Not the official numbers as our MLS database is user-maintained.  Recorded sales are entered by the selling broker, and sometimes there is a bit of a delay with that data.

Pulling things up today, here’s what I see for the Missoula Urban area:

Sales - 899 (down 1 from 900 in 2008) a flat trend, the peak was 1374 in 2006 so a 35.5% decrease off the peak.

Median Sales price - $209,000 (down $6,000 from $215,000 in 2008) continued downward pressure is on our median, the peak median price was $216,700 in 2007 so from that 2009’s median sales price is 3.55% down from the peak.

So, volume is flat for the year but as shown in my last post it’s up in the 2nd half.  This evidence suggests the tax credits, market affordability, and low interest rates have had a good impact on our market, and it helping it to stabilize.

The continued median price shift shows that the lower end of our market is dominating our activity, and causing the range of data to shift lower.  Probably a strong sign that the first time home buyer activity is playing a large part in our market, and houses that fit those needs are in a stronger market.

Looks like the 1st time home buyer tax credit is helping things along.  Looking at the stats from the Missoula Organization of Realtors, last year in November alone there were just 32 residential sales, which was down from 90 the year before.  This month the numbers posted is 83 sales.  This is a good sign that the tax credit and additional market incentives such as low interest rates have helped the Missoula market get back on track.

 We’re seeing our median price continue to shift down, in November it was at $200,000.  This shows that the lower-priced end of our market is the current driving force.  In fact when looking at sales and market inventory there’s a big split in our market.  Our local association tracks sales at different price points, basically houses priced under $275,000 are in much healthier markets than those about $275,000.  Currently all market inventory is under 12 months below $275,000 and is at or below 8 months at $200,000 and lower.  Over $275,000 is very stressed with multiple years worth of inventory currently on the market.

This trend is a national one as well, it’s called a bifurcated market, meaning a market split in two.  Certain sections of the market are better, while others are in rough shape.  It’s best to know where your home is if considering to sell this year.

Every October Newwest.net holds a real estate conference regarding real estate and development in the Rockies.  Each year they’ve had an economist, Chris Thornberg, come and speak.  Chris has been on-target all three years, predicting the burst of the housing bubble, the effects of the stock market collapse, and the rise in foreclosures.  This year he was the keynote speaker, and here’s what I took away from it:

• The United States is pulling out of the recession, all signs point to that, we’re no longer heading downhill.  In fact GDP growth in the 3rd quarter will be positive, the first time since the 2nd quarter in 2008.
• Job losses and the shrinking of the job market will continue.  Jobs are a “lagging indicator” which means that they’re usually one of the last things to correct after a recession.  Chris is the 2nd economist I’ve heard this year say this, NAR’s cheif economist Lawrence Yun also said it.  Both cautioned that news media will use the shrinking job market to suggest we’re still in a recession, which is not true.
• Unemployment is still high due to this, but it’s improving a bit.  Here in Montana, unemployment is acutally still pretty good.  State-wide we are about at 6.5% unemployment which is about 2% lower than the current national average.
• Nationally, many housing markets have bottomed out and are now seeing recovery in terms of volume.  Meaning that more houses are selling than in prior quarters, those markets include; Cleveland, San Fran, Minneapolis, Washington DC, Dallas, Boston, Denver, San Diego, Miami, Atlanta, Phoenix, LA, and others.  Of the large national markets only Seattle, Detroit, Las Vegas, and Charlotte had negative volume in his reports
• Montana’s median sales price has leveled out but seen little drop, his numbers suggested roughly a 4% drop in values.  He predicts some correction will still occur, however Montana’s market never spiked during the boom years and so it’s only seeing a slight decline over the bust years.
• Prices nationally will continue to go down this coming year, in Chris’s opinion and per his data, they’re still too high, but getting a lot better.
• Montana is ranked 48th nationally in regards to houses with “mortgage issues” being people who are 60 days+ late or in foreclosure.  Only Wyoming and Alaska are in better shape than us.  Montana only has 3.15% of it’s total housing market that are having mortgage issues.

The most interesting discussion was about where Chris believes we need to go from here, and how important the Federal Reserve is for all of us at this point.  He even went so far as to call Ron Paul a “nitwit” for suggesting in his newest book that we should “end the fed.”  The federal reserve controls inflation and the US is on the brink of another massive inflation risk.  Federal stimulus plans have injected billions of dollars into bank reserves, if that cash begins to seep into the market, our inflation rates will go up substantially.  Interest rates would spike, in fact Chris compared it to the early 80’s with 14% - 16% interest rates.  Henry Paulson and the Fed have continued to monitor inflation and curb it as best they can, the issue that comes up is national pressure on further stopping job loss.  Below me is what is known as the Phillips Curve.  This very simple chart follows the relationship between inflation and unemployment.  Chris Thornberg stated that if the Fed folds to political pressure and focuses on curbing unemployment, we will shift along the line below and inflation will rocket up.

The federal deficit will also affect inflation, and this next year we’ll have a record deficit.  However that should work to correct itself over the years to follow, he believes, and there will be other factors that will increase GDP, and shrink our deficit. 

He went on to point out that this next year the Bush tax-cuts eclipse, so taxes will be going up.  While as tax-payers this is bad news, for the economy, it’s real good news.  Tax revenues will increase for the government cutting back the deficit. 

Also we want a weaker dollar globally, the reason why is that a weaker dollar means our exports cost less globally, and our export market will go up.  Inversely our import market will go down and we’ll buy locally a little more.  This will further reduce our deficit, and help our economy.

