december 3rd real estate update

Wednesday, December 03, 2008

by Howard Sumner

It’s that time of the month to give you an update on the real estate market progress so far this year.

I thought it might be useful for perspective to give comparisons of how Billings is fairing this year as compared to Bozeman just 140 miles west.

All though information that follows are from the most reliable I could find, most from federal government sources, and some from local government entities, it would not surprise me if someone had slightly different numbers than what I present below.

When comparing the two areas there were times in the last few years most of us marveled at what we heard about Bozeman, yet I think at this point with the winds of change most would prefer the steady growth of Billings as opposed to the burring flame of Bozeman. When any market gets out of balance it will correct it’s self, it’s just impossible to say when and by how much.

Housing sales and prices are directly tied to income, population growth and financing. Although we in Yellowstone County enjoyed considerable growth in all three we did not seriously out strip our job and income growth with housing prices. At current interest rates the average wage in Billings will support a principle and interest payment of almost $900 with median price Home in Billings requiring a principle and interest payment of about $1000 meaning with the average wage almost 50% of the homes sell within reach of the average wage in Billings comparing to Bozeman the average wage in Bozeman will support a principle and interest payment of almost $813 with median price in Bozeman requiring a principle and interest payment of about $1607 meaning with the average wage barely has half the income to purchase the median priced home in Bozeman. The facts show while we have seen a unit sales decline and a substantial slow down in single family building permits in Billings, it pales in comparison to the correction Bozeman is feeling and probably will continue well in 2009.

	Billings	Bozeman

Percentage of Home
Sales decline	-17%	-39%

Percentage of
Single Family
Permits decline	-39%	-68%

Average sales price	$208,022	$323,000
percentage-up/down	2%	-13.44%

Median sales price	$185,000	$287,000
percentage-up/down	3%	-13.55%

Average wage
per job	$35,749	$32,523

average weekly wage
per job 1st quarter 2008	$695	$617

unemployment rate	3.10%	2.90%
as of September 30th

total employees	77094	45196

Market update at glance		11/30/2008		Year	Percentage Increase or -Decrease
Yellowstone County				2007	2008

Residential Closed Sales Units				2166	1800	-17%

Residential Pending Sales Units				179	145	-19%

Residential Active Property Units For Sale				707	894	26%

Average sales price Single family Home				$204,229	$208,022	2%

Average Square feet Single family Home				2331	2320	0%

Median sales price Single family Home				$180,000	$185,000	3%

Median Square feet Single family Home				2196	2208	1%

Average Days on Market Till Offer Received
Single Family Home				58	62	7%

Absorption rate -	TIME IN DAYS
Time it would take for all existing					202
properties to sell with no new inventory coming
into the market place - residential

SINGLE FAMILY PERMIT ISSUED FOR MONTH			thru 11/30	21	9	-57%

SINGLE FAMILY PERMIT ISSUED FOR YEAR			thru 11/30	413	252	-39%

Average Number of Rentals Advertised Sundays				90	105	17%

Average Asking Price for a Rental Home				$871	$1,052	21%

Average Asking Price for a Rental Apartment				$630	$684	9%

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Great News about Interest Rates!!!

Wednesday, November 26, 2008

by Howard Sumner

Interest rates have dropped about .5% since Monday! We are looking at 5.375% to 5.50% for a conventional 30 year fixed rate mortgage! FHA and VA are running about the same. This is great news that I thought I would share.

Please call me today to get connected with a lender who can provide you with detailed information. If you know someone who is thinking of purchasing a property, refinancing, or making an investment, I would love to help them!

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morning coffee

Friday, November 21, 2008

by Howard Sumner

Billings Montana Real Estate News

INSPIRATION FOR TODAY:

"Temperance in all things!"

~ Harry S. Truman

Extreme or Temperate?

You can see it on TV almost every day - extreme football, extreme wrestling, extreme police chases, extreme everything. The TV networks seem to be competing to capture our attention with one-upsmanship to the extreme.

If you're in your 20's to mid 30's, doing things to the extreme may be attractive to you. If you're 35-45, you may be starting to question whether it's necessary to carry things quite so far. If you're over 45, your age of wisdom may have set in - leading you in another direction - towards temperance. The good news is that it's beneficial at any age.

Recently on TV, there was an old interview with Harry Truman at the age of 77. The interviewer David Susskind asked, "To what do you attribute your energy and vitality at age 77?" Truman shot back with noticeable conviction, "Temperance in all things. I take plenty of rest, sleep well at night, and eat the right foods. That leaves me ready to face the challenges of being president."

