Real Estate Information Archive


Displaying blog entries 1-10 of 36

Property Taxes Rising Suggests an Improved Economy

by Tim Hart

Property tax collections increased by 3 percent over the past year. Collections increased by 13 billion dollars to a total of 503 billion collected. The figures include both commercial and residential property taxes.

Property taxes might be rising thanks to improving home values. State and local governments might be re-appraising homes to raise their listed value. Whether it has happened enough in different towns and states to affect the national average is unclear.

Interestingly, property taxes have taken up a smaller percentage of total tax collections than in recession years. In 2010, property taxes held 44.9% of the total share whereas now they hold 38.9% of the total. According to the National Association of Home Builders, that proportion is very close to the pre-housing boom levels seen in 2001 to 2003.

This trend would suggest that non property taxes have grown significantly faster over this time than property-based taxes, meaning that Americans are taking in more income and are generally having better economic success than in years previous. As everyone’s financial situation improves, it would make sense for the housing market to see similar results as it tries to creep back to a normal, healthy market.





Foreign Investments on Record Pace in US Real Estate Market

by Tim Hart


Foreign investors have taken on the United States Real Estate Market in full force in 2015 thanks to an improving US economy and low interest rates.

According to the real estate services firm JLL, foreign investments totaled 24.1 billion dollars at mid-year compared to 23.6 billion for all of 2014. JLL only keeps track of transactions greater than 5 million dollars so some hotels and multi-family developments were excluded. The CoStar group, another commercial firm, has the total spent at nearly 39 billion.

Chinese investors have taken a large portion of the investor market. They accounted for 1.9 billion dollars in the second quarter of 2015. Many investors are looking for a safe place to keep their money while the Chinese economy has struggled and the US continues to have very low interest rates. Interestingly, instead of putting away money in large lavish personal residences as seen in other years, these investors have shifted towards more humble, income producing commercial and residential properties.

In 2014, 28% of foreign investment came from Chinese investors. They spent 104 billion in total in 2014. To put that in perspective, Canada came in second place at 11.2 billion spent.

So long as the US economy continues to strengthen and so long as interest rates remain low, it would be logical to expect foreign investment to hold true, if not increase. Foreign investment will help deepen the housing market overall. Domestic investors might not enjoy the increased competition, but having that competition can really help individual buyers and sellers sell and buy at a great price.




91% of US Homes Have Equity

by Tim Hart

After 759,000 properties regained equity in the second quarter, almost 45.9 million homes now have a higher property value than the remaining balance on their mortgage. In essence, 91% of US homes with mortgages now have equity—great news for the recovering US Housing Market.

At the end of 2014, 89% of US homes had equity, totaling 44.5 million homes.

Ninety five percent of mortgaged homes valued at 200k or more currently have equity. At the end of 2014, that number was at 94 percent of mortgaged homes.

Homeowners with lower home values struggled to get over the equity hump in comparison to those buying more expensive homes. But these homeowners also saw the biggest improvement over 2015. In 2014, 84% of buyers under 200k had equity in their home but in 2015, 87% now have equity.

Much of the country has recovered from negative equity issues seen during the recession. Five states alone contributed to nearly 32% of the negative equity seen in the entire US. Although terrible news for these specific states, the general outlook for the nation overall might be even more positive than these numbers suggest. The US states with the highest negative equity rate (% of mortgaged homes in state without equity) are Nevada (20.6%), Florida (18.5%), Arizona (15.4%), Rhode Island (13.8%) and Illinois (13.1%).

Montana was in the top 5 states for lowest percentage of negative equity homes. In March of this year, Montana had 97% of homes with mortgages in positive equity. Although certainly not major, that number has climbed to 97.2 percent.

If property values rise by an additional 4.7 percent, experts believe another 800,000 homeowners will have positive equity in their home by July 2016.




Delinquent Mortgages Falling Across United States

by Tim Hart

Delinquent mortgages continue to fall across the United States, providing great news to a recovering housing market. Delinquent mortgages are mortgages with an outstanding bill for payments due. Delinquent mortgages are a great way to gauge the housing market’s health as well as the financial health of current homeowners.  Having less delinquent mortgages implies that a stronger economy has formed or is forming—helping those with mortgages pay of current debts and giving buyers the sense (whether true or not), that they are taking less financial risk by taking out a mortgage.

According to a report by the Mortgage Banker’s Association, delinquency rates for mortgage loans on one to 4 unit properties fell by 5.3 percent. That level is 24 basis points below the 1st quarter of 2015 and 75 points below levels seen last year.

And its not just the overall average rate that has been dropping. No, every stage of delinquency fell over the past year-providing heartening news to the US Housing Market. All loans that were past due fell by 70 points. All loans 30 – 59 days past due fell by 17 points. All loans from 60 to 89 days past due fell by 8 points and all loans 90 days or more overdue fell by 45 points.

In 2009, delinquency rates hit a high of 5.1 percent. Currently, delinquency rates sit at 1.9 percent. There is still work to be done however, as prerecession levels sate comfortably at 0.84 percent.

Less delinquent mortgages means happier homeowners and less anxious home buyers. Its already a financial burden to purchase a home. Having the emotional burden of neighbors leaving and friends drowning in finances did little to convince homebuyers that the time was right to buy during the recession. Hopefully, as more potential buyers see the financial advantages to owning a home, more and more will take the plunge, helping to deepen the mortgage and therefore housing market even more.




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!



Displaying blog entries 1-10 of 36