Real Estate Information Archive


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Jumbo Loan Market Still Booming in 2015

by Tim Hart

The US Jumbo Loan market continues to perform extremely well in 2015 after an already wonderful 2014. A jumbo loan is any loan where more than $417,000 is borrowed for a home purchase. In high priced markets, jumbo loans are not counted until someone borrows $625,000.

In 2014, jumbo loans took 19% of the total mortgage market, which had not been seen since 2002. In 2015, that number has risen to 20%. Even more enlightening, after only taking 1% more market share for total mortgages, jumbo loans took 36% more dollar volume than in 2014, reaching 160 billion in the first half of the year. Among other things, that difference in dollar volume really highlights how much stronger the overall housing market has become in the past few years. Home values continue to rise across much of the US, raising the average dollar spent on each loan taken out.

The Federal Reserve did not raise their interest rates in the first half of the year as many experts predicted, and high-end borrowers took advantage of low rates to refinance their home. But when the Fed ultimately raises the rates, its not expected to seriously hamper the jumbo loan market because most jumbo borrowers have significant assets and cash reserves.

Jumbo loans never dipped below conforming loans as they did last year, suggesting it was more than just low rates that have been re-attracting jumbo borrowers to the housing market.

So far in 2015, rates hit their lowest in April at 3.82% and their highest in June at 4.15 percent.




Total Home Values Up in the US

by Tim Hart

The total value of all homes in the United States grew for a third straight year according to The total value of all homes in 2014 reached 27.5 trillion dollars, up 1.8 trillion from 2013.

In 2013, home values had grown up to 25.7 trillion, up 1.9 trillion from 2012. From 2012 to 2013, home values rose by 7.9 percent. From 2013 to 2014, home values rose by 6.7 percent.

Between 2007 and 2011, home values had lost nearly 6.3 trillion. The attached graph indicates the new growth in comparison with the recession (updated through 2013). With 2014’s continued growth, the graph reveals a positive trend.

The value of homes is increasing, whether it’s through a rising inventory of new homes or prices themselves are going up (though probably both). So long as growth can remain consistent overall, the housing market should continue stabilizing and improving.



NYU Buys Two Buildings at $1,000 a Foot

by Tim Hart

If you thought real estate prices were soaring in the greater Bozeman area, at least you can hang your hat on the fact that New York City will always set the standard for high prices. New York University paid $157 million dollars for two buildings in downtown Manhattan in an effort to expand for their growing university.

708 Broadway and 404 Lafayette St. share approximately 151,000 square feet between them, a respectable expansion. However, in comparison to the price they paid for the two buildings, the cost per square foot comes out to more than $1,000. The properties were vacant at the time of the sale. NYU wants to use the building as a new fitness center and NYU believes the purchase will be cost effective over time.

Unfortunately, the buildings sales history reflects poorly on the school. The price they paid was unheard of right after the crash. These same buildings sold for 39 million in 2005, before the crash even occurred. The sellers were real estate investors, who clearly made a killing on their 2005 purchase. Real estate values have sky rocketed in Manhattan mainly due to the recent demand by offices and retail stores for downtown Manhattan locations. NYU’s timing for their purchase seems questionable, especially because they are an institution that has a buffer from the harsh economic effects of a market crash compared to individuals.

I always enjoy seeing real estate prices and purchases in major cities because they remind me to always stay within reason and educate myself about a market prior to making a major purchase.


Subdivisions Will Now Need Water Rights to Drill Home Wells

by Tim Hart

A county judge has put a stop to subdivisions unrestricted use of exempt wells in the state. Jeff Sherlock nullified a 1993 Department of Natural Resources and Conservation law that allowed developers of subdivisions to drill an unlimited number of small, home wells without needing to get a water rights permit. According to the 1993 law, so long as the wells were not connected, a subdivision could pump 1,000 acre-feet of water without a permit. Farmers and ranchers using the same amount of water had to apply for a water right or permit to use state water.

The fight over subdivision water rights began in 2009 when a few Billings ranches asked for a rule change, due to a lack of available water from nearby subdivision use. Under Montana law, anyone using state water needs a water right and people with the oldest water rights get priority. However, a loophole in the books allowed wells pumping less than 10 acre-feet a year to not need permits. When the law was drafted in the 70’s, there just weren’t that many of them. But recently, subdividers had used the law as a way to avoid either paying a city for their water, or attaining a water permit.

Senior water rights holders can ask other junior water rights holders to use less water when it is short, but they have no way to make exempt wells curtail their water use. But now, the judge has ruled against the law, making subdivisions hook up to city water or get their hands on a permit.

This law will have an impact on real estate development in Bozeman and Montana. How it impacts new subdivisions is yet to be seen, but homeowners moving into these subdivisions should be aware of the updated law.




Mortgage Rates Drop Below 4 Percent

by Tim Hart

The interest rate on a 30 year fixed mortgage loan dropped below 4% for the first time since June of 2013. The rate hit 3.97% this last week and now has become a more opportune time to consider purchasing real estate. The drop has been a much larger drop than other adjustments taken this year.

According to CNN real estate, the drop in rates have come because investors have been buying US treasury bonds in droves over the last week. In general, mortgage rates usually move in sync with the 10 year bond note, so when the yield fell to 1.86%, it seemed natural that fixed-mortgage rates would drop as well. Investors have moved to purchasing bonds because of the economic unrest in Europe. Rates have actually lowered because of investors actions, where most experts expected mortgage rates to rise after the Fed pulled back on its economic stimulus.