Chris’s overall projections went as follows:

• Expect 2010 to start with a sea of foreclosures.  Many markets have investors who are begging for more foreclosures to come out for sale.  His analogy was that they’re begging for a glass of water and they’re going to get a title wave.  Banks will dump more foreclosures on the market in 2010 than ever before.
• Inflation will creep into the market regardless what the Fed does, but if they stay on target it will be a small effect.
• In 12 - 18 months interest rates for mortgages should be in the 7% - 8 % range.
• Unemployment will not dramatically improve, it should drop to around 7% but probably won’t get much better.
• Next year we should see solid GDP growth in all 4 quarters.
• Expect taxes to go up once the Bush tax-cuts go away.
• Do not expect any more federal stimulus or bailout plans as further actions could really push inflation rates.

Chris said that of course his data could be all wrong and there are some big wild-cards that can dramatically affect our economy next year:

• It could be positively affected if our export market improves strongly, as suggested with a weaker dollar.
• It could also be positively affected if business spending goes back up.
• More tax cuts and/or more federal spending would have a negative influence on our economy.
• If Fed policy shifts from fighting inflation rates to fighting unemployment rates, that would also have a negative effect on our market.

Chris said it too, the scary thing is that both Democrats and Republicans right now have it wrong.  And the other thing that really frightens him is that none of the actual reasons that caused our economic collapse have been addressed (such as compensation pay for stock brokers and loan brokers, and regulations regarding stock markets and loan markets).

The big theme was that this will be a slow recovery, be patient, because nothing will be fixed overnight. 

Found out today that buyers cannot receive the first time home buyer credit if they owned a mobile home on a leased lot, or even a houseboat!  News to me.

I have a set of clients who own a mobile home that still has wheels under it sitting on a leased-lot in a local mobile park here in town.  I’ve got them under contract to purchase a sweet little foreclosure deal and we’re hoping to close within the next few weeks.  They called an accountant and then confirmed with the IRS, that since they own this little mobile home, they do not qualify as first time home buyers.  Kind of surprising!

Even though they not own real estate, or pay any real estate taxes they were considered home owners.  Thought I’d pass that along as a quick heads up!

Also, Congress is set to debate extending the tax credit, the National Realtor’s Association is leading the charge, here’s more info: http://takeaction.realtoractioncenter.com/campaign/hbtc?qp_source=dotorg

It’s official, I suck.  Apologies to all for the lack of anything new, this summer has been a whirlwind for me, and it’s been bugging me that I haven’t blogged.

Ok, now that I got that out of the way; last week I was in Chicago for the NAR leadership summit, this is where all incoming board presidents go to hear about the upcoming plans that our national leaders have for 2010.

Quick Summary:

•  The importance of social media (youtube, facebook, twitter, blogging, rankings/ratings, etc) could not be stressed enough throughout both days.
• The NAR cheif economist talked about the continuing positive signs of national recovery.  He said that things would continue along a better path if the first time home buyer credit was extended for another 12 months.  He pointed out that projections for 2010 show slight value gains, slight GDP gains, and slight CPI gains.
• An interesting report showed that VA loans over the last handful of years have not seen a significant increase in foreclosures.  VA is unique in that it is for veteran buyers and that the buyers do not need a down-payment, it is the true “zero-down” program left.  The lack of rising delinquencies in the VA market suggests that zero-down financing has not been the issue to buyers defaulting on their loans.  This suggests that zero-down financing can survive even the worst market, it’s when you go the route of sub-prime (ratios, stated income, etc) that causes the issue.
• NAR is going to fight to continue the 1st time home-buyer tax credit, and they’d love to see it become a tax credit for any home buyer, not just 1st time home buyers.  No clear statement on how confident they are in getting that done.

There was much more stuff, but that was some of the big things.

Looking forward to blogging more!

Ok, math is not my strong suit, but I’m learning.  I’m doing a lot of stats stuff on campus and I’m learning stuff that applies to our market quite a bit.  Today I thought I’d look at a bell curve with the 2008 market and the 2009 market YTD.

A bell curve has a center that is the median, in 2008 the median came out to $215,000 from my data I pulled today.  In 2009 the current median is $235,000.  Quick side note - the less data you have the more a median number can change, I expect this will adjust down over the next few months and so on.

With all of the data we can figure out what the standard deviation is, and in a bell curve one standard deviation below and one above is 68% of the market, two standard deviations above and below is 95% and three is 99.7%.

Here’s what I get:

2008:  Median at $215,000 with a standard deviation of $128,509.16

2009 YTD: Median at $235,000 with a standard deviation of $113,429.91

So in 2008 the bulk of the market (68%) sold between $86,491 and $343,509

And 2009 YTD the bulk of the market (68%) has sold between $121,570 and $348,430

Just another way to eye the data, this suggests that currently houses priced between the $121,500 and $348,500 represent the majority of our market.  Most likely you will not experience numbers under $121,500 however if your house is currently priced over roughly $350,000 you’re missing out on a large chunk of activity.

