Real Estate Information Archive


Displaying blog entries 1-10 of 142

Land off Stucky Road Considered for Annexation

by Tim Hart

Bozeman City Commissioners will vote next Monday on whether to annex a piece of land off Stucky Road in order to zone it for apartment style residences. The commission has seen several bids to annex additional land into the city in the last year. Bozeman continues to find ways to add additional home inventory to keep home values reasonable.

The land off Stucky is currently set for agricultural use and nearby farms are concerned about adding more residential lots on high quality, useable soil. Both farmers and developers made their pleas to the City Zoning Commission and though the zoning commission voted 2-1 against rezoning the parcel, the decision ultimately rests with City Commisioners.

Bozeman continues to search for land and strategies to help keep the real estate in the Gallatin Valley affordable. The city has looked at narrowing lots and has given a high number of building permits to increase inventory. Bozeman will need to strike a healthy balance between keeping prices reasonable and growing in a healthy, planned out manner.




United States Foreclosure Numbers Keep Dropping

by Tim Hart

The total foreclosed on homes has dropped to its lowest level since December 2007 according to CoreLogic’s May 2015 National Foreclosure Report. The report states that the number of foreclosures nationwide dropped to 41,000 in May. Today’s foreclosure totals are now 65% lower than the number of completed foreclosures in 2010.

The report continues a similar trend reported early in the year, when foreclosures fell by 27% in February and completed foreclosures fell by 15% year over year. 

Mortgages also have seen big drops in delinquent payments. Mortgages in serious delinquency—or mortgages that are 90 days or more overdue—dropped by 23% in May based on year-over-year totals. Currently, 1.3 million mortgages are delinquent. Sounds big—but that 3.5% rate is the lowest seen since January of 2008.

Having both lower foreclosure totals and less delinquent payments reflect positively on the current housing market and overall United States economic outlook. As more people have found consistent jobs and as housing prices have recovered and provided equity to many homeowners, foreclosures and delinquent mortgages have gone down. Having less people defaulting on their loans will create a more balanced, deeper, less volatile housing market—something buyers and sellers alike can benefit from.




According to a study by Realty Trac, 66% of housing markets in the United States provide cheaper monthly payments when buying a home compared to renting a home. Coupled with the fact that buying provides additional benefits that renting does not, if the two are even close, buying will be a better financial decision. Having rent actually cost more makes it a no brainer for anyone who has a down payment and qualifies for a loan to buy a home rather than rent a home.

The study looked at 285 counties in the United States. Of the counties surveyed, 188 of them reported higher rent rates than mortgage rates. Not only that, the study included insurance and property tax payments on the “buy side,” yet renting still remains the more expensive across the US.

The study based their findings on the percent of total wage a person used to either rent or pay off their mortgage. Renters used  29.96% of their income, while buyers used 29% while still building equity in their home. The study also found that 13 counties that were cheaper to rent in 2014, had shifted over to cheaper to buy in 2015.




New Mixed-Use Property to Add Home Inventory in Bozeman

by Tim Hart

A new Mixed-Use Property is slated to be built to the North of Bozeman’s Main Street. The building will have both commercial and residential spaces and will span nearly a full city block. The building should help with Bozeman’s low home and rental inventory that has lead to high rental rates and home values.

In order to build the new development, 8 older rental units will need to be demolished. Of the 8, three are uninhabitable during the winter while others have repair costs too high to make renting feasible.

The building itself will be 5 stories with a ground floor reserved for new businesses. The other stories will house the 41 residential units. The building will be located on N Lamme between Grand and Third.

This project, ideally, will help lower both apartment values and rental rates by adding additional home inventory to the Bozeman Montana housing market. 9 units will be made affordable even to residents only making 80% of Bozeman’s median income. While rental rates remain lower outside of Bozeman, this project will offer additional units to help lower rates within the city itself.

The City of Bozeman has focused on finding methods to lower housing costs. They have already given a no to a proposal to lower park requirements but have considered allowing smaller lots for denser neighborhoods. The City has also worked hard at alleviating the affordable housing issue by increasing inventory, whether through apartment buildings or new subdivisions. This project falls in line with the latter strategy.




