Real Estate Information Archive


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Real Estate Market Creeping Closer to Normal

by Tim Hart

Real estate markets across the country continued their slow climb back to normal market conditions. In early August, the National Association of Home Builders and First American Leading Markets Index (LMI) reported that most markets across the United States have been trending to normal. The LMI increased to a score of 0.92, suggesting the US is closing in on its goal for a normalized market.

The LMI measures the proximity of a certain market to its previous, normal economic and housing market outlook. When a housing market has hit “normal,” meaning it has fallen within numbers seen consistently in its past, the market will have a value of 1. At 0.92, the United States market overall has gotten closer to normalcy but still has some improvement remaining.

The LMI uses three components to measure their index.

First, they look at home prices for a certain market.  On a national average, home prices have improved the most, with a score of 1.29. Essentially, home prices are 29% more than they were when last normal. For big national averages, its important to remember that markets like San Francisco and New York City can do a lot to drive the overall average, but in this case the number really reflects the overall improvement of the nation. In this case, 95% of markets had an index over 1 for housing price normalization.

Second, they look at employment figures to determine the employment market health of an area. The US overall averaged an employment score of 0.96, showing that the job market has nearly made a complete recovery. 65 markets across the US have met or passed their last “normal” score and are now scoring above 1.0 in employment numbers.

Finally, the index looks at single housing starts across the nation to gauge the construction industry’s return to normalcy. Currently, single-family starts are still behind, with an average score of 0.49—suggesting builders are still waiting for more buyers to jump into the market. However, single-family starts saw a 13% increase in June and in that month topped the January 2008 annualized rate for single family starts. Although the nation would like to see more building, the marked improvement over this summer has been very encouraging. Multi-family starts have also been very healthy, increasing 28.6% in June—numbers that this index do not take into account.

Fifty four percent of metro areas saw their scores increase from the first to the second quarter of 2015. Meanwhile 66% of all markets have seen improvement from 2014 to 2015.

The three figures mentioned obviously do not account for all the subtleties and distinctions of individual markets, but they do give a good sense that the United States Housing Market has been and should continue to improve moving forward.




Seattle’s Famous ‘Up’ House Set to Move

by Tim Hart

The home that many believed inspired the Disney movie Up will officially be on the move—though not by balloons. The ‘Up’ home became a symbol for anti-development groups, naturalists and crusaders alike as the 600 square foot home and its owner stayed put despite mass commercial development around it. For those who don’t know, the home’s past owner Edith Macefield turned down $1,000,000 to be moved from her small lot she had owned for a near half century. Once developers were spurned, they went ahead and built their project around her.

Her home became iconic for standing firm in the face of progress and was used as a symbol by many groups. Now, after a complicated series of bids to purchase the home, it will now be taken in by OPAL (Of People and Land), a Seattle land trust. The home, due to its complexities and age, will be moved from its current location to Orcas Island and added to an affordable housing project OPAL has headed.

There were efforts to have the home turned into some form of historical landmark, but the home had been fully renovated and therefore did not have historical significance in that sense. Now Seattle developers will be able to incorporate the gap and the small lot will more than likely be filled by a small retail store or coffee shop.




FHA Loan Activity, Interest Rates Up

by Tim Hart

FHA loan activity rose to a two year high in the second quarter this year. FHA loans typically have very low down payments, designed for first time homebuyers looking to get into home ownership but may not have the capital to do so. Having FHA loan activity rise implies that these buyers are now feeling financially stable enough in a growing economy to take the plunge—great news for housing and the overall United States economy.

Buyers using FHA loans made up 23% of all home and condo sales that were financed. That figure is up 19% from FHA activity in 2014 and is the highest share of the market since the first quarter of 2013. In general, a strengthening economy and job market probably most effected the increase in activity. At the beginning of the year, the FHA lowered their mortgage insurance rates, which may have also helped provided more benefits and more activity. Mortgage activity across the board has been rising. Having high mortgage activity will help deepen and strengthen the overall housing market.

In similar news, mortgage rates did inch a few ticks higher this week. Mortgage rates went up for the first time in 4 weeks, but still remain very low. The 30 year fixed rate averaged 3.94%, up from 3.91% last week and below the 4.04% seen in July. Rates are expected to go up when the Fed raises their own interest rates, but when that will occur is yet to be seen.





US Home Prices Reach All-Time High, Inventory Low

by Tim Hart

Home Prices in the United States have reached an all time high according to the National Association of Realtors. The median sale price in June for all real estate housing types reached $236,400, up 6.5% from June 2014. Not only that, that figure hit above the 2006 record of $230,400 and is an all time high.