What a simple word - "temperance." Webster defines it as "moderation in action or thought; restraint; marked by moderation, as in keeping within limits." It does not mean total abstinence or prohibition of action. It is merely a concept that takes into account reasonable, self-imposed limits.

Some see temperance as "clean living." By whatever name, it can bring peace, tranquility, good health, high self-esteem, satisfaction, and financial freedom. What are your self-imposed limits?

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coffee

Sunday, November 09, 2008

by Howard Sumner

INSPIRATION FOR TODAY:

"Begin to be now what you will be hereafter."

~ St. Jerome

GIVE YOURSELF A PRESENT!

Regardless of who you have been in the past - why not give yourself a "present"? Each of us experiences regret from time to time over what we have done - or left undone - in the past. Perhaps our transgressions were great - or just seemed so in our heart.

To become a different person in the future, St. Jerome suggests that you must "begin to be" that person now. If your career is overwhelming you, begging to be tamed, begin now to untangle it. Begin today to simplify your activities.

If you would like to be more caring, begin today by complimenting someone. Want to be more understanding? Listen carefully to one you love - today. Want greater financial independence? Analyze your income and your expenses, then earn more and live on less - beginning today.

Nothing happens until you "begin to be." Interestingly, however, the moment you BEGIN, you actually ARE the person you desire to be, provided you continue to be. The moment you change anything in your life, the past is over, forever.

Want a new beginning in your life? Don't wait for some earth-shattering, life-changing event to get your attention. Get started today!

Howard Sumner Real Estate

404 North 31st Street Suite 130

Billings, MT 59101

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Last modified 11/9/2008

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market update 9/30/2008

Monday, October 13, 2008

by Howard Sumner

Here’s the market update through the end of September.

This months report is considerable longer than most due to the financial market turmoil.

Inventory has started its normal fall decline. I would expect inventory to continue its normal decline throughout the rest of the year. The other normal occurrence this time of year is for sales to slow, there is a natural market slow down as we approach the holidays when people get more focused on their families than changing the place they live.

The events in the financials markets of the last 4 weeks have people asking what’s going to happen to the billings area, while I would expect some caution from both buyers and sellers, yet when I look at the overall economy of the Yellowstone valley I perceive a lot of positives. The questions I ask my self to try and discern the tea leaves are as follows

1. Are one the refiners going to shut down? Answer I don’t believe so

2. Are one of the hospitals going to shut down? Answer I don’t believe so

3. Is the federal government going to pull out of Billings? Answer I don’t believe so and in fact they just approved the building of a new court house.

4. Is school district 2 going to shut down? Answer not very likely

5. Can the retail sector experience a slowing of sales due to people being cautious? Answer probable and likely

6. Could construction both commercial and residential see a slowing? Answer residential already has and its likely commercial will slow from this year’s torrid pace

7. Is agriculture likely to slow its fast past income growth of the past few years? Answer probable yet incomes will remain at historically high levels for crops

Other things to consider, the roundup coal mine is moving hard and fast to build the rail road to ship coal, cabalas’ is finishing it’s store, the general electric building is under construction and will be coming on line next year, the oil field metal fabrication shop is moving forward and coming on line next year, unemployment in Yellowstone county is still only in the 4% range, and foreclosures are at less than 1% of existing home loans which is considered “normal”

Below this months numbers is a graph I have down comparing the purchase of a home in billings or investing the down payment in the stock market. You be the judge of what may treat your finances better over the long haul.

As always if you have any questions please give me a call or e-mail.

Market update at glance		9/30/2008		Year	Percentage Increase or -Decrease
Yellowstone County				2007	2008

Residential Closed Sales Units				1869	1549	-17%

Residential Pending Sales Units				230	203	-12%

Residential Active Property Units For Sale				732	910	124%

Average sales price Single family Home				$206,090	$209,184	2%

Average Square feet Single family Home				2352	2324	-1%

Median sales price Single family Home				$180,000	$185,000	3%

Median Square feet Single family Home				2214	2206	0%

Average Days on Market Till Offer Received
Single Family Home				60	61	2%

Absorption rate -	TIME IN DAYS
Time it would take for all existing					188
properties to sell with no new inventory coming
into the market place - residential

SINGLE FAMILY PERMIT ISSUED FOR MONTH			thru 9/30	27	21	-22%

SINGLE FAMILY PERMIT ISSUED FOR YEAR			thru 9/30	361	227	-37%

Average Number of Rentals Advertised Sundays				90	97	8%

Average Asking Price for a Rental Home				$871	$1,043	20%

Average Asking Price for a Rental Apartment				$630	$680	8%

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Home Sales Exclusion Rules

Monday, August 11, 2008

by Howard Sumner

IN ORDER TO KEEP YOU INFORMED

A little mentioned provision in the Housing and Economic Recovery Act of 2008 amends the Home Sales Exclusion Rules.

