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At Home in Bozeman Real Estate Blog

Tim Hart


Displaying blog entries 1-10 of 452

Rural Mortgages Get Boost from CFPB

by Tim Hart

The Consumer Financial Protection Bureau, with changes to some current rules, will help buyers in rural areas get financed for home purchases. The CFPB made changes to its rules to increase the number of financial institutions that would be eligible to offer loans in rural areas. To do this, they broadened the definitions for lending as well as expanding the definition of a rural area.

The CFPB has expanded the definition of small creditor, raising the definition from 500 first-lien mortgage loans to 2,000, freeing up additional lenders to make rural loans.

They also expanded the definition of a rural area. They will now include all census blocks that are not in an urban area, whereas before, they had other credentials needed to classify a property as rural.

By broadening both definitions, more lenders will be able to loan and more rural buyers will qualify for financing.  Ideally, this will help entice more buyers into the housing market, further strengthening it as it recovers from the recession.




Off Leash Dog Park in Bozeman Progressing

by Tim Hart

Bozeman’s new off leash dog park has been progressing well and should be have a full, walkable loop by the start of winter. The loop should be completed by Halloween. As Bozeman’s west side continues to grow, adding another dog park will help keep Bozeman dogs happy and healthy.

Phase 1 of the park will consist of 13 acres. Run Dog Run, the non-proift heading the project broke ground in May and have been working on fundraising for the park since then. So far they have raised $30,000 for the park and received matching funds from the Land and Water Conservation fund.

The park will include trails, water and varied terrain. Ponds are slowly filling as workers excavated areas around the park. Next, workers will continue their work on the trail, replanting vegetation and fencing the park (it is off leash after all!).

Future plans include adding more intricate trails and adding a diving dock on one of the ponds.

With dog-related improvements throughout Bozeman over the past year, the city and county have really made a true effort to turn Bozeman into doggy paradise. Run Dog Run has helped start 4 off leash dog parks in Bozeman, including the recent 2-acre off-leash park at Rocky Creek Farm. The Gallatin Valley Land Trust also worked on improving and expanding Snowfill, the off-leash dog park north of town.




Fed Keeps Rates Near Zero, Mortgage Rates Fall

by Tim Hart

In light of the Federal Reserve’s decision to not raise the Federal funds rate, mortgage rates for a 30 year fixed rate mortgage fell to 3.86 percent this week.

The Federal Reserve continued to hold off on raising their interest rates, choosing to keep rates close to zero percent. The Fed attributed their lack of action to the lack of global growth that could potentially slow the domestic economy as well as the fact that inflation in the US remains subdued. The Fed committee also wanted to see additional evidence from the labor market to make sure it has and continues to improve.

The Fed made their decision 9-1 but they will meet again in late October and mid December. During those meetings, the Fed will once again decide on whether to raise rates. The Fed still plans on raising interest rates by the end of the year, but they have also said this for several previous years.

Currently, the Federal Reserve’s long-term goal is to have rates at or close to 3.5% by 2018.

Home buyers looking for a home loan will love the news that the Federal Reserve has not raised their rates as of yet. Mortgage rates are directly affected by the Federal Reserve rates and rise accordingly. Rates have stayed below 4% for 9 straight weeks. So long as the Fed does not raise rates, great financing opportunities still exist for buyers that might not be seen for some time. Having the Fed raise rates shows their confidence in overall economy, but from an individual buyer’s perspective, now is the time to lock in a great rate for the next 15 or 30 years.



Custom Home Building Increases

by Tim Hart

Custom Home building starts increased this year compared to 2013 and 2014 custom home start figures. Custom home starts are defined as homes built on an owner’s land, with either the owner or the builder acting as general contractor. The owner and builder have an agreement before the construction of a custom home.

Compared to other single family home starts, where the builder still needs to find a buyer for their home after completion, a custom home start can provide a builder with insurance that the home will sell while also providing a homebuyer the opportunity to customize each piece of the construction process to their liking.

From Quarter 2 of 2014 to Quarter 2 of 2015, 158,000 custom homes were started. From 2013 to 2014 of the same period, 146,000 custom homes were started. Having increased custom home starts implies that there are more homebuyers with more money in the housing market, looking for more than what the standard single-family spec home can provide. Many luxury buyers, instead of struggling through a long home search in the hopes of finding the perfect fit, move to custom building to get the amenities, style, floor plan and location they want in a home.

