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Home Buyers Paid Larger Down Payments in 2014

by Tim Hart

The average home buyer had more capital to put down on a home in 2014, according to an analysis of nearly 20 million home sales. The average down payment made by home buyers in the United States was $58,496. On average, buyers were able to put down 15.4% of the purchase price. Having buyers across the country with more money to put down in 2014 shows the positive turn both the economy and housing market have taken in the past few years.

The average down payment has been between 13 and 15% over the past decade and only 2013 and 2014 have risen above that standard.  

Only a quarter of home buyers with conventional loans put down less than 3% on their home. That same number was nearly at 37% in 2006, just before the housing crisis. Most of the buyers putting little money down in 2014 were first time home buyers.  The average sale price on homes receiving less than a 3% down payment was $190,304.

When buyers have more money to spend, that’s great news for everyone involved in the housing market. Buyers can manage their mortgage payments easier while sellers can sometimes get higher prices. Healthy activity from both sides will lead to a normalized growing market, shielding buyers and sellers from the pitfalls of a volatile market.

 

 

Source: http://realtormag.realtor.org/daily-news/2015/02/19/home-buyers-put-down-more-money-in-2014

Builders Address Bozeman Home Affordability

by Tim Hart

Local Bozeman builders have tried to come up with viable solutions to the affordable housing scenario in Bozeman. Although more building permits have been issued in the last few years, many of these homes are aiming at prices above $300,000 (read some stats on 2014 single family residence homes here). As the Gallatin County has seen high economic prosperity, home prices have gone up as local buyers find themselves able to buy more expensive homes. However, several local builders have tried to come up with designs that would be both affordable and useful to future buyers.

One design has called for a 2 story economy home. The 2 bedroom, 2 bathroom home would be 1,336 square feet and would come with a garage. The home design would sell on average for around $220,000.

Another design would build 720 square foot dwellings with a single bedroom and a flex space area. For this design, the builders would be able to put multiple units on a single lot and the homes would sell for $198,000 each.

Unfortunately, current city set back requirements would need to be changed to make either option possible.  A set back is the space between the home and the lot edge. Current set backs are designed to allow adequate privacy to residents while providing access for repair vehicles and equipment.

The city commission has set a May deadline for builders to brainstorm potential solutions before they move forward on the Bozeman affordable housing issue. In late February, the city postponed a potential zoning change that would require builders to build homes at certain price points on some of their lots. The city has also tried to raise home inventory and looked into lowering impact fees to lower prices. Builders will also want to decide if the options are viable – based on buyer interest in these models. Without a consistent market of buyers, homebuilders would have to take on serious financial risk building these homes. 

 

Source: http://www.bozemandailychronicle.com/news/city/builders-pitch-affordable-housing-options-for-bozeman/article_9c26f373-ba0b-5742-b250-d9f4a45b99c8.html?utm_medium=desktop&utm_source=block_647669&utm_campaign=blox

 

Mortgages Rates Rising, Still Below 4 Percent In March

by Tim Hart

Mortgage rates in the United States have fluctuated over the last few weeks, but with a general upwards trend. Homebuyers will want to keep their eyes on the mortgage rates over the next few weeks to see if they continue to remain low. If they do not, home buyers may want to speak with lenders sooner as oppose to later, to lock in a more favorable loan.

30 year fixed rate mortgages returned to the start of year averages (to see January rates click here). A 30 year fixed rate mortgage gave a 3.86% interest rate in the week ending March 14th. The rate has risen from the 3.8% in late February. The rates had dropped in the first week of March to 3.75% but have now risen again. Although the rates are going up, they are all well below the 4.37% interest rate given in March of last year.

Since October, interest rates have not really risen above 4 percent, minus a couple of weeks. Coupled with the FHA lowering mortgage insurance rates, its no wonder buyers took out more mortgages in 2014 than years previous.

The 15 year fixed rate mortgage rate rose to 3.1% from 3.03% last week. In October 2014, 3.08% was the lowest the rate had fallen since 2013. Since then, it has remained pretty steady.

As mortgages rise, homebuyers will want to be aware that their buying power will be diminished. Of course, the rates are very low in general so there will still be mortgages available for most buyers. However, for buyers walking the line between buying and renting, the current low rates may be needed to get loan approval.

