Real Estate Information Archive

Market update at glance

May 31^th 2013

Encore, Encore is the usual audience response for an outstanding performance at the theater.  I believe as I review the performance of the market for the first five months of 2013 that should be our response to the behavior of the market so far. The increase in in unit sales is up 10% year over year, the decrease in market time is 18% year over year, the absorption rate shows a decrease of 17% , the increase in pending sales is a positive  17%, the market velocity is a decreasing increase year over year in closed sales, this is a positive  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 4.34% approximate pricing movement since the end of 2012and about 8% year over year (one caution 2012 just started to move about this time of year in pricing, so that number should moderate back to the year over year figure as we go through the final 7 months of the 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. The latest available figures  of April  2013 there 2230 more people working in Yellowstone County than in April of 2012 and 3625 more working than in April of 2011,unemployment in Yellowstone county is now 3.9% compared to 5.5% State Wide, 5.2% in Missoula, and 8.4% in the Flathead. Pricing trends continue along a positive trend and even with interest rates lower than last year, total monthly payment has risen above the year before, for the first time in five years, yet still has a long way to go to match the pitit in 2008 of the average sales price home of $1583 compared to today’s average sales price home PITI of $1297. The other amazing factor is, to purchase the median price home your payment in March 2013 was $40 a month cheaper than renting the median priced home for rent, in May it is now $42 more renting the median priced rental in Yellowstone County. Of course with the positives in the resale market new construction is experiencing a another stellar year and has seen a 55% year over year increase in single family permits which puts new construction just 10 permits shy of the record year of 2007.  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

When listening to the print media and the talking heads on television a lot of home price numbers have been thrown around, you hear Las Vegas going up 30% since last year and Phoenix 21% huge impressive numbers, but does a headline line number actually reflect what is going on in the market place. A quick comment about those two areas ,  a lot of foreclosed inventoried has been wholesaled out to hedge funds/ large investors so they do not show in the pricing sales data, where if they were on the “regular” market they would have a major impact on the inventory and sales prices in those markets.

So let’s move closer to home and look at Yellowstone County.  As long as I have been tracking the market I know you can tell the “truth” yet not accurately reflect what is transpiring in the market. I personally have tried to always show an accurate picture of the market, the Yellowstone county area is definitely on the upswing and prices are moving in a positive direction yet the question becomes what would represent an “accurate” number of price movement this year.

My perception is that you must take into account both size and mix of the homes being sold to find a reliable number to use, without accounting for the factors I just mentioned I could tell from Dec. 2012 to Jun. 7th 2013 the median price per square foot movement is 7.37% while that is “true” my belief it does not fully recognize the activity of the market place. When you take in to account the average sales price (up3.56%), the median sales price (up5.56%), the average sale price per square foot (up2.58%) and the median price per square foot (up7.37%). When taking those entire factors into consideration the market shows a solid and impressive 4.66% upward movement since the end of 2012.

One caveat that you want to take into consideration of automatically trying to translate on your house location and condition play a factor in determining the value of a particular piece of real estate so your may have gone up more or less or not at all such is the varieties of the market place.

I have Two charts below to show

#1 graph the moderate price mix of the market you can see the trends of lower percentage of the market

#2 graph the upper price mix of the market you see the trends of higher percentage of the market

New Construction Single Family Billings Montana compared to the Rest the United States

Lots of press talking about the resurgence of single family construction in the United States, while true looking from the bottom up, there has been definite movement in a positive direction. Yet to say nationally there is recovery I would venture that may be a wee bit of exaggeration. The numbers show from the bottom permits nationally have increased from 373,000 to 617,000 an upward movement of 75%, quite impressive, that is until you compare to peak and of 1,682,000 to the 617,000 then you have a drop that still exist of 63%. The question to ask yourself if you were making just 37% of your best year wages would you consider your situation “recovered”.  My belief is numbers are neither good nor bad they just are but to have knowledge you must have perspective so that you can make good decisions.

The first graph is what true recovery looks like. The single family permits issued in Billings Montana. 2007 was the peak in this cycle and you can see permits in Billings are basically recovered to that level. That I would suggest is recovery. The second graph shows single family permits nationally and I believe you can see visually that you would have a hard time saying when you compare the two graphs that nationally the single construction has “recovered”.

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!

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!