The main portion of the provision at the bottom.

This applies to homeowners that move into a nonqualifed residence (that they already own) like a vacation home or rental unit. Here was the old rule from the IRS:

To exclude gain, a taxpayer must both own and use the home as a principal residence for two of the five years before the sale. The ownership and use periods need not be concurrent.

Under the new rule, the owner only gets a percentage of the exclusion based on a ratio of how long the property is their primary residence divided by how long they owned the property. This prevents people from moving into vacation homes or rental units for two years and then obtaining the entire exclusion. Here is an excerpt (see the bill for the entire text):

SEC. 3092. GAIN FROM SALE OF PRINCIPAL RESIDENCE ALLOCATED TO NONQUALIFIED USE NOT EXCLUDED FROM INCOME.
(a) IN GENERAL.—Subsection (b) of section 121 of the Internal Revenue Code of 1986 (relating to limitations) is amended by adding at the end the following new paragraph:

(4) EXCLUSION OF GAIN ALLOCATED TO NONQUALIFIED USE.
(A) IN GENERAL.—Subsection (a) shall not apply to so much of the gain from the sale or exchange of property as is allocated to periods of nonqualified use.
(B) GAIN ALLOCATED TO PERIODS OF NONQUALIFIED USE.—For purposes of subparagraph (A), gain shall be allocated to periods of nonqualified use based on the ratio which—
(i) the aggregate periods of nonqualified use during the period such property was owned by the taxpayer, bears to
(ii) the period such property was owned by the taxpayer.
(C) PERIOD OF NONQUALIFIED USE.
For purposes of this paragraph
(i) IN GENERAL.—The term ‘period of nonqualified use’ means any period (other than the portion of any period preceding January 1, 2009) during which the property is not used as the principal residence of the taxpayer or the taxpayer’s spouse or former spouse.
...
EFFECTIVE DATE.—The amendment made by this section shall apply to sales and exchanges after December 31, 2008.

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tax law changes hone exclusion real esta

new first time buyer tax credit

Sunday, August 03, 2008

by Howard Sumner

$7500 Tax Credit - What the First Time Buyer Tax Credit Means in Billings Montana

$7500 Tax Credit?

Congress recently passed (and the president signed into law) a housing stimulus package that has been billed as the $7500 Tax Credit for first time buyers. What does this mean to first time home buyers? The correct answer is--it depends.

First off, we know that people are inquisitive about the tax credit and we are getting more than a few questions here at Howard Sumner Real Estate about it. We have put together an information pack about the details of the new law...as always, we recommend that you visit with a competent financial professional before doing anything. That is always good advice!

Secondly, it is not, by precise terms, a tax "credit". It is actually a no interest loan over 15 years. You GET the tax "credit" for being a first time homebuyer, but that is only if the price of the house is over $75,000. Below that, it is 10% of the value of the home. You get it back on your taxes, regardless of whether you make enough to owe takes or not. It is refundable to you at that point.

Also, since it has to be paid back, it you sell your home, it is subject to a "recapture" in that year. (Means that you owe the money. Confusing, yes....it is to a degree.

All that having been said, some first time home buyers may well benefit greatly from this program and it is definitely worth looking into .if you'd like some help making sense of it all, give us a call, we will be happy to help.

Here is some more detailed information

First-Time Homebuyer Tax Credit

Up to $7,500 federal tax credit for first-time home buyers

There's a new, refundable tax credit of up to $7,500 for the purchase of a primary residence. The credit is available to first-time homebuyers. This tax credit has some novel features, so here are the details.

Amount of the Homebuyer Tax Credit

The tax credit is worth 10% of the purchase price of the home, with a maximum credit of $7,500. The credit is limited to $3,750 for married couples filing separate returns. The credit is also limited to the same $7,500 maximum for unmarried persons who purchase a residence together.

Qualifying as a First-Time Homebuyer

For the purpose of this tax credit, a first-time homebuyer is defined as someone who has not owned a primary residence in the three-year period ending on the date of purchasing the home.

Limited Time Period for Purchasing a Residence

The credit has a very limited life-span. Individuals will need to purchase a residence after April 9, 2008, and before July 1, 2009.

What's a Primary Residence?

A primary residence is a residence in which an individual lives most of the time. A primary residence can be a house, condominium, co-operative apartment, houseboat, or mobile home.

Because the tax credit is for people who purchase their primary residence, individuals may qualify for the tax credit even if they own a vacation home or rental property as long as those properties were not their primary residence for at least three years preceding the purchase of their new home.

