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 30TH 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 1ST 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 30TH 2010  AND GET THEM BUILT TO CLOSE BEFORE JUNE 30TH 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. 

 

 

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