Each Tuesday members of the Community Leadership Team of which MOR (Missoula Organization of Realtors) is a part have a teleconference with the Missoula legislative delegation.   During the call on 3/3/09, Senator Wanzenreid ask us to help break the logjam regarding the Healthy Montana Kids Initiative.  This initiative was passed by voters in the November election (overwhelmingly in Missoula) but the enactment of it is being held up in the House Appropriations Committee.  Senator Wanzenreid feels that the Legislature has an obligation to act on the will of the voters and is urging the mobilization of the voters to put pressure on the committee to act.    The bill is in House Appropriations.  Missoula representatives on the Committee are Teresa Henry and Bill Nooney.  You can use the Missoula Speaks section of the website at http://www.missoularealestate.com/index.php/fuseaction/speaks.speaksForm/ID/5E43E13F  The full committee is listed below. Appropriations
Meets Mondays-Fridays, 8 a.m., Room 102
Sesso, Jon (D) (Chair)
Hiner, Cynthia (D) (Vice Chair)
McNutt, Walter (R) (Vice Chair)
Ankney, Duane (R)
Getz, Dennis (D)
Glaser, William (R)
Hawk, Ray (R)
Henry, Teresa (D)
Hollandsworth, Roy (R)
Hollenbaugh, Galen (D)
Jones, Llew (R)
Kasten, Dave (R)
McChesney, Bill (D)
Mehlhoff, Robert (D)
Morgan, Penny (R)
Nooney, Bill (R)
Pease-Lopez, Carolyn (D)
Roberts, Don (R)
Steenson, Cheryl (D)
Villa, Dan (D)
Staff: Jon Moe, 406-444-4581
Secretary: Samuel Speerschneider, 406-444-1511

http://www.cnn.com/SPECIALS/2009/map.economy/index.html

Some interesting stuff here:

 - Regarding unemployment, Montana appears to be pretty good, almost 2% below the national average

- Jobs by industry, Montana is one of the many Rocky Mountian states that is showing healthy growth

 - The lowest foreclosure rate in December of 0.009%

Yesterday I took some notes from an economics professor at the UM. He had some info on how this stimulus affects Montana. Here’s what I wrote down:

- $626 million for the State of Montana, in his opinion a little low per capita.

- 1/3 of that is for highway funding, he reminded us that many city streets are considered highways, such as Brooks, Russell, and Reserve here in town. He suggested that most likely this stimulus will allow projects such as the Russell St expansion to take place.

- In his opinion a lot of the stimulus money is going to go into programs that the State of Montana was most likely going to do. Which means that Montana will have hundreds of millions of extra money with this bill.

- In regards to Montana’s economy as a whole, “one of the better in the nation.” The reason why is that our economy isn’t based on most of the volitile businesses at this point. Montana didn’t see the big gains, and we’re not seeing the big drops.

- Montana governor Brian Schweitzer has stated that Montana has a $250 million “rainy day” fund in the bank, just in case. When you compare this to California who is $40 billion in debt, or Kansas who is going to be bouncing checks to it’s teachers, Montana is in a very good (and safe) position.

—————————–

This information came to me via the National Association of Realtors:

This is the official release from the National Association of Realtors:

So here’s what we have achieved: 1) the loan limits will be raised to $727,000 in high cost areas, 2) the tax credit will be raised to $8,000 with NO payback [a true credit], 3) interest rates have come down 125-150 basis points, and 4) the bill has over $50 billion in it for foreclosure mitigation, with Geitners Treasury plan signaling that the second half of TARP and TALF will be used to mitigate foreclosures through a government guarantee, drive down interest rates by buying another $200-300 billion of mortgage paper from the GSES’s thereby freeing them up to do the same with new mortgages, and Fannie has just agreed to lift the cap of 4 investment properties eligible for loans and raise it to 10.

In addition, we preserved what we have - which some tend to forget is always on the table when these negotiations start up again - mortgage interest deductability, real estate tax deductability, and the $250,000/$500,000 cap gains exclusion (an overall package worth more than $100 billion and for some a very attractive funding source for their pet projects).

We did make a run at the $15,000 credit — and we would have loved to have gotten that or the Homebuilders $22,000 credit idea as well as their 5 year loss carryback deal, but they were considered too rich for this program. What it did do though is totally take the debate off of whether a tax credit should be reinstated at all (it expired last year) and whether it was a true credit or a repayable loan, and kept the conversation on how much it should be. It also kept the debate off of ‘what we are willing to give up to get a $15,000 tax credit’ and kept the debate again, on how much it should be. It’s pretty hard to complain when they give you what you ask for and you lose something you never had.
While we study the Treasury specifics on their major role in providing the rest of the housing solution — there is much more to come and we are working diligently with the Administration to help ‘unclog the pipeline’ and get capital flowing into housing again.

I always try to keep my clients and blog readers as informed as possible, and with a full year on the books I thought I’d go back and take a look at the Western Montana market in some general terms so we can see how things have been.  All of this data I retrieved from the Missoula Organization of Realtors.  So, off we go!

First off, the meat and potatoes, residential sales, which is single family detached, townhomes, condos, and modular homes.

City of Missoula:

- 928 Sales (down from 1284 in 2007, a 28% decrease)

- Median Sales Price, $215,000 (down from $218,000 in 2007, a 1.4% decrease)

- Average Sales Price, $246,628 (up from 246,538 in 2007, less than 1% increase)

- Average Days on Market, 117 (up from 116 days in 2007, less than 1% increase)
General thoughts: Volume is down, but that is expected, with less loan programs, and fears of national trends a slow-down was practically unavoidable.  The good news is that values have essentially not dropped, people are still paying similar prices for homes, and homeowners are retaining value.

Greater Western Montana region:

- 1760 Sales (down from 2554 in 2007, a 31% decrease)

- Median Sales Price, $215,000 (down from $222,000 in 2007, a 3.5% decrease)

- Average Sales Price, $260,499 (down from $275,074 in 2007, a 5.3% decrease)

- Average Days on Market, 148 (up from 138 in 2007, a 7.3% increase)

General Thoughts: The out-lying areas in Western Montana have been hit much harder by this slow down.  The high gas prices through the year were a major factor, suddenly the thought of driving 20-40 miles to Missoula 5 to 6 times a week isn’t as popular when it’s costing over $60 to fill your gas tank each time. 

