Real Estate Information Archive

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

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According to the study, the shifts among the top five states have continued this month with Nevada (-26.1%) remaining the top-ranked state for annual price depreciation, but Florida (-23.2%) supplanted California and became the second-ranked state for price depreciation. After being the top-ranked state for 20 consecutive months — May 2007 through December 2008 — California’s (-22.7%) home price declines have improved sharply, putting California into third place in April 2009 and just ahead of fourth-ranked Arizona (-20.5%).

The rapid deterioration of home prices in Illinois (-17.4%) put that state in fifth place for the first time during the downturn, indicating that woes in the nation’s real estate market may be shifting to other areas.

When you read the above then think about the comment about home price declines “improving” Alice in wonderland through the looking glass comes to mind. The statement of the obvious is, home price in those areas had already taken a substantial decline a year earlier so actuality the numbers are much uglier if you live in one of those areas. The above information illustrates my point about unemployment and the wave of foreclosures coming. If you have watched the news, they have touted sales increases in many of theses areas driven by first time buyers (good sales) and investors (short term holding, they think). When you look at the phoenix area with 45,000 homes in the foreclosure pipe line (which was a year sales at peak) and unemployment not close to peak yet. How long before investor fatigue sets in when the value of what they have bought no longer looks like the “steal” they thought it was and they stop buying. The tax credit expires in December just when the second wave of foreclosures will start to come on the market. Ask yourself who will buy those homes besides the lenders who took them back.

Oh by the way I am glad I live in Billings MT where people were more conservative so the above issues have nominal impact on us. Although I know at times it does not feel that way.

MARKET UP DATE AT GLANCE COMMENTARY THRU MAY 31ST 2009

STABILIZATION SEEMS TO BE THE BEST WAY TO DESCRIBE THE WAY THE REAL ESTATE MARKET BEHAVED IN MAY.  AS MENTIONED PREVIOUSLY AN INCREASE IN buyers coming into the market (first time buyers AND BEGINNING MOVE UP TRAFFIC) 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 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 MAY 2009. THE UPPER RANGE SEGMENTS 300K TO 500K HAS SEEN AN INCREASE IN PENDING SALES INDICATING A MOVE UP MARKET TREND BEGINNING. 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 THE 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. THE MARKET SHOULD ALLOW MOVE UP TRAFFIC TO PICK UP AS we PROGRESS INTO SUMMER.

THE inventory levels have CONTINUED TO moderate A DECREASE OF 1% FROM a year ago, AS COMPARED TO 41% HIGHER IN JANUARY AND 25% FEBRUARY 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 GREATER ACTUAL DECLINES FROM A YEAR AGO BECAUSE APPROXIMATELY A YEAR AGO INVENTORY LEVELS WENT UP SUBSTANTIALLY.

THE PENDING SALES levels  CONTINUE TO moVE HIGHER, AN INCREASE OF 9% FROM a year ago, AS COMPARED TO 37% LOWER IN JANUARY AND 5% LOWER IN FEBRUARY. THE INcrease from a month ago is AFFECTED by the increase in FIRST TIME HOME BUYERS AND THE BEGINNINGS OF MOVE UP TRAFFIC. IN THE COMING TIME PERIODS WE WILL SEE GREATER INCREASES FROM A YEAR AGO, BECAUSE APPROXIMATELY A YEAR AGO PENDING SALES LEVELS WENT DOWN SUBSTANTIALLY.

CONSTRUCTION numbers in MAY: single family permits, IN TOTAL still show a very SIGNIFICANT decline FROM LAST year. to put it in PERSPECTIVE the first 5 months of the year are as follows 1. 2009 76 single family permits, 2. 2008 128 single family permits, 3. 2007 214 single family permits. the SURPRISE IN new CONSTRUCTION market WAS THAT IN MAY OF THIS YEAR AND LAST YEAR THE SAME NUMBER OF  SINGLE FAMILY PERMITS WE PULLED 29 IN BOTH THIS YEAR AND LAST. IT will BE INTERESTING TO SEE IF THE SAME OR BETTER HAPPENS IN JUNE...

the home sales prices below SHOW a slight price decline year to year YELLOWSTONE county has seen about a 3% DECLINE in closed PRICE (A SLIGHT IMPROVEMENT FROM LAST MONTHS COMPARISON).