Both mortgage rates and loan applications have seen big up and down swings over the first few weeks of July.

Earlier in the month, mortgage interest rates fell and continued to be on a downward trend. On July 10th, the rates fell to 4.04 percent. However, the past weeks since then have given a sense that mortgage rates may once again be trending up. This week, mortgage rates hit their highest level since October of 2014—hitting 4.09% this week. For now, its clear that at the very least, mortgage rates have been volatile and should be watched closely over the follow weeks to get a better sense of where they may be heading.

According to the sources listed below, events and turmoil in both China and Greece directly affected yields on US Treasury Securities. Rates rose during this time, but the Fed may still hold back from raising interest rates in light of turmoil abroad.

Mortgage applications have also been volatile as buyers have mirrored interest rates closesly. In a July 8th article, mortgage applications had risen 4.6% on a seasonally adjusted basis but by July 10th, those numbers had already fallen by 1.9% again. On the bright side, although the numbers may be volatile in 2015, total mortgage volume still remains 22% higher than a year ago and total home purchase volume is up by 17 percent.

Any buyer looking at homes right now will want to keep a good watch over mortgage rates so s/he can take advantage of the lowest available rates. They seem to be moving up and down quickly—so buyers will want to make sure they don’t settle for a loan with higher rates than average.






I read a great article by Troy Carter of the Bozeman Chronicle, detailing the effects of the exempt well ruling on Gallatin County growth. In mid-October of last year, a county judge ruled that subdivisions pumping over 10 acre feet of water per year would need to apply for a water rights permit. Before the ruling, subdivisions could pump up to 1,000 acre-feet of water without a permit, while farmers and ranchers using the same amount needed a permit.

The article details how the well ruling has affected development in Gallatin County since its inception. Many people have been worried it will affect growth in the area. So far, it has been difficult to tell whether the ruling will affect subdivision growth moving forward.

According to the Department of Natural Resources and Conservation Water Resources Division, nearly 100 subdivisions have applied for approval since the ruling. If a subdivision stays under 10 acre-feet of water per year, then no further action is needed to drill. According to the DRNC, a vast majority of subdivisions have stayed under this threshold. From this perspective, it appears the ruling has done little to curb growth.

However, other evidence suggests that changes may be coming. This year through June, 53 wells were reported whereas last year there were 57 and 70 in 2013. In addition, some well experts are worried that the ruling will raise land values. Because subdivisions have to use less water per home, they would put less homes on a parcel of land. Whereas ten homes may have shared the water before, now only a few may be able to. Not only would there be less home inventory on the market, homebuyers may have to buy larger segments of land as well—both of which would raise prices, potentially slowing development.

The ruling may also just affect how people live in Montana but not the overall growth. The ruling could potentially lead to more urbanization as developers move towards hooking up to city water, rather than having to jump through the hoops of attaining water rights.

Currently there are 18,000+ wells in the Gallatin Valley with 12,500 of them labeled as domestic wells.

Moving forward, it will be very interesting to see how this ruling affects subdivision development and overall growth in Bozeman, the Gallatin Valley and Montana overall.




Energy Investments Protect Earth, Not Wallets

by Tim Hart

According to a new study done by the University of Chicago, energy efficiency upgrades still keep the planet green, but probably won’t put too much green back into your pocket.

The University set up a controlled trial of 30,000 households in Michigan, telling ¼ of them to make residential energy efficiency upgrades (with assistance) and compared their energy savings to those who did not upgrade. Households were provided $5,000 in weatherization upgrades (furnace replacement, attic and wall insulation, and weather stripping). Unfortunately, the cost of putting these upgrades into place was nearly double the difference in their energy costs. Although energy consumption fell by a noticeable 10 to 20%, the upgrades only translated into $2,400 in savings over the life of the upgrades—less than half of the costs to input them.

Of course, from an environmental standpoint, such upgrades are still a big win. But its portrayal as a “double-win” as the University of Chicago calls it, is unfounded.

From a real estate perspective, particularly real estate sales, having a green home can still do a lot to attract a buyer to your home over someone else’s non-efficient home. But the direct ‘bottom-line’ approach shows that the investment is not giving as much return as advertised.