 

Source: http://realtormag.realtor.org/daily-news/2015/03/06/mortgage-rates-drop-near-2013-lows

http://realtormag.realtor.org/daily-news/2015/02/27/mortgage-rates-continue-move-up

http://realtormag.realtor.org/daily-news/2015/03/13/mortgage-rates-edge-higher-week

 

More Mortgages Taken Out in 2014

by Tim Hart

According to Federal Reserve Bank of New York’s Household Debt and Credit Report, outstanding mortgage debt rose a good deal in 2014 and should continue to do the same in 2015. When the mortgage debt rises, it usually does not mean that people with mortgages are getting into worse debt or aren’t paying their bills. Instead, the numbers reflect the total number of people taking out mortgages across the United States. When people take out more mortgages, it shows they, and the economy alike, have seen more prosperity in recent years—the best sign for any market, housing or otherwise.

Total household debt rose by 306 billion or 2.7% from the 4th quarter of 2013 to the 4th quarter of 2014. At the end of 2014, Americans had 11.8 trillion dollars in outstanding household debt. After 4 straight years of decline from 2009 to 2012, 2014 marks the second consecutive year of growth.

Clearly, more buyers are coming to the negotiating table, whether they’ve seen rising wages, are tired of renting in high cost markets, or want to take advantage of low mortgage rates. Mortgage originators are expecting to see increased business in 2015, specifically from first time buyers who now feel within their capability to purchase a home.

 

Source: http://eyeonhousing.org/2015/02/mortgages-rise-in-2014-should-increase-further-in-2015/

 

Bozeman Building Still Booming

by Tim Hart

According to the Department of Community Development’s Annual Report, Bozeman has seen a huge spike in building permits over the past two years.

639 single-family resident permits were filed in Bozeman in the last two years. That number is more than 2008 to 2011 combined. 40 duplex permits were filed in 2014. 44 were filed from 2009 to 2013. 27 triplex permits were filed in 2014. 18 were filed from 2008 to 2013.

The report has shown most of the growth on the western end of town but growth is also present to the south as well. Bozeman Deaconess Hospital, among their other construction projects, may soon be developing the open space acreage around them. Preliminary plans include 300 homes with park and wetland additions.

When seeing numbers like this, its hard to say Bozeman is not doing enough to keep up with their lack of home inventory. As both home prices and rental prices have gone up and vacancies for both have gone down, its clear the builders are working as hard as ever to get people into homes in Bozeman. Whether they will be able to keep up with Bozeman’s growing reputation and tourism numbers is to be seen.

 

Source: http://www.kbzk.com/story/28186330/bozeman-building-boom-spreads-in-all-directions

http://www.bozeman.net/Smarty/files/dd/dd78ab4b-2733-4d86-af27-5a5ce25a2f10.pdf

 

 

Gallatin County Leading All Montana Counties in Economic Growth

by Tim Hart

Gallatin County has lead all Montana counties in economic growth in the past few years, according to a recent economic outlook presentation by the University of Montana. Already one of the fastest growing counties population wise, the county has seen growth in wages, tourism, manufacturing, energy and housing markets, suggesting a solid economic outlook for the county as a whole.

The county posted the highest real wage growth in the state from 2013 to 2014. Growing wages help all economic industries move in a positive direction because people have more ability to extend their checkbook into industries they may not have been a part of before.

For the housing industry, higher wages help push first time homebuyers over the edge into the buy side of the housing market as oppose to the rent side. The housing market in Gallatin County saw growth and has been projected to continue growing. 2014 real estate numbers confirm this growth.

However, the report showed the state may also be struggling with similar housing issues that Gallatin County has seen in the past. The lack of affordable houses and the lack of first time homebuyers in Montana continues to hold back the housing market from its fullest potential. Economists have been baffled by the lack of home purchases being made by the millennial generation throughout the US, though they have predicted a sharp rise in their presence on the housing market soon.

Gallatin County has struggled with a lack of home inventory and high rental prices due to the large influx of MSU students, creating a great situation for those already with homes or investment properties, but leaving little homes available for purchase. But on the positive side, sales have been steady and construction in the area has rebounded since 2008.

