from a YEAR ago is AFFECTED by the increase in FIRST TIME HOME BUYERS AND slight MOVE UP TRAFFIC (WHICH SHOULD INCREASE WITH THE EXPANDED TAX CREDIT). THIS MONTH AS IN COMING TIME PERIODS WE WILL SEE INCREASES FROM A YEAR AGO, BECAUSE A YEAR AGO PENDING SALES LEVELS WENT DOWN SUBSTANTIALLY.

CONSTRUCTION numbers in OCTOBER: single family permits, IN TOTAL still show A DECLINE FROM LAST year, 18% LOWER. to put it in PERSPECTIVE the first 10 months of the year are as follows 1. 2009 199 single family permits, 2. 2008 243 Single family permits, 3. 2007 392 Single family permits. WE CONTINUE A TREND IN new CONSTRUCTION market THAT PERMITS IN FOR THE MONTH ARE AT OR HIGHER THAN THE YEAR BEFORE AND OCTOBER DID ADMIRABLY WELL AGAIN 21 PERMITS 2009 AND 16 IN 2008. AS WE MOVE FORWARD THE TREND WILL MOST PROBABLY CONTINUE DUE THE STEEP DECLINE IN PERMITS LAST YEAR, AGAIN THIS SHOWS A MARKET THAT IS STABILIZING AND FOUND ITS FLOOR of activity. THE BONUS FOR HOME BUILDERS WILL BE 2010 IF THEY CAN GET AN ORDER BY APRIL 30^TH 2010  AND GET THEM BUILT TO CLOSE BEFORE JUNE 30^TH 2010 THE BUYERS CAN REAP A $6,500 TAX CREDIT. A LITTLE BIT OF A NARROW TIME FRAME YET I AM SURE IT WILL INCREASE ACTIVITY IN THE HOME BUILDING BUSINESS.

the home sales prices below SHOW a slight price decline year to year YELLOWSTONE county  a 4% IN AVERAGE AND 3% IN MEDIAN SALES PRICE.  I WOULD SAY WHEN THE SMALLER SIZE OF HOME SELLING IS FACTORED IN THE DECLINE YEAR TO YEAR WOULD BE ABOUT 3% WITH HOMES IN POOR CONDITION OR LOCATION EXPERIENCING GREATER THAN THAT.

THE POSITIVE forces in the MARKET REMAIN THE SAME, the STRENGTH of the below $200,000, no SIGNIFICANT FORECLOSURES of HOMES AND HISTORICALLY LOW INTEREST RATES 5% FOR A 30YEAR LOAN AND STRONG EMPLOYMENT NUMBERS. the importance of A LOW FORECLOSURE RATE CAN not be OVERSTATED. when you look at other market places AND THE case /shiller index declines, the driving force in downward price pressure is FORECLOSED properties sold by lenders.

unemployment in YELLOWSTONE COUNTY IN   WAS 4.7%, NOT SEASONALLY ADJUSTED, COMPARED to the state average of 6.7% , GALLATIN VALLEY OF 5.5% MISSOULA OF 5.6%,  THE FLAT HEAD OF 8.8 % and the NATIONAL of 10.2% giving people who want to own their home a job and A BELIEF that they will be employed, (A SIDE NOTE TO YELLOWSTONE COUNTY  ACTUAL NUMBER OF WORKING PEOPLE IN OCTOBER WAS 80,400 PRELIMINARY) along  WITH low INTEREST, approximately 5.% 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. 

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

Below are the numbers for Yellowstone County for the first ten months of the year. If anyone had any doubt giving people an $8,000 tax break would affect people’s behavior the numbers below should put that thought to rest.  Things of note as we have progressed through the year we have steadily gained on our short fall of closed transaction compared to last year. The 79% above last year for pending sales of you can thank the $8,000 tax credit for that huge increase.  When you look at sales price decline with size factored in my comment is about a 3% decline in pricing to put that into perspective the market has been flat since 2007. Not bad if you compare a 50% statewide drop in home values in California in the same time period, heck Las Vegas dropped 33% just from 2008 September to 2009 September. Another item to note is by definition first time buyers are rents and you can see the impact of them buying homes in the rental softness in pricing and increase availability.

Since it seems that Washington dc will pass an extension and expansion of the tax $8,000 for first time buyers $6,500 for person moving from a home they have owned for five years get ready for the after burns to kick in till reach altitude than flame out and head back for a crash landing.

the hour glass is is running and time will soon be gone for the first time buyer to take advantage of the $8,000 dollar credit. the first time buyer credit ends on November 30th 2009. for a first time buyer to take advantage they must have their purchased closed by midnight November 30th 2009. doing some calculations as to timing within the the market and financing changes it puts the date that you must have a purchase agreement in place to October 31st 2009. why you might ask do i need to have a buy sell in place by then. 1. it generally takes 30 days from start to finish to allow for inspections appraisals and loan processing, in November you have thanksgiving which is going to slow the process with banks being closed and people leaving on vacation. so even with a purchase agreement in place it will take some very focused help to make sure everything happens the way it should, so you don't miss out on the tax credit.  adding to the complexity is rules changes on disclosures and changes as your proceed toward closing if a lender does not get the annual percentage close enough on the initial disclosure. right at the end you could be faced with between a 3 to 7 day delay in closing and then a lot of shedding of tears because the lender won't close due to federal law.

the best advice is to get out in the market and find a home and find a lender, get fully credit approved so you may take advantage of funding your first home and the $8,000 credit before it expires.

call howard sumner 406-245-6990

or http://Realestatemontana.com

MARKET UP DATE AT GLANCE COMMENTARY THRU JUNE 30TH 2009

MEASURED OPTIMISM SEEMS TO BE THE BEST WAY TO DESCRIBE THE WAY THE REAL ESTATE MARKET IS BEHAVING FINISHING THE FIRST HALF OF 2009.