————–

Now lets take a look at all bare land which can include lots in subdivisions too.

City of Missoula

- 106 Sales (down from 198 in 2007, a 46.5% decrease)

- Median Sales Price, $100,000 (up from $74,950 in 2007, a 34.2% increase)

- Average Sales Price, $156,076 (up from $127,015 in 2007, a 22.8% increase)

- Average Days on Market, 252 (up from 212 in 2007, a 19% increase)

General Thoughts: A big hit in volume, however values increased.  The large volume slowdown is most likely due to the larger slow-down in new construction, and banks tightening their rules and regulations on how many “spec” homes builders can have at one time.

Greater Western Montana Region:

- 452 Sales (down from 829 in 2007, a 45.5% decrease)

- Median Sales Price, $109,900 (up from $100,000 in 2007, a 9.9% increase)

- Average Sales Price, $203,047 (up from $161,954 in 2007, a 25.4% increase)

- Average Days on Market, 246 (up from 224 in 2007, a 9.8% increase)

General Thoughts: We see the similar hit in the volume slow down here, sales prices go up as well.  The reason we see higher sales prices is that once outside of Missoula a lot of the land parcels are going to be much larger in size, or may have recreational features such as live water.

—————–

Next up, Multi-Family, which is Duplex/Tri-plex/4-plex/and beyond

Due to the lack of data, I did not break this apart from Missoula and Greater Western Montana

- 50 sales (down from 89 in 2007, a 44% decrease)

- Median Sales Price, $237,750 (down from $249,900 in 2007, a 4.7% decrease)

- Average Sales Price, $316,639 (up from 302,537 in 2007, a 4.7% increase)

- Average Days on Market, 171 (up from 136 in 2007, a 25.7% increase)

General Thoughts: A little twist is thrown at us here, a slight decrease in Median, a slight increase in average.  Looking through the data in 2008 there were a few more large ticket sales, which boosted the average, add in the fewer amounts of sales and the Median is prone to slip a bit.  Again we see a big drop-off, probably because of the much tougher loan qualification rules for multi-family units.

—————-

Overall: We’re down in volume, which makes things tougher for everyone.  Missoula is weathering the storm much better than the rest of the western side of the state, probably due to a stronger economy, and that many people over the last few years have been moving back into town instead of moving out into the countryside.  The best news that I see in this is that generally speaking, people are not losing money in their homes, which probably explains the lack of foreclosures and short-sales we see in our market.

http://money.cnn.com/2009/01/05/autos/hyundai_assurance/index.htm?postversion=2009010513

So… Hyundai will buy back your car if you lose your job, I saw this ad on TV yesterday watching the playoffs.  Apparently they found this method works much better than incentives or rebates that we see companies like GM offering.  Also, it’s not a new thing, they’ve been doing this with success in Canada for 8 years now. 

I wonder, will we see some of our major banks or companies that still have some sort of liquidity consider a program like this?  Certain markets I think would need to be excluded, however this could be an interesting incentive to offer. 

Can this work?

There’s differences, for example Hyundai can just put the car back on the lot, but a bank will have to take on another house to sell.  Which usually means that if the house comes back up for sale it won’t sell for the same price, and the bank takes a loss.  Would the government get involved with this and guaruntee the difference?  They’ve offered something like this already I believe in regards to commercial paper and have plans in the making for people that are behind on their loans too.  I think it’s safe to say regardless your political party affiliation that the incoming leadership will be much more inclined to do something along these lines.

I’d love to hear others thoughts, I don’t see a working solution, unless the federal government gets involved.  If the government gets involved I see it being more of a mess than a solution, however what if it helps get parts of our nation on the road to recovery?

Merry Christmas, Happy Hanukkah, Happy New Years, all that good stuff.

It’s been quite the year, many challenges and new twists, but looking back it’s been a year I’ll not soon forget, looking back

Nationally:

• An historic presidential election
• “Once in a century” collapse on the stock market
• Federal bailouts like we’ve never seen
• Another horrible hurricane season
• The credit crisis/freeze/crunch/etc
• Crazy high gas prices, followed by now crazy low gas prices

Montana: 

• Montana’s economy one of the best in the nation
• Re-election of our popular Governor, State Senator, and State Representative (Schwietzer, Baucus, Rehberg)
• Stream-side set back debates rage in Helena, Realtors take a side against them
• A manageable fire season

Missoula:

• Our Montana Grizzlies football team returns to the National Championship game
• The Milltown Dam is finally removed, the Clark Fork flows free through the valley for the first time in almost 100 years
• Economic growth continues, housing sales numbers slow down reflecting national trends
• The west side of town (Orchard Homes) is hooked up to city sewer

Personally:

• Back in school I made the Dean’s list for both semesters
• My son turned 3, we found out he has some sort of autism, he’s now enrolled in Special Ed pre-school
• My daughter turned 1, and is walking and talking more now
• My wife and I sold our home and are planning to purchase again this spring
• Business was steady, not a record breaking year but a respectable one, helped some people avoid big trouble, helped others get great deals, and helped a bunch get their house sold.
• My sister got married
• My dad was very excited to turn 65 and get on Medicare
• I was elected to be the 2009 president elect of our Realtor Association, and 2010 president.

