Mortgage standards that have kept many potential buyers out of the market are beginning to loosen. In addition, banks are speaking about increasing their mortgage business soon and shore up their residential mortgageassets within the next year.  All these prospective changes are being driven by a sharp rise in mortgage demand in conjunction with more home purchase applications being approved (60% compared to 55% of a year ago). This will combat but not fully eliminate the highly competitive home buying marketthat will still require standards such as 20% down.

“Fear Fannie Mae and Freddie Mac will force lenders to take back risky mortgages continues to be the primary condition constraining lending,” RealtyTrac reports. “Other conditions that have lenders holding tight to mortgage purse strings include obtaining insurance, slow economic growth, concerns about securitization, and processing capacity.”

“Mortgage Squeeze Loosens, Somewhat,”

Data Shows Mortgage Credit Easing, Others Not so Sure

Here are the national averages for mortgage rates for the week ending May 16: 

• 30-year fixed-rate mortgages averaged 3.51 percent, with an average 0.7 point, increasing from last week’s 3.42 percent average. A year ago at this time, 30-year rates averaged 3.79 percent. 

• 15-year fixed-rate mortgages averaged 2.69 percent, with an average 0.7 point, rising from last week’s 2.61 percent average. Last year at this time, 15-year rates averaged 3.04 percent. 

• 5-year adjustable-rate mortgages averaged 2.62 percent, with an average 0.5 point, rising from last week’s 2.58 percent average. Last year at this time, 5-year ARMs averaged 2.83 percent. 

• 1-year ARMs averaged 2.55 percent, with an average 0.4 point, rising from last week’s 2.53 percent average. A year ago at this time, 1-year ARMs averaged 2.78 percent. 

Housing starts are at 1.04 million, up 7% from this February and up 47% from this time last year.

This number is achieved highly due to the recent surge in building apartments and condominiums. These multi-family units alone jumped 82% as compared to last year. Each unit within these types of complexes is counted in the statistics so they can be extremely volatile. When looking at a more stable number, single family units, the percentages have actually fallen by 6% since February.

But, there is a strong demand for the multi-family and rental type living environments that does not seem to be waning anytime soon. Young workers moving out of their parents’ houses, a little older workers who stuck around with their parents through the recession, and even seasoned workers who gravitated towards living together are all beginning to move out and find places of their own.  In addition to the workforce contributing to the demand, many home owners how lost their home to banks are wary of buying again and are choosing to downsize into a lower risk situation.

With the great benchmark of hitting the 1 million-point and beyond comes details everyone should keep their eyes on: the demand, as mentioned above, is very dependent on the trends of society, raw material costs are on the rise, and there is an increasing shortage of construction workers.

“The supply/demand balance is clearly tilted toward sellers in a good portion of the country,” said NAR Chief Economist Lawrence Yun. “Inventory conditions are expected to remain fairly constrained this year, so overall price increases should be well above the historic gain of one-to-two percentage points above the rate of inflation.  If home builders can continue to ramp up production, then home price growth is expected to moderate in 2014.” - See more at: http://www.inman.com/2013/05/09/home-prices-post-highest-gain-in-over-7-years/#sthash.KboECc0L.dpuf

Great news right! Not so fast…

Some dark shadows are brewing on the real estate horizon. Looking at who is leading the recovery, the rate at which the market is recovering, and the future governmental programs all paint a picture a little different than the major headlines.

This market boom is being spearheaded by investors. Seeing the low interest rates in conjunction with the depressed home prices, investors are able to move with more assurance and speed then the average home buyer. Once prices rise, many of these investors will pull back—leaving a hole in the market again.

"These days, I worry more about the economy hurting housing than housing hurting the economy," said Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities, a Washington D.C.-based think tank. Employment is intimately integrated with the housing market and hiring has slowed since March—the weakest growth since last June. Discouraged workers are increasingly leaving the workforce hinting that the housing market recovery will being slowing more and more. Once the jobs market improves, there will be a direct surge in the housing market once more.

Governmental cuts, $85 billion, will be hitting their peak this summer. The cuts will hit the gut of the American workforce since workers comp, military spending, the expiration of payroll tax breaks, and other pieces will all contribute to overall loss of income—impacting the spending capabilities of many families.

http://money.cnn.com/2013/04/18/real_estate/housing-recovery/index.html

Related: 5 best markets to buy a home

 Related: Was your home a good investment?

HUD—Who are They?

In 1937, the U.S. Housing Act planted the seeds for the development of the Department of Housing and Urban Development in 1965. The mission of HUD is to create strong, sustainable, inclusive communities and quality affordable home for all.

