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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!

 

Source: http://eyeonhousing.org/2015/04/top-builder-challenges/

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.

 

Source: http://realtormag.realtor.org/daily-news/2015/04/23/home-sales-surge-18-month-high

 

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

 

 

Source: http://www.realtor.com/news/jumbo-borrowers-get-red-carpet-treatment/

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.

 

Source: http://www.bozemandailychronicle.com/ap_news/business/us-home-sales-plunge-percent-in-january/article_2754146c-31c6-5b37-bc88-1c9e4d172006.html?utm_medium=desktop&utm_source=block_802944&utm_campaign=blox

 

https://gallatinrealtors.com/uploads/statistics/1_15_Market_Stats_Gallatin_County_Residential.pdf

 

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.

 

Source: http://money.cnn.com/2015/01/27/real_estate/boomerang-homebuyers-foreclosed-return/index.html

 

Manhattan Jurisdictional Area Now Taxable

by Tim Hart

The Gallatin County Commission will try to fix a nearly 36-year old loophole that allowed a 3.5 km sized district surrounding Manhattan to not pay taxes on their planning services. The district, created in 1978, was indoctrinated as a jurisdictional area. Within the jurisdictional area, as oppose to a tax district, property owners were never taxed for the planning services they received. Residents of the county and city did pay for those services.

When the problem was discovered in 1994, Manhattan and the Gallatin County entered into discussions to fix the problem. Now, with the County Commission’s approval, the County will be able to authorize mill levies to tax property owners in the district. Last year, the county paid about $3,500 for planning in the Manhattan city and surrounding area.

As of yet, no decision has been made on how much the property taxes within the district would increase. However, Manhattan has seen positive signs for new growth in the area, making planning services all the more important. Lots of new lots have been offered in the Centennial Village subdivision and an unnamed developer has been working on starting a new subdivision near Manhattan, but the details have not been made public.

Gallatin County, in general, continues to grow. Planning committees will become all the more important to keep the growth healthy, consistent and under control. Having the proper funding will keep the best people in those positions, helping keep real estate and new home construction in Gallatin County growing in a healthy manner.

 

Source: http://www.bozemandailychronicle.com/news/county/county-commission-set-to-fix--year-old-manhattan-planning/article_5415b898-8fbb-11e4-b622-03584dfd7f71.html

New Chapter In Housing Market Recovery

by Tim Hart
The nation experienced a 5.24% decline in housing inventory this July. At the same time, the national median listing price increased by 5.27%.

“The recovery is entering a new phase where inventory shortfalls are no longer the driving force behind changes inhousing prices in many markets. Larger inventories, especially in the hotter markets that experienced rapid price increases in the spring, are expanding buyers’ choices and helping to moderate price increases,” said Steve Berkowitz, CEO of Move, Inc. “This month’s report also underscores the uneven nature of the housing recovery and its dependence on the strength of the local economy.”  

This new trend boasts the following highlights:

  • No More Year-Over-Year Inventory Declines

  • Local Markets Inventory Declines Decrease Leading to Slower Price Growth

  • Mortgage Rates Rise/Plateau

 

Source: http://www.realtor.com/news/housing-inventory-declines-are-easing/

Healthy Real Estate: Bursting Bubble Fears on the Rise

by Tim Hart

“Prices are increasing quickly, though that may not always be the most healthy development for the economy. Also, banks may soon loosen overly strict requirements, but a choke point remains in new-home construction.(source)

“The median home price jumped 8% from the previous month to $208,000, according to NAR. While month-to-month price swings are not unusual, the year-over-year rise is now 15%, and prices are at levels last seen in the summer of 2008, just before the bursting of the housing bubble.” (source)

 

The housing recovery is in full swing. The surge in themarket caught many by surprise with how fast and how swiftly demand for new homes and the selling of homes happened. There are still too many buyers seeking to buy in a market with too few homes for sale. For most, all this news is vibrant and wonderful.

There is always caution that must be mixed into the equation when it comes to the real estate market.

  • Although fast-rising home values are great for home owners, price increases that go beyond the growth of income create a weak point within the economy that will have to balance itself out eventually.
  • The potential loosening of underwriting restrictions will normalize the lending environment but this too will contribute to a faster price growth. Making it easier for buyers to buy will only put stress on the already limited inventory on the market.
  • New-home construction breached the 1 million mark for the first time in five years in March. Currently, 1.5 million new housing units are needed annually to keep pace with the price gains to keep the market stable and healthy.

All of these currently optimistic headlines the real estate world is seeing are all red flags in and of themselves as well. The market is amorphous unit and will adjust to re-balance itself in time. Too fast of a recover can potentially mean an equally fast decline when the market constricts. One eye on the present and one eye on the future. 

Bid Adieu to 3% Mortgage Rates

by Tim Hart

In this week alone, the average 30-year fixed-rate mortgage rose 10 percentage points to 3.91% and are up from 3.3% seen in early May. 15-year loans are up from their 2.56% to 3.03% as well. This trend does not look like it will change. “It’s unlikely that rates will ever be that low again.” said Doug Duncan, Fannie Mae's chief economist.

 

Here are some of the reasons why:

  • THE FED

The Fed has been stepping in and actively keeping rates at rock-bottom levels by buying up to $85 billion/month of Treasury bonds and mortgage-backed securities. This purposeful manipulation of the market has enabled lenders to sell mortgage loans at lower interest rates and recoup their money plus profits. Now with the market recovering, the Fed will stop purchasing the securities and private investors will have to pick up the slack.

  • THE ECONOMY

Economic conditions have improved severely compared to the recession of four years ago. With the economic health on the mend, it is creating a tailwind of interest rate increased. Low rates happen in a time of distress to stimulate. Higher rates happen when the market improves in order to stabilize.

  • 3.3% RATES ARE UNPRECEDENTED

 Even if the rates increase by a percentage or two, those new numbers will be comparatively low to the average. Historically, 30-year loans are above 5.5%. “For clues to the direction of mortgage rates, look at the daily movements in 10-year Treasury bond yields. Mortgage rates track Treasury yields with the difference between them holding fairly constant. Today, Treasury bonds have been on a jumpy uphill climb, with the 10-year hitting 2.21% on May 31, its highest closing since April 2012. On Thursday, the yield was about 2.10%. Since the interest rate on a 30-year is usually 1.7 to 2 percentage points higher, it indicates that mortgages should be at between 3.82% and 4.12% this week.” http://money.cnn.com/2013/06/06/real_estate/mortgage-rates/index.html

 

The Desire to Buy Real Estate

by Tim Hart

 

 

The American Dream has at its core the idea of home ownership.  The dream, according to CNBC-All-American Economic Survey, is being acknowledged more and more. 79% of Americans believe home ownership is the essential piece of the American dream. 69% of Americans think owning is more advantageous to renting. Home ownership is regaining the confidence it had in re-recession times.

 

“The housing numbers are all heading in the right direction,” reports Diana Olick for CNBC. “Home prices up, foreclosures down and, perhaps the most important, consumer confidence in housing is swelling.” 

 

The one demographic that still seems to be the unknown element within the market is that of the first-time home buyers. There is a surge in first-timers looking for their first home, but they are highly dependent on their low down payment financing, and that may cause a plateau of actual home purchases. What are your predictions?

READ ON:

Parents as Kids’ Mortgage Lender

More Reasons to Buy v. Rent

People Are Becoming More and More Confident in Housing Market

Home Ownership and the American Dream

 ATHOMEINBOZEMAN

Displaying blog entries 1-10 of 27

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