Interestingly, though custom home building has increased in the United States, its market share has dropped significantly since 2009. In 2009, 31.5% of all single family starts were custom homes. Now, only 23.1% are custom homes.

When looking at the time period, the decline makes sense. Builders at that time were highly competitive in a down market. Many builders would have been much more willing to build any type of home as they searched for enough work to keep their business afloat. Credit issues also made it hard for builders at that time to build homes without set buyers. Custom home building alleviated both, providing guaranteed work at a guaranteed price. 

On top of this, the market share has also declined because the single-family construction industry rebounded in general. Through much of the recession, single-family construction totals were much smaller, allowing custom homes (even if not growing themselves) to take a larger portion of the markets.

Growing custom home starts is just another small piece of evidence suggesting the United States housing market is rebounding and improving.






Foreign Investments on Record Pace in US Real Estate Market

by Tim Hart


Foreign investors have taken on the United States Real Estate Market in full force in 2015 thanks to an improving US economy and low interest rates.

According to the real estate services firm JLL, foreign investments totaled 24.1 billion dollars at mid-year compared to 23.6 billion for all of 2014. JLL only keeps track of transactions greater than 5 million dollars so some hotels and multi-family developments were excluded. The CoStar group, another commercial firm, has the total spent at nearly 39 billion.

Chinese investors have taken a large portion of the investor market. They accounted for 1.9 billion dollars in the second quarter of 2015. Many investors are looking for a safe place to keep their money while the Chinese economy has struggled and the US continues to have very low interest rates. Interestingly, instead of putting away money in large lavish personal residences as seen in other years, these investors have shifted towards more humble, income producing commercial and residential properties.

In 2014, 28% of foreign investment came from Chinese investors. They spent 104 billion in total in 2014. To put that in perspective, Canada came in second place at 11.2 billion spent.

So long as the US economy continues to strengthen and so long as interest rates remain low, it would be logical to expect foreign investment to hold true, if not increase. Foreign investment will help deepen the housing market overall. Domestic investors might not enjoy the increased competition, but having that competition can really help individual buyers and sellers sell and buy at a great price.




Trending Back to Buyer’s Market?

by Tim Hart

Although the US housing market is certainly still a seller’s market, their advantage might be slipping. Right now, low home inventory allows many sellers in markets across the US to negotiate much harder, knowing they have another potential buyer waiting in the wings. However, as more homes continue to come on the market and stay on the market for longer, buyers will see their bargaining power increase.

Normally towards August, both inventory and demand reach their peak. Then, once the school year starts, near-term buyers disappear as they look for solidity and routine in their daily lives. Most people don’t want to move in the midst of the school year, particularly if they have children.

However, this August, home inventory has continued to increase. Home inventory increased by 3% month-over-month. Having more homes on the market is great news for the housing market overall, but will also help balance the market, evening the footing between buyer and seller.

Homes also stayed on the market for 75 days on average. With more homes taking up more time on the market, buyers may have the ability to negotiate during a purchase more so than in previous years—and they might even be able to walk away to an equally appealing fit. Most sellers in the US, with some metro areas removed, don’t have a line of back up buyers in tow, making it harder for them to walk away from deals that don’t provide everything they’ve requested.




91% of US Homes Have Equity

by Tim Hart

After 759,000 properties regained equity in the second quarter, almost 45.9 million homes now have a higher property value than the remaining balance on their mortgage. In essence, 91% of US homes with mortgages now have equity—great news for the recovering US Housing Market.

At the end of 2014, 89% of US homes had equity, totaling 44.5 million homes.

Ninety five percent of mortgaged homes valued at 200k or more currently have equity. At the end of 2014, that number was at 94 percent of mortgaged homes.

Homeowners with lower home values struggled to get over the equity hump in comparison to those buying more expensive homes. But these homeowners also saw the biggest improvement over 2015. In 2014, 84% of buyers under 200k had equity in their home but in 2015, 87% now have equity.

Much of the country has recovered from negative equity issues seen during the recession. Five states alone contributed to nearly 32% of the negative equity seen in the entire US. Although terrible news for these specific states, the general outlook for the nation overall might be even more positive than these numbers suggest. The US states with the highest negative equity rate (% of mortgaged homes in state without equity) are Nevada (20.6%), Florida (18.5%), Arizona (15.4%), Rhode Island (13.8%) and Illinois (13.1%).