The U.S. Department of Housing and Urban Development is reportedly releasing more of its homes to the market here shortly in order to counterbalance the slim inventory being seen across the country and the backlogged foreclosures/short sales.

“The inventory is there, [it’s] just not being released during the banks/servicers review of the loan/mortgage documents,” says Nat Genis, a HUD listing broker in Riverside County, Calif., which is already seeing an increase in HUD-owned homes.  

"HUD homes are back," Genis told HousingWire. "FHA financing went away with the 'creative' financing of the 80/20 loans, and now with the increase of FHA financing, these government-backed loans guarantee that if the borrower defaults, HUD will pay off the mortgage, obtain the deed, and re-sell the home."

READ MORE

HUD homes add to inventory-starved market,

'Shadow Inventory' Threat Reduced

As it is well known, the housing market is uniquely bound to the U.S. Treasury. This is never more apparent than a policy found within the Treasury Department’s Office of Home Ownership. Laurie Maggiano is the architect of a plethora of the government-backed Making Home Affordable program, uniform guidelines for loan modifications, Home Affordable Foreclosure Alternatives short sales, and foreclosure prevention.

“Her work at Treasury has not only helped servicers and investors adopt HAFA short sales, but also led to new guidelines that include making deficiency releases and relocation money standard when it comes to these transactions. Maggiano and her team were also responsible for programs that have helped so many people across the country avoid foreclosure.”

The changes Maggiano will affect the tools provided to agents and consumers if they get bogged down in the midst of their short-sale process by:

• adjusting short-sale timeline

• change occupancy restrictions in addition to

• an increase in payments to second mortgages and relation assistance to sellers.

Related Content: 

Beating the Odds on Short Sales

Expect Gradual Changes at Fannie & Freddie

FHA: Unsung Hero of the Recovery

Lenders: What’s Holding Back Loans

http://realtormag.realtor.org/news-and-commentary/feature/article/2013/04/us-treasury-offers-resources-for-distressed-sales

I chose to evaluate Valley West first because we recently moved and call this neighborhood home.  We were drawn to the neighborhood early in its development because of the park, lake and architectural interest and diversity.  Since moving here, I realize just how convenient it is.   My third grader walks or rides his bike to school.  My teenagers drive to the high school in 6 minutes (so I am told).  Four groceries, a fish market, banks, gas stations and the mall are all within a short bike ride or up to a four minute drive.  I am also 4 minutes from my office, which comes in handy when I’m late for dinner.

Valley West offers traditional and contemporary architecture, condos and single family residences with or without attached dwelling units.  Small lots encourage neighbors to congregate in the park to get to know one another, play with their kids and walk their dogs.  Kids meet at the park to play tag and tube on the creek.  Common walk areas were designed to “flow” through the neighborhood, providing a safe and natural connection to the community.  Groups frequent the pavilion in the summer and gather for ice skating at the pond in the winter.

The neighborhood’s residents’ life stages are diverse, ranging from the college student renting an ADU to retired individuals investing their lives in the community.  Therefore, several property choices are available.  Currently on the market are 5 condos ranging in price from $143,000-$239,000 and an average price per square foot of $132.00.  There are 7 single family homes on the market, including 4 existing homes and 3 new constructions.  The prices range from $234,900 - $499,500, with an average price per square foot of $150.00.

In the last 6 months, 7 single family homes have sold, ranging in price from $184,000-$485,000.  The average sold price per square foot was $142.00.  Ten condos have sold, ranging in price from $144,750-$261,250.  Of the sold condos, the average price per square foot was $111.00. 

This is a series that will continue with blogs and newsletters.  The next article in the series will feature Harvest Creek.    If you would like to share your perspectives, I would love to include them in future articles.   If you would like to hear about a particular neighborhood, email me and I will be happy to include it.

 ATHOMEINBOZEMAN

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

Seeing the investment: 

In 1972, a ranch could sell for $36/acre. In 2011, that same land sold for $500/acre. Even accounting for the inflation of the dollar through history, the land has doubled in value. Amenities on ranches extend beyond the utilitarian use of the land. Wildlife habitat, fishing, scenic views, and other nontangibles are spiking in value on top of the solid financial endeavor of running a ranch. Few investments are as secure as property and few property investments are as secure as one with the multiplicity of profitable uses as a ranch.

How does this inform Montanan values?