I look out the window right now, we’re covered in snow and there’s no sign of it letting up, it should be a relaxing few weeks, and then it’s back at it! 

Happy Holidays and God bless!

 -Brint

Just last week Dr. Larry Swanson an economist with The Center for the Rocky Mountain West did a mass presentation about the Montana economy, how it’s doing, and where it’s headed.  There was also a panel of speakers there, the president of the Home Builders Assoc, our Realtor board President, a Hotel/Convention Center manager, the manager of the Southgate Mall, and a manager from a regional bank, First Security.  It was a pretty interesting discussion, in fact I’ve got the power point slide-show, if you’d like it let me know I’m happy to email it.

Larry started off that all of the US is being hit by the current recession, however certain areas of the country are actually making worse of the local economy by just reading the news, Montana was an example.  Our economy here is steady, not great, not bad, but steady.  However many people turn on the TV and hear the sky is falling, and they presume it’s happening here too.

A few points from his presentation that I’d like to pass along:

• If you were to remove California, Florida, Nevada, and Michigan from the national trends there is no recession and there is no burst in the housing bubble.  The mass loss of jobs, economic slowdown, and deflation in home values comes from these 4 states.  Now, that doesn’t mean all would be fixed, however the massive declines mostly come from these areas.
• In the western half of the US, we see a housing and economic trend that flexes and bends, when California/Nevada are up, the rest of the collective western states are down, and when Cal/Nev go down the rest of the western states go up.  Where are we right now?  Well Cal/Nev is headed down and the rest of the western states are headed up, and at this point they’re just about equal, which suggests in the next 2-3 years strong economic gains in states like Montana
• This year Montana home-owners have lost just $1,000 in median value, a 0.05% price decline.
• This year Missoula’s SALES volume is down 28%, the Missoula valley will have just under 1,000 residential sales this year.
• Missoula is in one of the nation’s top-50 small-sized towns in regards to growth, economy, and housing prices.  Billings & Great Falls also fell on this list I believe, I’ll double check that. 
• Next year Larry predicted we could see legislation that will lock 30-year interest rates at 4%.  That would be interesting, during the early 2000’s when sales went nuts interest rates were never that low, usually in the mid-low 5% range.
• Montana’s economy is largely service based, construction, medical, real estate, and general services are some of our biggest portions of the economy. 

I’ll scan through that report and put some more points up after Christmas

http://money.cnn.com/2008/12/15/real_estate/underwater_borrowers_near_12million/?postversion=2008121504

 Thanks Zillow!  Ok seriously, this is news that we’ve all been hearing about for quite some time, and now Zillow is putting numbers to it, which is very staggering.

In some markets we’re seeing that people are getting killed by decreasing sales prices, they’re probably not only losing gained equity, but also some of the initial investment that they put down on the house.  That’s scary.

Here in Montana, we’re not seeing the massive “lost value” in homes, our median has held steady at $220k for quite some time now, and last I checked our average sales price has dipped by about $8,000.  Also, don’t believe Zillow here in Montana, we’re a non-disclosure state which means that sales data is not public record. 

Zillow does it’s best to make a good guess in Montana, sometimes it’s close! About 10 months ago when I sold my house on the west end of town I sold it for just about $228k, Zillow at the time said it was worth $219k.  Now in doing another check Zillow tells me the house is worth $192k - which would be way lower than any other house selling out there.  Also I checked my parents house that’s in the university area, Zillow thinks that the house is worth about $333k.  There’s been a few sales right across the street from my parents and those averaged out to around $475k.  So…. looks like Zillow’s off, by a bunch.

In Montana check with a Realtor who has MLS access for value researches, we can do that, Zillow can’t.

http://www.missoulian.com/articles/2008/12/03/bnews/br40.txt

So this article just came out today, listing the current amount of homes in Montana with mortgages that are listed as 60-days late or worse in the 3rd quarter this year.  There’s some very interesting info, some quick points to the article:

• Montana’s is at 3.96% which is up 1.4% compared to the 3rd quarter of 2007.
• The rate has been around 2% for quite some time, until the 2nd quarter of 2007, then is started to climb to where its at today.
• They project that this will still climb, getting possibly as worse 4.7%.
• Florida is a 7.8%, Nevada at 7.7%
• One projection is that delinquencies should continue at these rates until 2010

So, what’s kind of interesting is that Montana’s has seen an increase, however the out of the entire state with less than 1,000,000 total people, there’s really not a lot of houses going through these issues, compared to 7.8% in Florida with over 18,000,000 people and much more houses. 

Overall though, we’re talking about a direct housing crisis that’s influencing less than 4 in 100 homeowners in the state of Montana.  The 2006 Census lists that Montana has 432,023 houses and most national trends show that about 60% of all houses have a mortgage against them.  So, doing the math we’ve got approx 260,000 households in Montana with a mortgage, and 3.96% 60 days or late, that’s just about 10,300 houses.  Certainly a bunch, but we’re not talking staggering numbers here.  Again pulling up Florida we’ve got 8,533,419 houses, again if we use the 60% rule we’ve got just over 5.12 million houses with mortgages and 7.8% behind, that’s nearly 400,000 homes!

No one can deny that the housing / credit / bailout issues are hurting almost all of us in some negative way or another, but remember that each real estate market is different, and we see different affects in different areas.

http://www.metnet.mt.gov/NewsLinks/I029A2356

http://missoulian.com/articles/2008/11/27/news/mtregional/znews13.txt

 That guy was our neighbor at our old building.  Pretty crazy stuff! 