Tourism spending in the Gallatin County was nothing short of spectacular. The county made up nearly half of all non-resident dollars in the state, totaling more than 666 million dollars. Those numbers come from 2012 to 2013. Perhaps, Gallatin County's access to public lands has been the driving factor for the high tourism numbers. Yellowstone and the local state parks have both seen rises in attendance since then and a few new hotels have also moved into the area. As more people visit Montana, more of them will also stay in Montana—a positive omen for real estate in the Gallatin County.

 

Source: http://www.bozemandailychronicle.com/news/economy/statewide-economic-report-shows-gallatin-out-in-front/article_015fdaf6-c125-5fcb-891b-d99283be09e2.html

 

Home Rent Lower in Areas Surrounding Bozeman

by Tim Hart

I read a great article in the Bozeman Daily Chronicle today and I wanted to pass along some interesting numbers regarding rentals in the city limits of Bozeman compared to those outside of it. Long story short—it will be cheaper to rent outside of Bozeman compared to inside it.

The numbers were acquired by the Bozeman Daily Chronicle and they explain how they found them below:

 

“The numbers included in this analysis are based on 114 rental advertisements posted to Bozeman Craigslist between Feb. 1 and Feb.16, as well as classified ads placed in the Chronicle’s Sunday edition Feb. 15. Postings advertising individual rooms for rent, as well as most duplicate postings, were excluded.”

 

According to these numbers, the median per bedroom monthly price of a rental unit was $513. For Belgrade, Livingston, Four Corners and Gallatin Gateway, the median bedroom rent was $450. That totals a $756 dollar/year difference in renting in Bozeman compared to out of Bozeman.

For a 3 bedroom unit, the average rent in Bozeman was $1,300 a month compared to 1,200 a month elsewhere. When comparing median home prices between Bozeman and Belgrade, $325,350 and $223,000 respectively, Bozeman actually comes off well in terms of their direct proportion of cost to rent. From an investment perspective, it leads one to believe that higher profit margins may be had in the Belgrade rental market.

But don’t go buying up all the homes in Belgrade quite yet, because here is a great fact that shows how quickly Bozeman rent has climbed in the last years. Only last summer in Bozeman, a 3 bedroom unit cost around $950 a month--$450 less than current rental rates. For six months, that is an exceptional difference. If an investor can find a good deal on a home, the increasing rental rate could really change his/her fortunes.

For renters, however, Bozeman still remains a tough rental market. However, the city continues adding home inventory, making subdivisions and creating affordable housing to address the issue.

 

Source: http://www.bozemandailychronicle.com/news/city/rent-too-high-look-outside-bozeman-city-limits/article_66ac83ed-200a-5cef-b375-2c32a8468050.html?utm_medium=desktop&utm_source=block_683269&utm_campaign=blox

In a report released by a local research group, Prospera Business Network, Bozeman is barely above the average cost of living of the national average in 2014. According to Prospera Business Network, Bozeman scored a 100.8 index cost of living score—or in other words, they were 0.8% above the average.

The data was drawn from an unweighted average from the first three quarters of 2014 from 281 participating towns and cities. The report took data from six categories—housing, utilities, grocery items, transportation, health care and miscellaneous goods and services. The report also broke down the cost of living by each category—something both home buyers and real estate agents may find more useful.

Housing: Bozeman scored an index score of 113.2, meaning houses cost 13.2% higher than the national average for 2014. This has both positive and negative elements. The negative is obvious—home prices are higher so it will cost a bit more to live in Bozeman than in other places. The positives lie in the implications of having higher prices. First, Bozeman has recovered faster from the housing recession than a majority of US towns. Second, Bozeman is attracting higher paying jobs that bring higher prices than the majority of the US. Third, Bozeman buyer demand has noticeably increased which has driven up home prices, showing just how marketable Bozeman has become. The outdoor aspects of Bozeman, its arts and culture and its reputation as an easy to live in town continue to draw interest from visitors.

The report released some interesting numbers as well. The average home price for a 2,400 square foot home on an 8,000 square foot lot in Bozeman was $353,777. The average monthly rent for a 950 square foot home in Bozeman was $917 a month. Those rent prices sure explain why renting has become so difficult in Bozeman.

Minus groceries and health care, Bozeman scored below the national average.

Transportation: 7.5% below national average

Utilities: 12% below national average

Misc. Goods and Services – 3.9% below national average.

Groceries – 2% above national average.

Health Care – 5.9% above national average.