If you are considering purchasing real estate in Bozeman, Belgrade, Big Sky or the greater Gallatin Valley, lower rates may have made you far more eligible to buy than you may have been even a week ago. Over 30 years, even the smallest adjustments in mortgage rates can save you a lot of money in the long run.


Bozeman Considering Building a New Convention Center

by Tim Hart

The City of Bozeman is considering building a new convention center for the area’s residents. Those living in Bozeman, or looking to purchase real estate in Bozeman, will see changes take place on North 7th Avenue, assuming the plan is approved.  The plan would be put into the already established urban renewal project in the area. Currently, the city is accessing the feasibility of the plan before giving it the true go-ahead. The city will assess nearby properties and decide whether to include them into the new district, or draw new lines. The city is looking at two parcels of land, one north of the Holiday Inn and another just south of Baxter Lane.

The addition of a city center continues a growing trend to truly make Bozeman the center of all events, services and activities in the Gallatin Valley. Please see these other articles on the other building projects currently going on like the future aquatics center, sports complex, the cannery district improvements, and airport expansion. For anyone looking into real estate, this is great news, because in general, these major hubs will continue to see more foot traffic and with more traffic comes real estate buyers and sellers.


Boise’s Tiny House Tour Aims at a Different Kind of Buyer

by Tim Hart

I read a really fun article in the paper the other day about a real estate tour in Boise, Idaho with a different flavor from most home tours. The tour, unlike most ‘Parade of Homes’ style tours, focused on tiny homes, all under 1000 square feet. Gone are the days of 10,000 square foot mansions—well—maybe not but it certainly offered an alternative!

The tour started last year with the efforts of Boise High School Orchestra students, who were hoping to fundraise money for a trip to Spain.  The students were tired of the standard fundraisers like bake sales and car washes and turned to the city’s unique architecture in an attempt to garner the necessary funds for the trip. The students organized a “Tiny Home Tour” that offered Boise residents a chance to see how  the owner’s of these homes lived on the inside—for a small fee of course. The students had hoped for around 100 tourees, but they had more than 350 people sign up for it.

This year, the school will feature 10 homes, all of which are under 1,000 square feet. The tour includes homes built as far back as 1935 and homes as small as 400 square feet. One home actually came in a make-it-yourself catalog that came in a mail order kit. Tourees can expect to see some strange advantages to these tiny homes, including ornate, large yards even with small lots. Some owners have even said they can clean they entire house in 20 minutes. Not bad!

I would love to see a tour like this for Bozeman Real Estate. The houses don’t necessarily have to be tiny, but I love seeing how unique some of these older, smaller properties can be.


Tim's Know Your Homes 101 - Victorian

by Tim Hart

Victorian architecture is unique in its presence and design. Victorian homes are almost always asymetrical, multi story buildings. Victorian homes are the essence of beauty over function. The roofs are always very steep and the home is decorated with all the bells and whistles including gables, bay windows and overhangs. Victorian homes are stately, with complex designs and ornate trim. On the interior of a Victorian home, expect to find intricate ceilings, chandeliers and mirrors, all harkening to the renaissance and (obviously) Victorian eras. If you are trying to uncover whether a house may be Victorian or not, dead giveaways include the castle-like tower or its long, wrap around porch. Purchasing a Victorian home can be expensive, but local and national progams exist to help subsidize attempts to purchase and restore such homes.

Wealthy Buyers Paying Lower Mortgage Rates

by Tim Hart

Wealthy homebuyers in the US are receiving cheaper loans in higher numbers than other homebuyers also applying for mortgages. These deep pocketed buyers are paying lower average rates on high dollar value loans known as jumbo mortgages. The Mortgage Bankers Association reported that the average rate of jumbo loans for houses above $417,000 or $625,000 in high priced areas averages around 4.24% interest. However, a normal buyer, paying an standard 30 year fixed mortgage can expect to pay interest rates of 4.36 percent.

Now, lenders are accepting smaller down payments and even waiving mortgage insurance. Down payments on the big loans can be as small as 10% of the value, compared to the standard 20 percent. Banks have even begun lowering the credit standards that they use to underwrite such loans. Before, a jumbo borrower would be expected to maintain at least a 700 credit score to even be eligible. Now, lenders have given out loans to people with scores as low as 650.

Why though? Well in general, banks are willing to give these friendly loans, not for the profit they make themselves, but oftentimes on the capital the can use with other clients. Banks take that capital to use in brokerage accounts or retirement funds, where such capital can exponentially increase profit margins. Then, they can turn to prospective clients and show them the investment potential of that bank. Keeping those big loans on the books allows them to invest and lend more, adding to their clientele and prestige.

Now may be the perfect time for big buyers to do just that—buy big. Mortgage rates are low, the market is stabilizing, and as banks continue to make jumbo loans more appealing, wealthy buyers can take full advantage.



New Subdivision Coming for Bozeman Real Estate Market

by Tim Hart

Construction workers are updating and extending both Ferguson Avenue and Cattail Street to make room for a new subdivision, the Four Points. Crews started work on both roads on Wednesday. Once finished, Ferguson will be the only road between 19th Avenue and Love Lane that will directly connect Baxter and Huffine Lane. The west side of Bozeman has become very popular due to the decent prices of homes in that area, coupled with its solid infrastructure and transportation. The Four points subdivision will be adding several muli-family units. The already existing Sundance apartments will be adding 195 new residences. Bozemanites should see improved access and better traffic distribution with the improvement to the two roads. In terms of real estate, Bozemanites should expect to see a lot of new homes and apartments, with many looking for new occupants.


Displaying blog entries 1-10 of 33