My first example is a house I’m very familiar with, it was the first home my wife and I bought.  The house is located here in town, on LaFray Lane, it’s a 2 bed, 2 bath home with a double car garage, built in 2001.  The lot is fenced with a cedar privacy fence, and there’s a separate dog run on the side.  The house has surround sound in the living room, tile floors, and a custom kitchen.

So here we go, like I said this house was built in 2001, however looking back at similar sales a year before I’m able to find similar homes that sold, here’s the breakdown in possible values of what I find when I search for newer homes in the same MLS area with similar features;

2000 - $115,575 - Average / $113,475 - Median

2003 - $141,272 - Average / $141,447 - Median

2006 - $185,369 - Average  /  $175,300 - Median

2008 YTD - $212,481 - Average / $202,500 Median

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Based on these numbers, and my familiarity with this house, they seem fairly accurate.  Amidst the doom and gloom of national woes it’s good to look at long-term scenarios like this to see that an investment in a house like this is a good one, especially here in Missoula.  Now that might not be the case with all housing across town, but we’ll see how that shakes out as I do more of these posts!

So I’ve been thinking about rolling out a new section of my blog, and I’m going to start it up today and show what we’ve been seeing in value trends with specific homes!  What I’m going to do is this:

 - I’ll have an example property, a house somewhere here in town, I’ll post a photo and some additional information on the place. 

- Then I’ll show, based on comp data from the Missoula Organization of Realtors what the house was worth in 2000, 2003, 2006, & current. 

If you have a property you’d like me to try this on, let me know, send me a photo and some information and I’ll put it together!

Not newsworthy, but funny, I guess.

 Today I put together a list of houses in our MLS that are listed as either short-sale (selling for less than what’s owed on the house), or foreclosure properties.  There were a handful, 29 out 280 in the price range of $200,000 - $300,000.  However about every 5 or 6 listings I noticed that the agents in their remarks would either type in all caps, or type some features in caps.

According to the National Association of Realtors I think the average age of Realtors is somewhere in the 50’s, and so we’ve got an MLS full of people typing in a style that interpreted as shouting (By typing in all caps, online print/discussion is meant be considered as shouting.)  Kind of made me laugh, I can see some marketing guru talking to a room that’s 3/4 full of Realtors about marketing ideas now;

“Alright, you guys want to really stand out, and get your listings sold before anyone else?!?  Well I have a secret for you, it’s called…. CAPS LOCK!”

<audible gasp from the audience>

“That’s right, caps lock is big, it stands out and it makes your features seem even better!  Yeah!!!  Who’s with me?!?”

——-

So below are some of the property descriptions I saw.  Here’s what I want you to imagine; you’re meeting this agent face to face or you’re chatting with them on the phone and he/she is describing the property to you exactly as the description reads, and they shout where ever you see words in all caps, just imagine what you’d think:

First example:

“ONE LEVEL LIVING - LOW MAINTENANCE home- feels good w/ OPEN FLOOR PLAN,vaulted ceilings & gas FIREPLACE. Convenient MASTER SUITE w/double vanity. You will enjoy the DECK w/ pergola which provides a great outdoor living space for entertaining, grilling/dining or quietly lounging & enjoying the nicely landscaped, fully FENCED yard (larger than many of the newer Lolo subdivisions). Ample storage in large garage & shed that stays. Garage wired for 220*. The VALUE and QUALITY are here. Come & Enjoy.”

Second example:

“ABSOLUTELY METICULOUS! LOCATED ACROSS FROM PARK AND NEXT TO SCHOOL LAND. HUGE LIVING AREA WITH VAULTED CEILINGS. BUILT PERFECTION.”

Third example:

“THIS IS A MUST SEE!! IMMACULATE IN EVERY WAY. NEWER ROOF, SIDING AND WINDOWS. HARDWOOD FLOORS, GREAT KITCHEN, AND MAIN FLOOR UTILITY ROOM. HUGE YARD WITH ALLEY ACCESS, NICE LANDSCAPING AND DECK WITH GAZEBO AND HOTTUB. ROOM FOR RV WITH

PAVED PARKING. THIS HOME IS READY TO MOVE IN AND ENJOY.“

Fourth example:

“OPEN FLOOR PLAN! 2 large Main floor bedrooms, PLUS 2 lower level bedrooms or BONUS rooms PLUS office area and lots of storage make this a great home. MUST SEE INSIDE TO APPRECIATE all work sellers have done. Upgraded KITCHEN & BATH. Collectibles LIGHTED DISPLAY built-in cabinetry.  Side entrance to lower level. Enjoy wooded area at your back door–PINE TREES & wildlife. 1500 sq ft DECK for entertaining, complete with cascading water feature. COUNTRY LIVING yet close to town! FREE 1 YEAR HOME WARRANTY!”

————–

Ha, I see this every day, makes me laugh, but I guess i’m just some dumb kid that doesn’t maximize the potential of my caps lock key!!

No blogs for a little while, sorry about that!  We’ve moved locations, from 1701 South Ave W to 1001 SW Higgins, we’re very close to downtown and the “hip strip.”  Now that we finally have internet and phones up and running I’ll get back to blogging a few times per week!

Last Thursday - Friday was the 3rd annual New West: Real Estate Development in the North West.  The event featured a Thursday schedule that was based around a lot of political issues, land-use, and marketing trends.  Friday was a lot more economic talk, there was some discussion with developers, and discussion about stream-side set backs. 

Here’s my quick thoughts from the 2-day event, also I’ve posted New West’s official release below.