Limited inventory and high demand have been leading to the higher prices. Home sales increased by 3.2% in June to the highest level of sale activity seen since February 2007. Steady job growth and an improving economy have been pegged as the leading cause for the high activity.

Coupled with high buyer demand, home inventory in the United States remains low. Housing inventories only saw a 0.9% increase in June, to a total of 2.3 million homes on the market. Inventory is 0.4% higher than a year ago but still remains at a 5-month supply. The supply represents how many months it would take to sell all the homes currently on the market. (Economists want to see a 6 month supply in an ideal market.)

Because of the high demand and low inventory, homes are moving extremely quickly. In June, 47% of homes stayed on the market for shorter than a month.

So long as demand stays high and home inventory continues to be low, we should continue to see rising home values.





Rental Market Hit New Highs in June

by Tim Hart

Rental prices continue to grow in the United States Housing Market making many wonder when and where the tipping point may come. The national effective growth rate for rental values went up by 5.1% in June to a 47 month high. Effective rent growths have also been at 5% for 5 consecutive months, a streak not seen since April 2009.

Tight occupancy has pushed rent even higher as the intense competition has allowed landlords to consistently raise rates while still finding tenants. The US rental occupancy rate now sits at 95.3 percent. Although renters have struggled to keep up with the recent price growth, they’ve still made the payments work—but for how long renters can afford these high rates is to be seen.

The US Housing market may be catching up from the housing recession, when a very small number of apartments were made. Now, renters can only hope the recent economic growth will help builders increase home inventory and drive landlord competition to lower prices. Even despite low mortgage rates, the rising home values have kept many renters away from buying a home. Oddly, buying has been cheaper than renting in 66% of the national housing market, yet renters continue to pay steep prices for a place to stay.

In Bozeman, the local real estate market has acted as a sort of microchasm for trends seen in the US housing market. Bozeman continues to try to add additional inventory to keep rent prices low and have also looked into lowering lot sizes to increase the number homes they can build on a space of land.




Home Builders’ Top 5 Concerns and Obstacles for 2015

by Tim Hart

Builders across the nation were surveyed by the National Association of Homebuilders regarding obstacles that may cause problems to their personal business and the overall housing market recovery. Here is a list of their top 5 concerns.

  1. Cost/Availability of Labor – 68%
  2. Cost of Building Materials – 66%
  3. Bank/Financial Institution regulation – 61%
  4. Cost/Availability of Developed Lots – 57%
  5. Federal environmental regulations and policies – 57%

Although all of these seem like common sense issues when building a home, its always good for buyers to better understand the perspective of the person selling their home. If a buyer can understand the stresses, obligations and duties a builder/seller has to the home and all involved in its build, the buyer can be better prepared to write an offer that would be accepted. Buying and selling homes can be stressful—but remember it’s stressful for both the buyer and seller—even if he is a builder!



Housing Inventory, Sales, Values, All Up in March

by Tim Hart

Existing home sales hit their highest annual rate since September 2013, good news for the overall housing market. Existing home sales rose to 6.1% in March to an annual rate of 5.19 million. That figure is 10.4% higher than a year ago. Low mortgage rates and a strengthening job outlook locally and nationally have fueled the increased sale activity. As home buying and selling activity increases, the overall market will deepen and be more immune to shifting conditions—again, positive news.

Home values are still rising—generally good news for sellers. Across the nation, a median priced existing home sold for $212,000, up 7.8% from March last year.

Interestingly, home inventories also increased 5.3% in March, suggesting many sellers are happier with where the value of where their home may sell at. In general, rising home inventories benefit the buyer because sellers have more homes to compete against in their local markets. Inventory currently sits at a 4.6 month supply of homes, meaning current inventory should last the market 4.6 months. That value was 2% above levels seen last year. An ideal balance would be 6 months.

Assuming home values still rise, more and more sellers can be expected to list their homes. However, there may be a tipping point where either values peak and scare off buyers, or where a few too many sellers list their home, lowering the values across the board.




Jumbo Borrowers Have High Activity and Large Benefits

by Tim Hart

Jumbo borrowers were more active and received far more benefits than the average homebuyer in 2014. Over the year, jumbo borrowers saw lower mortgage rates than normal borrowers or, at the very least, smaller down payments and private mortgage insurance requirements.