Montana was in the top 5 states for lowest percentage of negative equity homes. In March of this year, Montana had 97% of homes with mortgages in positive equity. Although certainly not major, that number has climbed to 97.2 percent.

If property values rise by an additional 4.7 percent, experts believe another 800,000 homeowners will have positive equity in their home by July 2016.




Commissioners Delay Vote on Affordable Housing Plan

by Tim Hart

I wanted to quickly apprise Bozeman locals and potential residents of the impending decision Bozeman Commissioners need to make regarding affordable housing. On Monday, Commissioners heard arguments from all sides on whether they should move forward with an inclusionary zoning proposal that would try to lower costs of home within Bozeman city limits.

Commissioners received solid opposition from members in both the real estate and building industries.  Both the Gallatin Association of Realtors and the Southwest Montana Building Association raised concerns about the new proposal. These two groups worried the proposal would set back a rebounding Bozeman housing market while also encouraging sprawl outside of city limits to avoid the new laws.

Even the HRDC, a proponent of inclusionary zoning, took issue with the fact that it only helped the most affluent families who still qualified for affordable housing. But, the HRDC did still support the proposal as it stood.

For now, commissioners have tabled a vote on the proposal, with no deadline for when it may reappear for a vote. As of now, the Bozeman housing market will carry on as it had been.




Element Hotel Takes on Growing Bozeman Tourism

by Tim Hart

With tourism spending in Montana close to $4 billion, with 662 million of those dollars being spent in the Gallatin County, its no wonder Bozeman has looked to take advantage of growing tourism in the area. After reports that hotels had their weekends booked through summer before the end of May, it makes sense that new hotels might try to grab some of the growing tourism market. This coming week, Bozeman will welcome a new hotel to its downtown—the Element hotel.

The Element will be 5 stories and have 104 rooms. It will be located on East Mendenhall, just a block from the vibrant downtown Bozeman district.

The hotel is part of a branch called the Starwood Resort Chain and will be the first LEED certified sustainable hotel in the state. Its sustainability, part of where the Element name came from, is the hotel’s claim to fame. It has been built with salvaged wood ceilings, recycled carpet and flooring made from reused tires. Starwood Resorts want to have all of their hotels reduce their water usage by 20% and carbon emissions by 30% by 2020. For this reason, single use toiletries and bottled waters will be replaced with more sustainable alternatives.

The hotel will employ 50 people, will have dog-friendly rooms and will also have free bikes to rent for its patrons. The hotel joins the Lark Motel and the Etha Hotel as recent hotel projects near downtown. The Etha is still under construction.

Yellowstone is on pace to break visitor records this year while the local skiing continues to garner a larger reputation and following. All the industries that focus on tourism, including the airport, have seen increased traffic. So long as more and more people continue to want to visit and experience Bozeman and Montana’s beauty, the city should expect to see tourist based businesses continue to grow in the area.





Average Single Family Home Requires 22 Subcontractors

by Tim Hart

When faced with putting down 200k plus for a new single family home, some buyers may wonder if their builder is walking away with huge profits. Although the builder may very well be making a good profit on the home, many buyers forget the organization and costs required to subcontract out the work needed to build the best home possible—tasks best done by experts in a specific industry. Buyers want to know that their home has been wired, plumbed and floored with the best of them, but having that guarantee does come with a higher price tag.

Builder’s use of subcontractors is clearly as strong as ever. Now, according to the National Association of Home Builders, builders hire (on average) 22 subcontractors to build a new, single family home. Not only that, 70 percent of homebuilders use at least 11 and sometimes use up to 30 subcontractors on a given home.

16% use 0 to 10 subcontractors

36% use 11 – 20 subcontractors

34% use 21 to 30 contractors

9% use 31 to 40 subcontractors

4% use 41 to 50 subcontractors

2% use 51+ subcontractors

Even if a builder does not subcontract a job on a specific home, he may subcontract that task on the next one. Two thirds of builders said they generally subcontract 75% of the construction costs in a build.

So for homebuyers, remember that homes, like many human inventions, have a lot more subtlety and work put into them than what first appears to the untrained eye. Although home costs appear high, sometimes those profits are split among a wide group of people. It is up to the builder to determine how those profits are split and how much help he needs to build a quality home, while remaining competitive in the housing market.





Displaying blog entries 1-10 of 452