Compared to some cities in the US, Bozeman is extremely affordable. Bozeman’s score of 100.8 looks pretty good compared to San Francisco, 303.9, and Manhattan, NY 439.5.

Here is a list of other cities in the survey that represented costs of living above and below Bozeman’s cost of living.

2014  Annual Average Cost of Living Index
  Composite Score Grocery Items Housing Utilities Transportation Health Goods & Services
 
City
 
San Francisco, CA 167.5 123.5 303.8 101.5 110.5 119 116.5
Grand Junction, CO 97.4 94.7 101.7 85.1 102.2 104.8 96
Twin Falls, ID 91.8 90.8 79 91.5 110.1 93.2 96.4
Bozeman, MT  100.8 102 113.2 88 92.5  105.9 96.1
Manhattan, NY 222.6 135.2 439.5 136.6 125.3 112.4 150.8
 
Portland, OR 125.1 114.4 160.9 90.8 111.7 114.3 116.2
Pierre, SD 102.3 111.3 113.5 89.9 91 95 97.7
Harlingen, TX 81.4 86.1 69.9 96.4 87.7 97.8 80
 
Cedar City, UT 89 98.7 76.1 86.5 96.6 88.3 94.1
Olympia, WA 101.1 102.7 99.2 83.6 113.5 122.2 100.9

 

 

Source: https://www.prosperabusinessnetwork.org/bozeman-cost-living

 

Streamline Bus System Hits 2 Million Riders

by Tim Hart

The Streamline Bus System had its 2 millionth rider last week—a noteworthy benchmark for the Gallatin Valley public transportation system. The busses have served its greater Bozeman area residents  for eight years and by breaking the 2 million rider mark has confirmed the Gallatin’s increased use and need of the bus system.

Over the first 5 years, Streamline reached the million rider mark. However, it only took 3 years and 3 months to serve the second million. Not only does this show the growth of the Gallatin Valley in general, but it also shows the increasing popularity of the valley’s bus system. Last year, Streamline served 330,000 riders.

Streamline busses help Bozeman become more than just a “car only” town. The city has focused on keeping itself affordable for all types of people. Streamline helps those who want to live in the area without owning a car by offering them a form of public transport that had not really existed previously.

However, Streamline serves many people who have their own methods of transportation as well. 40 percent of Streamline riders own a vehicle. By keeping these people’s cars off the roads, the bus system has helped lower traffic and traffic emissions around Bozeman.

The streamline takes care of some “Bozeman wants”, in addition to the “Bozeman needs.” For example, the Streamline does go up to Bridger while its Big Sky brother the Skyline offers trips up to Big Sky resort.

As Bozeman and the surrounding area grows, it will be more important to have the necessary infrastructures in place. Bozeman has turned its attention towards its rental vacancy concerns and the prospect of a increasing internet speeds in the area. Hopefully, those issues will be addressed as soundly as public transportation was when they enacted the Streamline 8 years ago.

 

 

Source: http://www.bozemandailychronicle.com/news/city/streamline-hits-millionth-rider-mark/article_4ca09561-d97d-5fac-ad0c-a394d6b18a83.html

 

More Buyers Returning to Home Search

by Tim Hart

Reports from builders and real estate agents have suggested that buyer demand should see a sizeable increase for this year. According to Redfin, home tour demand reached an all time high last week, up 62% from 2014.  Redfin real estate agents also reported that accepted contracts rose 58% compared to last year.

Low mortgage rates and low down payments may be what is getting home buyers to start their home search. Many millenials who had not been as financially “ready” to buy a home or were waiting to be able to afford the type of home they wanted, have seen their loan eligibility increase significantly. In addition, as wages have grown and the labor market has strengthened, many of these buyers have seen themselves rise to higher levels of wealth. Some buyers have moved into home buying due to the lack of rentals or high priced rentals in their area.

Redfin reported 57% of home tours taken were by first time home buyers in the week of January 12. That ratio was much higher in comparison to the 48% share these buyers held in the same week last year.

Builders have also found increased traffic, helping them cautiously increase the home inventory in the states. Having additional houses will help keep prices down, hopefully continuing to attract more home buyers on the fence.

 

Source: http://realtormag.realtor.org/daily-news/2015/01/28/more-buyers-in-house-hunting-mode

Displaying blog entries 1-10 of 122