At the beginning of 2014, fixed jumbo mortgage rates started at 4.59 percent. Between August and September, jumbo loan mortgage rates were actually below the already very low rates from standard mortgages. In late September 2014, a jumbo loan borrower could expect to pay around 4.24% interest compared to a standard fixed rate mortgage borrower paying 4.36 percent. In the week ending  January 30th, 2015, the jumbo rate hit historic lows of 3.92 percent.

Jumbo borrowers have seen increased benefits over the last year. Banks and credit unions have offered down payments less than twenty percent while others have offered not private mortgage insurance costs. Both can really free up the eligibility of a jumbo borrower.

As the benefits have risen, jumbo borrower activity has followed suit. Jumbo loans took up 19% of the mortgage market in 2014, up from 14.4% in 2013, and the highest percentage since 2002. More borrowers became eligible and took out jumbo loans in 2014 and the average age of a jumbo borrower fell from 46 to 44 years old.

As banks have loosened their jumbo loan requirements, they have seen more jumbo buyers coming to the market. With more jumbo borrowers coming out of the woodwork, the banks have been able to continue loosening requirements and lowering rates. So far, the activity of higher end buyers coming out of the housing recession has been




United States Home Sales Down 4.9% in January

by Tim Hart

According to the National Association of Realtors (NAR), existing home sales fell 4.9% in January. Sales have not been so low since April of last year.

The United States has added 1 million new jobs over the past 3 months, but the improvement in wages and labor has not had the impact on the housing market for which experts had hoped. Low mortgage rates and job growth were expected to draw buyers back to the home market.

Now, experts are wondering if a spring sale rush will be had or whether United States real estate may be in for a slow 2015. Currently, home inventory is low in the nation, holding at a 4.7 month supply (home inventory is measured in how long the current homes on the market would be expected to last – i.e. 4.7 months). According to experts, a balanced market will have around a 6 month supply of homes.

Limited supply inevitably leads to higher priced homes. Over the past year, home prices in the United States have risen by 6.2 percent. Oftentimes, buyers will try to hold out when supply is low, in the hopes that better options will soon be appearing on the market.  Mortgage applications fell 13.2% in January, despite the low interest rates attempts to entice these buyers. Unfortunately, when there is a smaller buyer base, builders are less willing to improve home inventory numbers without the guarantee of finding a buyer, keeping prices high. 

The Gallatin Valley has been a micro chasm for these national trends, though the valley’s real estate market is definitely healthier than many US markets and improving quickly. Through the one third way mark of Quarter 1, Gallatin Valley home sales are projected to come in 38 home sales below last year’s first quarter total. However, average sales price has risen by $29,487 dollars since 2014—a large number indeed.

As supply has been limited of late in the area, it is no surprise to see the Gallatin Valley following similar national patterns. Gallatin Valley has struggled with home inventory, but it has struggled due to the area's increasing popularity (as oppose to a lack of buyer demand slowing production). However, construction in the area appears to be growing and healthy while the city has addressed expanding home inventory in both its rental and sales real estate markets. Both should improve the overall availability of homes in Gallatin County and continue the area’s higher paced recovery rate compared to the state and the nation.




Foreclosed On Home Buyers Returning to Market

by Tim Hart

According to Realtytrac, nearly 7.3 million people who have had their homes foreclosed on during the recession will once again be able to buy a home in the next 8 years. More than 500,000 foreclosed on homeowners will be eligible for a new home loan this year.

In general, homeowners can recover from a foreclosure in as little as three years. Realtytrac gives a more conservative number—seven years—for how long it will take these people to rebuild their credit score. By doing the math, homeowners who lost their homes in 2007 and early 2008 should now be able to qualify for financing.

As previously mentioned, 500,000 of these homebuyers, a.k.a. boomerang buyers, will be able to become homeowners once again in 2015. Next year, 1 million additional homebuyers will be added to the pool. By 2018, that number increases to 1.3 million. Low mortgage rates, low mortgage insurance rates, and new low down payment mortgages have also freed up more of these homebuyers.

Oddly, these buyers will most likely be able to find homes they can afford in markets that had originally put them in their unfortunate situation. Towns and districts with high foreclosure numbers during the recession still have the most affordable home prices. Hopefully, with that negative experience still on the forefronts of our national conscience and with the new government regulations enacted since, these buyers and their lenders will not find themselves falling into the same pattern that occurred during the recession.

Assuming all goes well, having more buyers return to the market will help the housing sector of the economy grow. Home prices may rise slightly, but having a big base of homebuyers should provide more stability and confidence for builders who can increase home inventory without concern.




Displaying blog entries 1-10 of 32