Income Phase-out Range

The credit is phased out for individuals with modified adjusted gross income between $75,000 and $95,000. For married couples filing a joint return, the phase out range is $150,000 to $170,000.

Modified AGI for the First-Time Homebuyer Credit

To determine if the tax credit is reduced or eliminated by the income phase-out range, individuals will need to determine their modified adjusted gross income.

For the purposes of determining income eligibility for this credit, adjusted gross income is modified by adding back the following excluded income:

· foreign earned income;

· income from Guam, American Samoa, or the Northern Mariana Islands;

· Income from Puerto Rico.

When to Claim the Credit

The credit is fully refundable, meaning taxpayers will be able to obtain an additional federal tax refund of up to $7,500 even if they have no other tax liabilities.

Taxpayers will be able to claim the credit on their 2008 tax return for homes purchased in 2008. For homes purchased in 2009, the IRS will allow the purchasers to file an amended 2008 return to claim the credit.

Repaying the First-Time Homebuyer Credit

The credit needs to be repaid in equal installments over 15 years. Unlike any other tax credit, the first-time homebuyer credit must be repaid over 15 years. The credit will works like this: you'll get your refund when you file the tax return. Then the credit will be repaid as an additional tax on your tax return for the next fifteen years. For the maximum $7,500 credit, this works out to annual repayments of $500 per year. As CCH notes in their tax briefing, this tax credit amounts to an interest-free 15-year loan for first-time homebuyers.

The credit will also need to be repaid in full if the taxpayer sells the house within the fifteen-year repayment period. The credit also needs to be repaid in full if the property is no longer the taxpayer's primary residence. The credit will be disallowed if a taxpayer sells the house before the end of the same year in which the house was purchased.

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new federal first time buyer tax cedit

MARKET UPDATE AT A GLANCE MAY 16TH 2008

Monday, May 19, 2008

by Howard Sumner

Visit us online at www.realestatemontana.com

Howard,

Here's how the residential market is performing so this year. My best description would be "surges" by that I mean purchasers seem to be coming into the market in bunches then a pause. The closed sales are holding steady at about 13% decline from a year ago same time period compared, which has been true since febuary. I would attribute at least half that decline on stricter undewritting reqirements insituted by the secondary market for loans. Overall I would say the majority of purchasers are buying "shelter" as seen by the decrease in the size of purchased as compared to last year. The pricing continues in a positive direction, yet condition and location determine that trend, more so than in recent years.

Market update at glance	5/16/2008	Year	Percentage Increase or -Decrease
Yellowstone County		2007	2008

Residential Closed Sales Units		695	636	-8%

Residential Pending Sales Units		363	282	-22%

Residential Active Property Units For Sale		678	794	17%

Average sales price Single family Home		$198,545	$204,254	3%

Average Square feet Single family Home		2367	2285	-3%

Median sales price Single family Home		$175,200	$180,300	3%

Median Square feet Single family Home		2207	2156	-2%

Average Days on Market Till Offer Received
Single Family Home		72	70	-3%

Absorption rate -
Time it would take for all existing			196
properties to sell with no new inventory coming
into the market place - residential

Average Number of Rentals Advertised Sundays		90	96	7%

Average Asking Price for a Rental Home		$851	$902	6%

Average Asking Price for a Rental Apartment		$639	$678	6%

Sincerely,
Howard Sumner

Howard Sumner, Howard Sumner Real Estate
404 North 31st Street Suite 130, Billings MT 59101
406-245-6890

Visit http://www.realestatemontana.com

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Real Estate Statistics for all of 2007

Tuesday, January 15, 2008

by Howard Sumner

Market update at glance	12/31/2007	Year	Percentage Increase or -Decrease
		2006	2007

Residential Closed Sales Units		2746	2578	-6%

Residential Pending Sales Units		299	191	-36%

Residential Active Property Units For Sale		867	880	1%

Average sales price all types of properties		$ 173,496	$190,713	10%

Average sales price Single family Home Billings		$ 192,041	$201,457	5%

Median sales price Single family Home Billings		$ 169,900	$179,900	6%

Average Days on Market Till Offer Received
Single Family Home Billings		52	55	6%

Average Number of Rentals Advertised Sundays		135	90	-33%

Average Asking Price for a Rental Home		$ 792	$ 851	7%

Average Asking Price for a Rental Apartment		$ 577	$ 639	11%

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december 3rd real estate update

Great News about Interest Rates!!!

morning coffee

Billings Montana Real Estate News

INSPIRATION FOR TODAY:

coffee

market update 9/30/2008

Home Sales Exclusion Rules

new first time buyer tax credit

MARKET UPDATE AT A GLANCE MAY 16TH 2008

Real Estate Statistics for all of 2007

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