 On Thursday:

 - The first few sessions were broken apart into three different topics, in the morning “track” I went with marketing innovations, in the afternoon “track” I went with land-use laws.  Both were decent, not entirely ground-breaking.  The marketing discussion lacked a lot of new ideas, mainly just a bunch of marketing firms telling the class that they should spend a bunch more in the paper and add in other marketing schemes that worked well in the 90’s.  Not much talk about using Facebook or Twitter to market/promote, or using innovative new sites.  The land use thing was basically a refresher on how playing nice when doing a development helps.

- The last session was pretty interesting, a politicial discussion with a NY Times Op-Ed writer, a reporter out of Helena, a reporter from Idaho and a reporter from Wyoming.  The discussion centered more around local/state elections rather than the national election, here’s a few quick points I gathered:

• Bryan Schweitzer has become a ground-breaking democrat, mainly b/c he’s bridged issues with some conservative voters around gun rights.  Also his more centrist appeal has helped economic trends in Montana and made him very popular.  There was some debate as to if he’ll be asked to be Energy Secretary or possibly head up the Department of the Interior.  The NY Times guy thought Bryan would take either appointment, the Helena reporter disagreed.
• The discussion about Schweitzer carried over to a lot of democrats in the NW Rockies area bridging the gap with a lot of conservative voters.  The possibilities and implications that might have, etc.  Mainly Wyoming and Idaho are seeing some ground-breaking movements and shifts away from the republican base.
• Some national election talk; most of the panel agreed that if Hillary was on the democrat ticket that states like Montana and North Dakota wouldn’t be “toss-up” states right now, due to the dubbed, “Clinton War on the West” from the 90s.  Most of the national election discussion wasn’t a, “who will win,” discussion, but a, “How much Obama will win by,” discussion.  During the open-mic portion a guy in the audience asked when the “gutless” media was going to talk about real issues, kinda funny.

Friday morning had the most amount of info, it featured an economist that’s been here all three years.  What’s funny was that he sounded pretty negative to a lot of people that were hearing him for the 1st time, however in 3 years of hearing this guy it’s the most positive report I’ve heard him say.  The new west article I’m linking to here talks mostly about that, so I wont really hammer out the entire discussion.  The main points are this, expect another 12-18 months of this continued trend, afterwards don’t expect a rapid bounce-back but rather a steady and progressive climb.  Also in reference to Montana, we’re a bit over-priced (although his numbers were off) and that we’ll have a more shallow dip, and we’ll bounce back at the same rate the national market does.

The next few sessions were discussions about land ownership, development, Plumb Creek, sustainable development, and master transportation plans, some quick observations from those:

• The moderator for the development session was trying to be very controversial, lashed out against Realtors - saying that he hears “all the time” that Realtors are saying the market is great so we can trick people into buying now.  The panel disagreed (3 developers).  I think our local organization does a great job of presenting just the facts, and doesn’t spin info.  Sure you can get conflicting reports, however I think the moderator’s statement was off-base.  Also add in that our organization was a major sponsor of this event it was somewhat upsetting to see such a one-sided question at an event that we support.  Don’t get me wrong, dissenting opinion is good, but just bashing on an entire industry - especially one that’s sponsoring your event, seems a little mis-guided.
• The sustainable developer was from Red Mountain Ski Hill in Canada, north of Spokane, WA.  Interesting stuff, looks like a funky little town and a neat ski hill.
• The master transportation people I got a laugh out of, one guy (who was probably in his late 40’s / early 50’s) was apparently the authority on my generation (under 30 years old) saying we all “hate” our cars.  I understand the point he was trying to make, but in Montana owning a car is almost a must, this isn’t downtown Portland we’re talking about.  Also I think it was the same guy said that we need the “private sector” to build more roads, and that we need to this and other things to promote affordable housing.  However private sector = developers, and if the developers have to put more roads and wider roads in constantly then they’ll be paying more impact fees and development costs, guess where they get those expenses back?  In the houses they build.  I think there’s a serious dis-connect between city government and how they think they’re promoting affordable housing.

The final session was on stream-side setbacks.  It was supposed to be a big fight, but it mainly just featured an upset land owner that looked a lot like David Crosby of Crosby, Stills & Nash who was rightfully upset that his lake-front land would be rendered un-use-able with a 250 foot setback (not allowing construction within 250 feet of water).  He called some people communists (I love it when the c-word is thrown out there!).  There was discussion that maybe a case-by-case basis should be taken, or a variance option.  The Davis Crosby dude brought up that there’s no language about compensation if his land is “taken” from him, a valid point - if you have 1 acre that suddenly isn’t use-able at all b/c it’s too close to a lake or live water, shouldn’t you be compensated for that?  Some interesting discussion, but not the heated debate it was expected to be.

 Uh… think that’s it!  A long post to start the week, I’d better get to work!  Also here’s that newwest link - http://www.newwest.net/topic/article/housing_slump_wont_recover_until_late_2009_or_2010_economists_say/C35/L35/

http://www.missoulian.com/articles/2008/10/10/news/local/news02.txt

In an exchange of email discussions with a friend I thought I’d share my thoughts on this here as well!

—–

Holy Cow, a very broad proposal.  You can look at an idea like this in two ways, good, bad, & some challenges: 

1.       Good

a.       Lower mortgage payments to off-set possible lower income or issues with other debt spending, that’s a good thing.  If people do not have other debt services they could possibly inject some of that saved money back into the market and spur consumer spending. 

b.      More homes would become affordable, more people would buy homes (once their credit is repaired), and that’s all good stuff for housing and home ownership. 

c.       Purchasing of homes in the $250k - $450k range would probably go up, b/c people could handle the higher payments. 