THE POSITIVE forces in the MARKET REMAIN THE SAME, the STRENGTH of the below $200,000 (ALLOWING SOME MOVE UP MARKET), no SIGNIFICANT FORECLOSURES of HOMES AND HISTORICALLY LOW INTEREST RATES 5% FOR A 30YEAR LOAN AND STRONG EMPLOYMENT NUMBERS...

another big POSITIVE IS NO SIGNIFICANT FORECLOSURE activity in yellowstone county. 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 in downward price pressure is FORECLOSED properties sold by lenders.

unemployment in YELLOWSTONE COUNTY IN APRIL WAS 4.2%, NOT SEASONALLY ADJUSTED, COMPARED to the state average of 6% , GALLATIN VALLEY OF 6.5% MISSOULA OF 5.8%,  THE FLAT HEAD OF 10.5% and the NATIONAL of 8.9% 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 MARCH WAS 79,800) 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                                                                              

DONOVAN ANNOUNCES RECOVERY ACT'S HOMEBUYER TAX CREDIT CAN IMMEDIATELY HELP THOUSANDS OF FIRST-TIME HOMEBUYERS TO BUY A HOME
FHA plan will stimulate new home sales and help stabilize housing market

WASHINGTON - Speaking to the National Association of Home Builders Spring Board of Directors Meeting, U.S. Housing and Urban Development Secretary Shaun Donovan today announced that the Federal Housing Administration (FHA) will allow homebuyers to apply the Obama Administration's new $8,000 first-time homebuyer tax credit toward the purchase costs of a FHA-insured home. Donovan said that today's action will help stabilize the nation's housing market by stimulating home sales across the country.

The American Recovery and Reinvestment Act of 2009 offers homebuyers a tax credit of up to $8,000 for purchasing their first home. Families can only access this credit after filing their tax returns with the IRS. Today's announcement details FHA's rules allowing state Housing Finance Agencies and certain non-profits to "monetize" up to the full amount of the tax credit (depending on the amount of the mortgage) so that borrowers can immediately apply the funds toward their down payments. Home buyers using FHA-approved lenders can apply the tax credit to their down payment in excess of 3.5 percent of appraised value or their closing costs, which can help achieve a lower interest rate. To read the FHA's new mortgagee letter, visit HUD's website.

"We believe this is a real win for everyone," said Donovan. "Today, the Obama Administration is taking another important step toward accelerating the recovery of the nation's housing market. Families will now be able to apply their anticipated tax credit toward their home purchase right away. At the same time we are putting safeguards in place to ensure that consumers will be protected from unscrupulous lenders. What we're doing today will not only help these families to purchase their first home but will present an enormous benefit for communities struggling to deal with an oversupply of housing."

Currently, borrowers applying for an FHA-insured mortgage are required to make a minimum 3.5 percent downpayment on the purchase of their home. Current law does not permit approved lenders to monetize the tax credit to meet the required 3.5 percent minimum down payment, but, under the terms of today's announcement, lenders can now monetize the tax credit for use as additional down payment, or for other closing costs, which can help achieve a lower interest rate. Buyers financing through state Housing Finance Agencies and certain non-profits will be able to use the tax credit for their downpayments via secondary financing provided by the HFA or non-profit. In addition to the borrower's own cash investment, FHA allows parents, employers and other governmental entities to contribute towards the downpayment. Today's action permits the first-time homebuyer's anticipated tax credit under the Recovery Act to be applied toward the family's home purchase right away. Unlike seller-funded down-payment assistance, which was a vehicle for abuse, this program will allow homebuyers to shop for the best home price and services using their anticipated tax credit.

According to estimates by the National Association of Home Builders, the Administration's homebuyer tax credit will stimulate 160,000 home sales across the nation - 101,000 of which will be first-time buyers who will receive the credit. Another 59,000 existing homeowners will be able to buy another home because a first-time buyer purchased their home. Given FHA's current market share, it's estimated that thousands of families will be able to purchase a home by allowing the anticipated tax credit to be applied toward their purchase together with an FHA-insured mortgage.

Homebuyers should beware of mortgage scams and carefully compare benefits and costs when seeking out tax credit monetization services. Programs will vary from organization to organization and borrowers should consider whether the services make sense for them, as well as what company offers the most suitable and affordable option.

For every FHA borrower who is assisted through the tax credit program, FHA will collect the name and employer identification number of the organization providing the service as well as associated fees and charges. FHA will use this information to track the business closely and will refer any questionable practices to the appropriate regulatory agencies, as necessary.

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How Billings market compares to other areas with similar median sales prices for 1stquater of 2009.

THE INFORMATION SHOWS WHY I HAVE ALWAYS SAID THAT THE BILLINGS MARKET IS LIKE A HIGH GRADE BOND. IT DOES NOT PROVIDE FLASHY RETURN YET IT PROTECT YOU CAPITAL. WITH ALL THE TURMOIL IN THE MARKET PLACES THE STATEMENT IS MORE TRUE TODAY THAN EVER.

  Billings             Mt       $179,900    $178,000    -1.05%      4.7%

I don't know about you but I'm glad I live in Billings Montana