Real Estate Information Archive

Market update at glance

April 30^th 2013

As I sit and review the performance of the market for the first four months of 2013, the increase in in unit sales is outstanding, the decrease in market time is phenomenal, the increase in pending sales is a positive trend, the market velocity is a decreasing increase year over year in closed sales, this is one of the most positive actions within the market. The reason for its positive effect is the increase in unit sales becomes a sustainable momentum and not a setup for a bad stumble. The other positive from the market behaving in this manner is that the movement of prices up becomes a more solid base to build appreciation on. The market has experienced a 6% approximate pricing movement year over year, as we get further into the year and both sellers and buyers gain confidence in the economy of Yellowstone County as mentioned above the price gains become solid. In March of 2013 there 2214 more people working in Yellowstone County than in March of 2012 and 5942 more working than in March of 2011.The pricing trend will be interesting watch develop. With interest rates  9.6% lower than last March and with the  price movement, it is actually was cheaper to buy a home this April as compared to last April by $20 a month and $78 cheaper than in 2011. The other amazing factor is, to purchase the median price home your payment will $40 a month cheaper than renting the median priced home for rent, another distortion of the market place by the extremely low interest rates. I would have to believe we are very close to the end of that continue declining interest rate cycle, at some point in the near term the Federal Reserve will stop buying 85% of the mortgages originated in the United States. Then housing market will have to survive with money raised in the private market instead of the Federal Reserve printing the money. I hope you find the information both useful and enlightening, if you have any questions about either buying, selling or the market in general do not hesitate to call or email

All roads lead to positive trends in the Single family real estate market. Yellowstone County has now has had year over year increase in number of sales since February 2012, 13 months in a row. Every category of measurement shows improvement. So what drives the positive trends, employment growth, population growth, and the Federal Reserve’s unwavering commitment to push and keep mortgage rates low. A quick comparison on the power of that policy, at current interest rates (3.57%) the approximate monthly payment with taxes and insurance at the average sales price home is just $1,286 per month, use the average interest rate for the last five years (4.57%) and that payment jumps to $1,435 per month and now for the shocker use the average interest rate since 1971, 42 years of history, (8.64%) and the payment jumps to $2,188. The question that comes to mind which leg of the positive drivers will most probably wavier first and how much effect may have if the other two factors continue with positive growth and how much growth in the factors do we need to override the faltering driver. As always fascinating to watch the market and its movement whether positive or negative

Does history indicate the future and can we project past norms to discern future trends?

Lots of different ways to look at the both the residential sales price market and the price of rentals and their relationship to each other

The 1^st graph shows the price differential between purchasing a home at the then current interest rate and price and renting an apartment in the Billings area

The 2^nd graph shows the payment trend at the sales price and interest rate at each year

The 3^rd graph shows average and median sales prices for each year

The 4^th graph shows the rent trends each year

Using the average interest rate for the last five years (4.57%) at this average sales price this year so far a house payment would be $1435 as opposed to $1286 with current interest rate (3.57%) if you use the average rate for a 30 year mortgage since 1971 (8.64%) at current sales price a house payment would be $2188

So the thoughts to ponder for the next twelve months

#1 do interest rates stay at the level they are and the cost of purchasing grow at whatever price appreciation occurs in the market place and how would that event affect the rental market?

#2 do interest rates and home prices both go up and how would that event affect the rental market?

#3 do interest rates trend back towards the 40 year average home prices remain the same, how would that event affect the rental market?

#4 is there such a creature as a “normal” market?

Open 1-3 p.m.

624 Terry Avenue

This is it!  Very clean, light & bright home with 2 bedrooms, 1 bath, basement area for future expansion, 2 car garage, fenced yard and patio

5349 Rustic Avenue                                                 $382,000

Lovely country property, set up for horses, fencing, corrals, riding arena, 6 bedroom, 3 bath home, 2 car garage, storage and more!  Just a few minutes from Billings too!

3967 Pheasant Road, Shepherd

$158,750

3 bedroom, 2 bath home on permanent foundation, 2 car oversized garage, 1.16 acres irrigated

Thought to ponder from peak ownership rate, to today the ownership rate has dropped 3%, based on the time before the explosion in housing it was holding about another 2% lower than it is today. Based sales and on the information below is the glass half empty or half full or is it as full as it most probably going to get nationwide?

30 year pi median sales price 1985  $932---

30 year pi median sales price 2013  $1094

median earnings 1985 $17,88 44.79% of the income to  qualify for the payment

median earnings 2013 $39,936 85.18% of the income to  qualify for the payment

Open 1-3

1519 Foothill Drive                                                  $228,600

Spacious living areas, large fenced yard, country atmosphere, located in the Alkali Creek area.

5+ bedrooms, 3 baths, 2 car garage, storage and more!

Market at a Glance February 2013

We are now two months into the year and the good numbers continue to roll through the housing market here in Yellowstone Count, Inventory lower by 18%, pending sales up by 16%, closed sales up by 24%, new home permits up 61% all outstanding performance for the residential market. The driver for most of this outstanding performance comes from three things interest rate and jobs and population growth.   First let’s talk about interest rates, the Federal Reserve through  buying mortgages and not selling any of previous mortgages has managed to drive and keep interest rates to historical lows, 9.3% below 2012 and 43.52% below where they were in 2006,which was the peak year in sales for Yellowstone County. From to December 2011 to December 2012 the Billings MSA added 1700 non-farm payroll jobs and population has increased approximately 1450 people. Lots of positives in the economy.

With all these positives, pricing structure is starting to change, from the first two months of 2012 to the first two months of 2013 by 3.5% to 4% year over year when you take size and price into the actual formulation of price change. When all the positives are taken into consideration, on first blush, that would seem a more than modest price increase than demand would indicate.  I have asked the question before and believe that the underlying reason is the same, caution on both the buyers and sellers within the market place. Yes sellers do want the highest price that they can achieve yet, they do want to sell, so while you might assume sellers interest are not aligned with the buyer at this point in the market place the assumption is most probably wrong. Just as you reverse the process and look from the buyer’s side and assume that the lowest value would be most wanted yet with a lower inventory being able to purchase the home and location wanted becomes more paramount. So with interest rates favorable buyers will move some in pricing of purchase yet not as much as positives would lead us to believe. We are now seeing an influx of buyers moving out of rentals into the market as purchasers, since the Yellowstone County economy continues in a positive direction with jobs being more secure. As always it’s fascinating to me to watch the market and how it operates with all the different forces involved. This year should be interesting to see of how the market responds

And an affordable price too!  3 bedrooms, 1 bath, 2 car detached garage, and a large fenced yard, hardwood flooring on the main level, family room, storage and more!

2110 Rosewyn Lane

$172,500