MARKET UP DATE AT GLANCE COMMENTARY JANUARY 6TH 2010
2009 IS IN THE REAR VIEW MIRROR, SO LONG AND I DON’T THINK THE YEAR WILL BE MISSED. 2009 FROM THIS SIDE OF THE FENCE CAN BEST BE DESCRIBED AS A GRIND OUT YEAR ALL SALES TOOK MORE TIME AND ENERGY TO ACHIEVE MY CLIENTS GOALS. WHEN 2009 STARTED IT APPEARED THE WORLD WAS FALLING OFF A CLIFF, WHICH IT WAS, THE QUESTION WAS WOULD THE FALL STOP.
FROM THE HOUSING PERSPECTIVE IN YELLOWSTONE COUNTY I THINK THE MARKET BEHAVED REASONABLY WELL BASED ON THE FACTORS INVOLVED. AT THE START PEOPLE WITHDREW FROM THE MARKET PLACE IN DROVES, REASONABLE WHEN IT APPEARS THE ECONOMY MAY END AS WE KNEW IT AROUND THE GLOBE. LUCKILY WE LIVE IN YELLOWSTONE COUNTY SO WE WERE SPARED THE WORST OF THE STORM.
IN FEBRUARY THE FIRST TIME BUYERS CREDIT STARTED AND SINCE EMPLOYMENT WAS GOOD AND PRICES IN YELLOWSTONE COUNTY NEVER OUT STRIPPED WAGES, FIRST TIME BUYERS CAME INTO THE MARKET THROUGH OUT THE YEAR, IN SEPTEMBER AND OCTOBER IT WAS A RUSH TO WHAT WE ALL THOUGHT WOULD BE THE FINISH LINE OF THE TAX CREDIT. BUT THE POLITICIANS FOOLED US. BEFORE THE END OF THE YEAR THEY EXTENDED AND EXPANDED THE TAX CREDITS TO HOUSING, SO IT BRIGHTENS THE OUT LOOK FOR THE BEGINNING OF 2010, MORE ON THAT LATER. THE BIGGEST INTERVENTION INTO HOUSING BY THE GOVERNMENT WAS ACTUALLY NOT THE TAX CREDIT BUT THE FEDERAL RESERVE BUYING MORTGAGES FROM FANNIE MAE AND FREDDIE MAC. Just SO YOU KNOW AS A TAXPAYER YOU CONTRIBUTED ABOUT 49% OF EVERY DOLLAR LENT IN 2009 TO HOME BORROWERS. IN TOTAL IF YOU COUNT ALL THE SUPPORT that WAS GIVEN TO HOUSING IT TOTALS ABOUT 2 TRILLION DOLLARS NOT A FIGURE YOU’RE LIKELY TO SEE IN 2010.
SO WHAT CLOUDS CAN WE PART AND SEE THE HOUSING MARKET IN 2010.
I WILL USE MY STANDARD DISCLAIMER ABOUT PROGNOSTICATIONS “IF I COULD ACCURATELY SEE THE FUTURE I WOULD BE RICHER THAN BILL GATES AND YOU WOULD NOT BE RECEIVING THIS FROM ME.” That BEING SAID HERE WE GO.
FIRST LETS LOOK AT CONSTRUCTION, CONSTRUCTION OF HOMES IS DRIVEN BY FIRST AND FOREMOST JOBS. ALTHOUGH YELLOWSTONE COUNTY IS FORTUNATE UNEMPLOYMENT IS ONLY 4.8% YELLOWSTONE COUNTY HAS 3804 FEWER PEOPLE EMPLOYED THAN THE PEAK OF EMPLOYMENT IN AUGUST OF 2007 WITH that IN MIND THE HOME CONSTRUCTION BUSINESS WILL PROBABLY SETTLE WHERE IT HAS BEEN IN THE LAST TWO YEARS ABOUT 250 SINGLE FAMILY HOMES IN 2010. that NUMBER IS ABOUT 200 HOMES LESS THAN BEFORE THE DOWN TURN AND 350 LESS THAN THE PEAK. ALTHOUGH YELLOWSTONE COUNTY CONTINUES TO GROW SLOWLY IN POPULATION IT IS JOBS that DRIVES NEW CONSTRUCTION.
EXISTING HOMES ACTUALLY ENDED THE YEAR UP 13 UNITS FROM 2008 that WAS DRIVEN ENTIRELY BY THE TAX CREDIT. IN 2010 WE HAVE NOT ONLY THE FIRST TIME BUYER CREDIT WE ALSO HAVE THE EXISTING HOME BUYER CREDIT FOR THOSE WHO HAVE LIVED IN THEIR HOME FOR AT LEAST 5 OF THE LAST 8 YEARS. THESE TWO FACTORS COMBINED WITH THE FEDERAL RESERVES COMMITMENT TO CONTINUE BUYING MORTGAGES THOROUGH MARCH OF 2010 SHOULD PROPEL HOUSING INTO THE NEW YEAR WITH A FAIRLY SUBSTANTIAL PUSH.
That WILL MEAN PRICES SHOULD BE STABLE WITH NO DOWNWARD PRESSURE FROM FORECLOSURES AND, AT LEAST IN THE FIRST FOUR MONTHS OF THE YEAR, ENOUGH DEMAND TO BALANCE WITH INVENTORY.
WITH ALL PROGRAMS WHEN YOU PUSH ON ONE SIDE, SOMETHING MOVES ELSEWHERE, THIS IS ALSO TRUE IN HOUSING AND WITH THE POSITIVE SALES SIDE IT HAS CREATED A SOFTER RENTAL MARKET. THE AVERAGE ASKING PRICE FOR AN APARTMENT IN YELLOWSTONE COUNTY DECLINED 1% YET AVAILABILITY INCREASED BY 33% SO WE SHOULD EXPECT SOFTNESS IN THE PRICING ARENA FOR RENTALS FOR MOST OF 2010 UNTIL THE EFFECTS OF THE TAX CREDITS WEAR OFF IN THE SALES MARKET.
MY BELIEF IS 2010 WILL BE MORE STABLE THAN 2009 YET THE RESULTS BY THE END OF THE YEAR WILL MOST PROBABLY BE VERY CLOSE TO 2009 IN TERMS OF SALES YET MORE STABLE PRICING THROUGHOUT THE YEAR
HERE’S TO WISHING NOTHING BUT THE BEST IN 2010!!!!!!!!!!!!!.