WHEN YOU LOOK AT THE NUMBERS THE THING that JUMPS OUT AT YOU IS A 41% INCREASE IN THE NUMBER OF PENDING SALES YEAR TO YEAR, WHICH IF YOU WANTED, YOU COULD CALL THE GREEN LAWN, YET WHEN YOU NOTE THAT LAST YEAR AT THIS TIME THE BUYERS WITHDREW FROM THE MARKET PLACE AND CAUSED A PLUNGE IN PENDING SALES, IT TEMPERS YOUR ENTHUSIASM. I BELIEVE MEASURED OPTIMISM IS THE BEST DESCRIPTOR.

the most active SEGMENT of the market HAS REMAINED between 120k to 180k(PRIME FIRST TIME BUYER PRICE RANGE), that price range  share of the market  22% by unit volume in 2008, INCREASED TO  29% by unit VOLUME AT THE END TO JUNE 2009. THE UPPER RANGE SEGMENTS 300K TO 500K HAS SEEN AN INCREASE IN PENDING SALES INDICATING A MOVE UP MARKET TREND. WE WILL WATCH CLOSELY AS THE PENDING SALES SHOW UP IN THE CLOSED SIDE OF THE EQUATION TO SEE HOW THE MOVE UP MARKET PLAYS OUT FOR THE REST OF THE YEAR.

the question ABOUT FIRST TIME BUYERS CHANGES A LITTLE over the next couple of months, HOW MANY FIRST TIME buyers  DOES YELLOWSTONE COUNTY HAVE, AND HOW MANY WILL CONTINUE TO COME INTO THE MARKET  due to the tax credit AND LOW INTEREST RATES. IF thE CREDIT MARKETS AND INTERESTS RATES CONTINUE TO BE KIND TO FIRST TIME BUYERS, WE SHOULD CONTINUE TO SEE STABILIZATION IN THE MARKET, AND MOVE UP TRAFFIC TO PICK UP AS we PROGRESS INTO THE SECOND HALF OF THE YEAR.

THE inventory levels have CONTINUED TO moderate A DECREASE IN PROPERTIES FOR SALE OF 8% FROM a year ago, AS COMPARED TO 41% HIGHER IN JANUARY AND 9% HIGHER IN MARCH A YEAR AGO, THE decrease from a month ago is AFFECTED by the increase in pending SALES. IN THE COMING TIME PERIODS WE WILL SEE A GREATER PERCENTAGE OF ACTUAL DECLINES FROM A YEAR AGO BECAUSE A YEAR AGO INVENTORY LEVELS STARTED MOVING UP SUBSTANTIALLY.

THE PENDING SALES LEVELS CONTINUE TO moVE HIGHER, AN INCREASE OF 41% FROM a year ago, AS COMPARED TO 37% LOWER IN JANUARY AND 12% LOWER IN MARCH. THE CONTINUED INcrease from a YEAR ago is AFFECTED by the increase in FIRST TIME HOME BUYERS AND MOVE UP TRAFFIC. THIS MONTH AS IN COMING TIME PERIODS WE WILL SEE INCREASES FROM A YEAR AGO, BECAUSE A YEAR AGO PENDING SALES LEVELS WENT DOWN SUBSTANTIALLY.

CONSTRUCTION numbers in MAY: single family permits, IN TOTAL still show a SIGNIFICANT decline FROM LAST year, 34% LOWER. to put it in PERSPECTIVE the first 6 months of the year are as follows 1. 2009 106 single family permits, 2. 2008 160 Single family permits, 3. 2007 254 Single family permits. the SURPRISE IN new CONSTRUCTION market WAS PERMITS IN MAY OF THIS YEAR AND LAST YEAR IN MAY WERE THE SAME NUMBER AND JUNE DID ADMIRABLY WELL AGAIN 30 PERMITS 2009 AND 32 IN 2008.

the home sales prices below SHOW a slight price decline year to year YELLOWSTONE county  a 5% IN AVERAGE AND 3% IN MEDIAN SALES PRICE. (A SLIGHT DETERIORATION FROM LAST MONTHS COMPARISON).  I WOULD SAY WHEN THE SMALLER SIZE OF HOME SELLING IS FACTORED IN THE DECLINE YEAR TO YEAR WOULD BE ABOUT 3% WITH HOMES IN POOR CONDITION OR LOCATION EXPERIENCING GREATER THAN THAT.

THE POSITIVE forces in the MARKET REMAIN THE SAME, the STRENGTH of the below $200,000 (ALLOWING MOVE UP MARKET), no SIGNIFICANT FORECLOSURES of HOMES AND HISTORICALLY LOW INTEREST RATES 5.125% FOR A 30YEAR LOAN AND STRONG EMPLOYMENT NUMBERS. the importance of A LOW FORECLOSURE RATE CAN not be OVERSTATED. when you look at other market places AND THE case /shiller index declines, the driving force in downward price pressure is FORECLOSED properties sold by lenders.

unemployment in YELLOWSTONE COUNTY IN MAY WAS 4.1%, NOT SEASONALLY ADJUSTED, COMPARED to the state average of 5.8% , GALLATIN VALLEY OF 6.2% MISSOULA OF 5.6%,  THE FLAT HEAD OF 9.7% and the NATIONAL of 9.5% giving people who want to own their home a job and A BELIEF that they will be employed, (A SIDE NOTE TO YELLOWSTONE COUNTY  ACTUAL NUMBER OF WORKING PEOPLE IN MAY WAS 81,002 PRELIMINARY) along  WITH low INTEREST, approximately 5.125% 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. 

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