2.       Bad

a.       Investors and people owning rentals would make major gains, they’d probably keep charging the same rent, so their profits would go up, but renters would not see any value/benefit. 

b.      This flies in the face of the free-market way worse than a $700b bailout, forcing house prices to be set at a previous standard?  Would we then have to do the same with stocks (although the DOW is already at 2003 levels) tell everyone that their stock portfolio will be lowered to it’s 2003 levels?  Will we do the same with cars, commercial R.E., and other larger ticket items too?   

c.       What about markets that aren’t hit so bad?  Missoula’s is a good example, our median value hasn’t dropped, so now we’re going to be penalized for insane value increases and borrow-and-spend tactics that happened in the mid-west and on both the east coast and west coast?  That hardly seems fair. 

d.      This would crush new construction, it would simply stop.  By lowering houses to 2002 – 2003 values you’re not lowering the cost of concrete, wood, labor, finish work, asphalt shingles, etc – you would be unable to build a house now simply b/c of the costs associated with building them 

e.      The complete halt in new construction would have a giant ripple effect, that labor market would be gone virtually.  Granted a lot might get into remodels (b/c people would have to buy and remodel since they couldn’t afford to build) however if you were a framer anywhere in the USA and a law like this came through, you might as well be finding another job.  Also, impact fees would stop getting paid, we all know the city relies on A LOT of impact fees to collect.  No construction – no impact fees, or if there’s just a little construction the impact fees would be raised so much that again the price of the house would skyrocket and thus not be affordable  

3.       Challenges 

a.       The benefit would be so much larger for other states, for example California vs Montana.  In California people would have $200,000 - $500,000 in many cases forgiven where in Montana it would probably be more like $30,000 - $40,000.  Again, how do you properly distribute or coordinate that? 

b.      Would qualified home buyers just go out an up-bid houses?  The market could shift to a very strong sellers market and we could see values return to close to their current levels really quickly, how would we control that? 

c.       Right now it wouldn’t matter any ways b/c everyone has crap credit, regardless if a house is $220k or $180k they might not be able to be approved for it anyways. 

It’s a broad and ambitious statement, but I don’t think it will work.  I don’t think when he made this statement that he took into account the amount of other industries that are affected by the values of houses, from complimentary jobs such as contractors to industries that also rely on real estate (city gov’t, home supply, landscape, etc).  In regards to the value of homes, let the market work its course – there’s definitely sectors that need bailouts but for areas like here in Missoula I don’t think it’s needed.   I’d wonder if a better idea would be to do this with credit markets (lines of credit, credit cards, etc) it would have a smaller ripple effect. 

What do you think?

http://money.cnn.com/2008/10/08/news/economy/Paulson/index.htm?cnn=yes

Paulson says, “Chill out.”

America is going through some crappy times right now, sure most of us probably just aren’t eating out as much, or maybe cut back on the satellite package, or don’t drive the truck around as much - but a lot of us are having to make sacrifices.

I’m a younger guy (turning 29 on Sunday) in my 11 years as an “adult” and especially since 2001 when I became a homeowner we were in a market where we could get money, answers, results instantly.  Look at what people could do!

• HELOC’s would take a week or so, and then a 3 day right of rescission and you’re set.
• You could get a credit card without even asking for one
• You could get a line of credit as easily as saying, “Sure” when the bank teller and the drive through asked you if you wanted one.

Now that the bailout is in place people are wondering why nothing has happened, and Paulson is warning us all that this takes time to unravel.  However we’re still hungover from quick credit/loan solutions that I think a lot of us expected immediate results.  Like we’d wake up a week after the bailout and housing values would be up 15%, we could get stated income loans on anything, and we’d all have big raises waiting for us.  This will take time, and a majority of us need to relax for a while (hunker down) and things will recover.

Ah yes - it’s that time again, quarterly stats and absorption rates! 

 I hopped into the MLS (Missoula Organization of Realtors) to pull some unofficial numbers - here’s what I saw (this is just for the Missoula valley):

2008 3rd qtr sales - 282

2007 3rd qtr sales - 403

 - Almost a 30% decrease in volume, right?  In the midst of everything I’m not entirely surprised.

2008 3rd qtr median sales price - $220,000

2008 3rd qtr average sales price - $249,625

2008 3rd qtr average days on market - 103

2007 3rd qtr median sales price - $220,000

2007 3rd qtr average sales price - $252,326

2007 3rd qtr average days on market - 102

- The good news appears to be that houses are maintaining value, and selling in roughly the same amount of time.  The average is down a little, I was a bit surprised to see the median exactly the same, I figured it would be close, but not exactly at the same point it was at last year.

http://news.yahoo.com/s/ap/20081004/ap_on_bi_ge/financial_meltdown_credit;_ylt=AvWChjCHxlCtr6wHfehtWKIDW7oF

This AP article I read on yahoo suggests that there’s other factors than simply pumping hundreds of billions of dollars back into banks around the the US.  The main thing now is that home prices need to stop falling.  Banks are still going to consider many markets a risk and still be very hesitant to lend money in certain markets.  I would think that amidst the hammering they’ve taken banks are not simply going to jump right back out there and make all sorts of bad mortgages again!

Also mentioned in the article is what a turnaround in housing prices would do - boost consumer confidence mainly.  1 in 8 US jobs are housing related!  However they caution that this will not be a quick turnaround, it will take a while for things to stabilize and then rebound - also the risk of everyone “sitting on the sideline” and not taking action will continue to drag out this recovery.