Places to hunt, fish, spend quality and semi-isolated time with family and friends are all strong central values of Montanans at large. With the city centers of Montana growing rapidly, the return to where Montana started speaks of how deep these important land and family ethics run. Time on a ranch is hard work and togetherness.

Future….

Trusting this strong market entirely is a bit naïve so those monitoring the market ought to remain skeptical. Fay sees ranch prices as bottomed out, but not yet appreciably rising making this moment in time as a good time to buy. Tomorrow, who knows… All that can be said is that there are “excellent opportunities everywhere right now.” (http://billingsgazette.com/news/state-and-regional/montana/ranch-sales-rise-as-wealthy-investors-put-cash-in-land/article_c0b70ee3-2e86-5a23-83f3-81e1eb281b5a.html)

 ATHOMEINBOZEMAN

Oddly enough, the time to decide may be based on when they purchased their home rather than watching the current market like a hawk. If your home was purchased during the sluggish market in the last few years, moving up in 2013 is their prime opportunity.

"Because they bought near the bottom, these home owners should have built up some good equity that can go toward the purchase of a new home, and waiting longer to build more equity likely won’t provide much advantage given that other homes that they might want to move up to will also be appreciating at roughly the same pace," Blomquist, vice president of RealtyTrac, told HousingWire.

Home owners who wait much longer may miss their chance by being overly cautious. If you are looking to sell and then buy, waiting for prices to rise because there is no ultimate benefit. They will get more out of their home, but turn around and spend more too. In addition, the costs of financing your next home may increase in the months to come since mortgage rates are anticipated to rise from their current 3.5% to 4.4%... The time to sell may be now or else you may miss the boat...

Read more:http://realtormag.realtor.org/daily-news/2013/03/25/home-owners-who-are-delaying-selling-may-miss-out?om_rid=AACuz5&om_mid=_BRUHT7B8xiPzNw&om_ntype=RMODaily

 “The Time to Sell Is a Waiting Game for Some,” HousingWire (March 21, 2013)

Home Owners Reluctant to Sell; Inventories Fall
 

 ATHOMEINBOZEMAN

“Buyer traffic is continuing to pick up, while seller traffic is holding steady," Lawrence Yun, the National Association of REALTORS®’ chief economist says. "In fact, buyer traffic is 40 percent above a year ago, so there is plenty of demand but insufficient inventory to improve sales more strongly. We've transitioned into a seller's market in much of the country."

Buyers and sellers alike are finding themselves in better positions then they found themselves at last year at this time. Price gains are being counter-balanced by low mortgage rates, and it is shifting to a seller’s market…. But it is not all good news.

Read More

Seller's Market Developing in Much of the U.S.
25 Quick, Cheap, and Easy Home Sale Tips

 Will housing market's revival last?

Housing heats up, but far from normal

 ATHOMEINBOZEMAN

Household wealth in the U.S. has climbed in the fourth quarter to the highest level in five years. Good news is abounding. Household wealth is approaching pre-recession levels and that, in conjunction with the Federal Reserve pushing to keep lending rates low, consumer confidence is surging. “Growing wealth puts households in a better position,” said Paul Edelstein, director of financial economics at IHS Global Insight in Lexington, Massachusetts. “They’ve acquired a lot of financial assets, and that’s a positive for spending.”

The housing market is surely making its way to recovery. Single family home prices have risen in 88% of U.S. cities. Making claims that home values is predicted to surge seems to be substantiated based upon all the evidence. "During the peak of the housing run-up, affordability was stretched as the market sold off," Dosaj, vice president of the home price index at LPS Applied Analytics, said. "As home prices dropped, affordability dropped." (http://realtormag.realtor.org/daily-news/2013/03/01/economist-makes-bold-statement-home-prices?om_rid=AACuz5&om_mid=_BRMNeLB8xIsqgB&om_ntype=RMODaily)

 ATHOMEINBOZEMAN

In all the recovery of the housing market, there are clear trends developing within the houses that have sold versus the homes that have not. The National Association of Home Builders (NAHB) conducted a large study to pinpoint on how having a recession followed by a recovery has influenced the lifestyle preferences of home buyers. The survey found the top three items sought for in a home are: energy star appliances, energy efficient laundry rooms, and double sink, French doors, full house technology luxury items. In contrast, buyers do not want: elevators, golf course homes, and laminate countertops.

The housing market as a whole is moving to the periphery of the city centers with only 8% looking to buy within the core of a city which is a return to pre-recession movement. During the height of the recession, urban lifestyles boomed to save in gas prices, transit time, and the living out of town expenses.