Bozeman City Commissioners rejected the proposal by Bozeman area builders to lighten parkland requirements to make homes more affordable. They city remained open to the idea of lowering lot size requirements to increase inventory and lower prices of homes in Bozeman.

Bozeman builders were asked by City Commissioners to come up with several proposals in mid March to lower the prices of homes in the area. Despite high permit requests, new construction has not alleviated rising home values. Builders pushed for less mandated parkland in new subdivisions—a request, they believed would help lower prices while keeping their jobs affordable and feasible. City code currently specifies that 0.3 acres be set aside as parkland for each dwelling unit in new subdivisions. Builders believe that not being able to use this land has been a major cost driver for home values because there are less total homes available in Bozeman. Their proposal was denied outright by the city.

They came with another alternative as well, one that is still being considered by commissioners—lowering lot size requirements. Current minimum lot size is set 5,000 sq. ft. but builders want this lowered to 2,000 sq. ft. Again, this would be to raise home inventory, and having more homes would lower existing prices based on competition.

Other proposals included subsidizing impact fees and improving down payment assistance programs, but both would need public funds and much more deliberation to be considered.

The city was open to lowering their lot sizes, but they did not decide on what size they would be comfortable with moving forward. The city has also looked into adding more “pocket neighborhoods,” based on how their experiment in the Lakes at Valley West is received. When the decision comes from commissioners on how they will tackle affordability, it will be a major decision that affects home building, home prices, and the overall Bozeman real estate market for years to come.





As many local Bozeman residents have surely figured out, a new apartment complex will be coming to the MSU area, south of the football stadium, to help ease the rental vacancy issues in Bozeman. Bozeman has been attracting more and more new residents of late as it has become one of the nation's most liveable towns. Both the local public schools and MSU have seen increased enrollments--also putting strain on the rental market. The apartments will add nearly 500 renters, but whether that will make any major changes to the overall market are yet to be seen.

According to the Bozeman Daily Chronicle, 3,200 additional renters have been added to the Bozeman market since 2010, assuming half of the new non-student residents are renting and not buying. If this is the case, and with 888 new apartments and 371 multi-family units built since 2010, the Bozeman Chronicle believes that Bozeman is still short on rental inventory.

Bozeman has been working with consultants, builders and Montana State University to help ease the high costs of renting in the area. Nationally, renters have been struggling with affordability issues as well as vacancy issues and Bozeman has seen similar concerns. The surrounding areas of Bozeman have provided residents with some respite, offering better rental prices.

Bozeman has been adding more inventory through new apartments and in some cases new subdivisions to help keep prices manageable. The apartment complex is another effort to help create a more positive rental market in the future.



Retirees Keeping Their Mortgages in Higher Numbers

by Tim Hart

Some retirees are opting to keep their mortgages instead of using their retirement funds to cash out and have full ownership over their home. Why? Well for now, stock market returns and low interest mortgage rates might make it more financially advantageous for a retiree to keep their money in these investments. More often than not in the past, retirees with an active loan would use a piece of their retirement plan to pay off their premium no longer owe anything on their home.

However, with high capital returns from the stocks and bond market, coupled with the fact that mortgage rates are some of the lowest seen in history, investment returns from other markets have actually been greater for many even with their mortgage payments subtracted out.

Improved health care and life expectancy has also affected this trend. Where many retirees preferred a low risk investment in the past, a lot of people now potentially see decades of life ahead of them and are still willing to take some financial risks.

Interestingly, 64% of retirees said they would also probably move at least once after retirement. Assuming it’s not an all cash deal, many of these retirees would be applying for another mortgage post retirement. Not only that, 30% of them actually said they would be looking for a larger home, rather than downsizing.

As mortgage rates rise, this financial path’s viability will need to be re-evaluated. The stock market does hold more volatility and risk—so even in a positive market like this, there is no guarantee of reward. However, more retirees have gone through this process, evaluated their financial situation and chosen to incorporate more risk—showing a marked shift in how many people have been approaching their retirement of late.




Displaying blog entries 1-10 of 142