The return to the rural/suburb shift of buyer movement means we will be soon seeing a rise in current urban renters looking to buy. Stats show 60% of single-family renters plan to buy within the next five years! “demand for single-family homes, the fastest growing rental category, will be more stable than multi-family demand,” according to the survey findings.

Buyers want energy efficiency and buyers want to buy at an increasing rate beyond what the real estate market has seen in years past. This will be one heck of a year!

READ MORE

What Home Buyers Want  Buyers Want Cozy, Connected Kitchens Opinion Research Corporation Half of all Renters Spend 30% or More Income on Housing

Nearly 75% of homes sold between Oct 2012 and December 2012 were to families earning a median income of $65,000 at a median price of $188,000.

"It is noteworthy that affordability remains historically high thanks to favorable mortgage rates even as national home price indexes show some rise in values," says NAHB Chief Economist David Crowe. 

The exterior limits of this trend are found in Utah, with 94% of home sales in the affordable range, and San Fran, California with only 28% of home sales in this same category.

Source: National Association of Home Builders

 ATHOMEINBOZEMAN
 

• Responsive Website(s): Having the contact information for not only the real estate office as a whole, but for each agent (with a bio on what they are a specialist in) is necessary for buyers, but it is just as important for selling agents. Finding the information to schedule a showing, provide feedback, and contact for interest. This may seem like a no brainer, but finding the contact information for agents is surprisingly difficult at times. In addition, having continuity throughout the office as to what to do when a call comes in for a listing maintains the professional, high priority and maximum attention to each potential lead that comes in. 

• Traceable Traffic:  Knowing about the marketing tendencies of each listing individually is a key indicator of how to gage a ‘good listing.’ Knowing when the listing receives market rejection, a spike in views, and even plateaus are all valuable measurements to appropriately adjust the marketing strategies for a listing. Not all sites provide agents with this information let alone allow clients to see these trends.

• Local Market Trends: Finally, taking the trends of the individual listings and being able to expand that understand to what it means within the market at a whole is a deeply detailed-focus analytic process that takes years within the Gallatin Valley Real Estate market to be able to understand and iterate to clients. The juxtaposition of giving credence to individual listings and understanding them in the market at large is what will really set an agent apart.

Liniger recently offered up some of his predictions for the new year:

• More buyers and sellers return to the housing market. 
• Home sales increase 6-7 percent while home prices increase 3-4 percent. 
• Inventory of for-sale homes will hit bottom. 
• Higher-priced listings begin to sell more. 
• The number of distressed properties continues to drop. 
• The shadow inventory continues to fall. 
• Short sales rise, reaching a peak. 
• Mortgage rates rise slightly by year's end from record lows. 
• Lending remains constrained for home buyers. 
• Home affordability remains at record highs.  

Watch Liniger’s video to learn more about his housing predictions.

Source: RE/MAX

 The name short sales is becoming much more accurate to the shortening frequency short sales are entering the market. Freddie Mac initiated Standard Short Sale program on November 1st. Since then, the short sale process has become easier and more transparent.

"We estimate that the time to complete a short sale will decrease by approximately 50 percent to 75 percent," as a result of the changes, writes Tracy Mooney, Freddie Mac’s EVP in a recent blog post.

Here is a list of changes that took effect:

• Mortgage servicers have 30 days to make a decision on a short sale once they receive an application. If they need to negotiate with a third party, they have 30 additional days. A final decision on the short sale must be made within 60 days. 
• Mortgage servicers are required to acknowledge they received the short sale application within three days of submission. Servicers must provide weekly status updates if they end up needing more time to review the application past the initial 30-day period.
• Mortgage servicers have authority now to approve short sales when qualifying financial hardships for home owners who are past due or current on their mortgage payments. 
• Mortgage servicers are also now able to approve short sales without seeking a separate review by the mortgage insurance company.
• Following a short sale, home owners may be able to qualify for up to $3,000 in relocation assistance. 

Source: “The Shorter Short Sale: Long on Borrower Benefits,” Freddie Mac Executive Perspectives Blog (Jan. 22, 2013)

 ATHOMEINBOZEMAN
 

Builders breaking ground so far in 2013 are moving at a pace not seen since 2008! Experts are predicting a promising year ahead on the wave of late 2012 & first month solid numbers for 2013. Housing starts soared at 12.1% for December. The majority of the jump was attributed to a 20.3% increase in multi-family construction but even looking at single-family home starts, they rose 8.1% in that same month.

"With inventories of new homes at razor thin levels, builders are moving prudently to break ground on new construction ahead of the spring buying season to meet increasing demand," says Barry Rutenberg, chairman of the National Association of Home Builders. (http://realtormag.realtor.org/daily)

The best indicator for future markets, permits for future home building, rose in December as well proving this trend is set to continue for at least the foreseeable future!

Here at Bozeman Montana Real Estate, we have, in January alone, written five contracts on new construction pre-solds! Call us today (406.570.5730) to find out how we do business and if right now it is the time for you to explore getting into the possibility of buying a newly constructed and customized home!

 ATHOMEINBOZEMAN
 

The Year in Review:

Year to Year Outlook for the Gallatin Valley (Big Sky, Bozeman, Belgrade, Three Forks and Manhattan)

Stats for Improved Properties:

* Data is for period Jan 1 – Dec 31 – includes all improved categories except for mobile/manufactured.

Summary of Data for Improved Properties:

• Bozeman is a shining star without a doubt up 222 units over 2011 with days on market down almost 20 days and median price rising by $10,000.00 plus.
• Belgrade also picked up some steam up 8 units and median price up by $10,000.00  - this trend has continued into the new year
• Big Sky is still stabilizing – units sold are down but median price improved by $20,000.00 and days on market shrinking
• Manhattan is stable in units sold and $27,000.00 increase in median price
• Three Forks has also gained ground after stagnating  – units up by 13 – but median price is down and days on market up

Stats for Vacant Land:

* Data is for period Jan 1 – Dec 31  – includes all land categories.

Summary of Data for Vacant Land:

• More of the same for Bozeman in land with net increase of 234 units year to year
• Belgrade is down about 5 lots
• Big Sky is more positive than negative – up 20 lots – median is down but I see this as positive – sellers are getting more realistic about their land values and deals are closing successfully.
• Manhattan improved in lot sales – prices are down
• Three Forks is a negative trend  BUT both lot and house sales are now trending up in the first quarter of 2013 as Three Forks is being seen by many first time buyers as an affordable alternative.  I am bullish on Three Forks for 2013!  Our office, alone, will be representing developers in three large sub-divisions – activity is brisk!

Overall, the Gallatin Valley is seeing great growth with Bozeman being the shining star and booming.  I am fairly confident that this report at the end of 2013 will likely see all indicators turning to positive.

Predictions are vague estimations of what people who study a specific area think may happen. Looking back retro-actively at the predictions made is sometimes an event of true comedy. For several years now experts who have studied trends, analyzed data, and put their own intuition into predictions have said the housing market will reach its bottom. Instead, what has happened is a great recovery in 2012 and rising, record breaking numbers to kick of 2013. After their predictions being so wrong for 2012, what are these same experts saying about 2013?

Home prices are estimated to rise this year with the median forecast of a 3% gain. Joel Naroff, president of Naroff Economic Advisors, is so optimistic to say that he predicts a 7.2% gain and that prices could rise 39% above the current market value by 2017.

What do all these predictions mean to people who are looking to buy/sell. The reality is that although I will always encourage clients to read the news and stay up-to-date on the national economy, real estate is a hyper-local venture. Talk to a Realtor and see what the stats are in your area and get a feel for the reality behind the predictions.

Decreasing rates of foreclosures is a positive trend for home owners at large, but shifting trends result in a shifting reaction within the real estate market. The first result from the decreasing inventory was a beneficial growth in home prices across the board. The tighter inventory of a post REO flooded market has nearly run its course in controlling the market economists predict. In fact, CoreLogic goes so far as to say that home prices are stabilized enough to be back ‘on track’ in a way it has not been since 2006.

The stats are as follows:

• Foreclosures have fallen 20% from a year ago.
• From January to November of 2012, REOs dropped from 19.6%-11.5%.

Delinquencies are becoming rarer as banks opt for short sales/mortgage  modifications over foreclosures. One big national trend within this larger narrative is that of the stark difference between judicial and non-judicial states. The only difference, judicial states must have their foreclosures go through the state’s court extending the timeline for a home to foreclose. Non-judicial states have clear their foreclosure pipeline whereas the judicial states are still trucking along. 

“The foreclosure crisis has shifted east, to the judicial states, where the pipeline is slow,” says Khater. “The big driver in 2012 in prices increases [sic] was the decline in REOs, but I think the big move-down has already happened. The driving prices in 2013 will be the tighter inventory.”

Source: “Inventory Takes Center Stage as Foreclosures Fade,” The Wall Street Journal (Jan. 4, 2012)