Lets take a look at an array of stats (For Missoula urban area only):

1/1/2010 - 7/26/2010 Sales: 504 houses

1/1/2010 - 7/26/2010 Median: $199,900

1/1/2009 - 7/26/2009 Sales: 464 houses

1/1/2009 - 7/26/2009 Median: $215,000

My analysis: Neither of these numbers are overwhelmingly surprising, the first half of last year was when the tax credits were just taking hold, interest rates were higher and the stock market collapse was still resonating for everybody.  Until March of 2009 I believe the tax credit for 1st time buyers was very different ($7500 and you had to pay it back) so the market was not dominated by first time buyers.  Run forward to today, the entire year has been controlled by the tax credit which leads to a few things, increased (stimulated) activity, which is shown with the YTD sales being 8.6% higher than last years at this time.  And a decreased median that reflects continued downward pressure on the top-end of our market and increased activity in the lower-end where most first time buyers look.  The $15,000 decrease off the median is our biggest drop I’ve seen in recent years, it reflects almost a 7% drop.

What to watch for: the 2nd half will be very interesting, our market shifts from a first time buyers market to a move-up / move-down / investor market, which would suggest the median should shift up slightly but probably not significantly.  Additionally the number of overall sales should slow as there isn’t an incentive for people to hurry up an buy.  Right now looking in the MLS there are 108 houses listed as under contract or under contract / actively searching for backup offers.  The current pace of sales puts Missoula on par for a year very similar to last years at about 870 - 900 sales, however without incentives and continued national concerns on the market I expect continued slowing trends overall, I’d be pretty surprised if there are over 800 homes sold this year in the Missoula urban area through our MLS.

Next up, lets branch from residential and see how the investment market is looking (duplex/triplex/:

1/1/2010 - 7/26/2010 sold: 24

1/1/2010 - 7/26/2010 median: $235,000

1/1/2009 - 7/26/2009 sold: 19

1/1/2009 - 7/26/2009 median: $271,500

 My analysis: A slight uptick in activity shows some renewed activity in the investment sector for Missoula, that’s a good thing (only 15 sold in the same range in 2008 and 20 in 2007).  While the return of activity is good, the median price shows what part of the market is moving, and what part isn’t.  Properties that need to sell are going for a discount and have pulled the median down sharply.  I looked at the median list to median sales price and in 2008 the difference between list to sale was just $5000, in 2009 it was $25,500, and so far this year in the same range it has been $11,950.  So the era of getting rental properties at a big discount could be over, for now.  It’s good to see investor interest returning!

Check out this new Land property that I just posted on my Web site. It is at 29805 South Side Rd in Alberton. Almost 15 acres that border open land and are near a game preserve. Bordering the Clark Fork river to the north this property offers moderate/heavy treesfor privacy and utilities already available to the land. There used to be a mobile home on the property, so there are some ideal spots to put your dreamMontana home. A very short distance to I-90 offers the convenience of being able to get to town quickly, while still providing a private and secluded .

I just read about a new email forward that is being passed around citing the HR 2454 Bill will require all sellers to retro-fit their homes, license them, and get EPA approval to sell them.  Then today I get it sent to me by a fellow agent in Missoula - word travels fast!

Totally not true: here’s the answer from the National Association of Realtors debunking the myth:

 ”An email (subject: “Homeowners—Listen Up”) is being re-circulated claiming that H.R. 2454: the American Clean Energy & Security Act would require an energy license/retrofits for home sale. The email is NOT accurate. H.R. 2454 remains pending in the Senate. Senators Kerry (D-MA), Graham (R-SC) and Lieberman (I-CT) continue to pursue bipartisan support for an alternative to the House bill to move the legislation forward for consideration by the Senate. NAR continues to monitor the Senate efforts and will work to ensure residential and commercial real estate is not adversely impacted.

Additionally, during consideration of H.R. 2454, NAR was instrumental in eliminating time-of-sale energy efficiency requirements from the bill. The House approved H.R.2454 with the following two provisions. We will work to ensure that these provisions are retained in the Senate version of the legislation:

• Section 202 (Building Retrofit Program) would offer matching grants for home improvements. State governments would administer the program which is voluntary and available to all property owners.
• Section 204 (Building Energy Performance Labeling Program) would apply to new construction only and prohibit time-of-sale labeling. The original energy audit and MLS listing provisions were deleted.

Thanks to REALTORS®, NAR succeeded in excluding existing real estate from the bill requirements. Last summer after the House approved its version of the legislation and this email originally surfaced, NAR developed a full packet of information complete with legislative analysis, Myths vs. Facts, FAQs, etc.”

Today I’m making a stronger commitment to blog more often, and hold myself accountable to that, I’m moving this blog to the front-page of the website.  From here on out this will be easier to find and will have more frequent updates and information.

After some tweaks today I’m going to get a market update posted, be on the lookout!

Testing out some new features to my RE/MAX design center - we just listed this great condo for $189,900.  It’s got 3 beds / 1.5 baths and also has a full unfinished basement thats ready to add another family room, bathroom, and bedroom!

Check it out!

Catlin Virtual Tour

Two weeks back in Washington DC for the Realtor mid-year meetings I was pretty surprised to hear both Lawrence Yun and an economist with Moody’s talk about an upcoming new construction housing shortage.  Yun talked about on average the US needs to be building about 1.6 million new homes per year, however in the last 3 years new builds are non-existent, and that currently the US is about 2.35 million homes short of meeting that need.  So what does that mean in the future?  A big shortage, and in doing a simple Google search I can see it’s not just the US who is dealing with this, it’s also the case in Austrailia, Sweeden, and the UK.

It seems the report of the pending housing shortage is starting to get press such as with this articleon MSN from Forbes, this reportfrom Drew Kessler, and of course the NAR press-release on it. 

Naturally the market will continue to be dominated by foreclosures in some areas as well as short sales.  Missoula has remained pretty intact, however foreclosures are up and playing a much larger factor in our market today than ever before.  However a foreclosure and a new build are two very different things and in many cases appeal to very different buyers.  Foreclosures will remain popular with investors and people looking to fix-up places, while new will remain attractive for move-up / move-down buyers that aren’t looking to buy a house that usually needs work or for many 1st time buyers or FHA buyers that don’t want to become new home owners and inherit a lot of deferred maintenance.

Looking down the road in Western Montana that could be a very good thing, if the demand for new housing ramps up sharply that will dramatically impact the surviving lumber mills and the wood-products industry.  Furthermore it will have a much stronger effect of stimulating our local economy than most federal government incentives.  How so?  Think about the amount of people and local supplies it takes to build a single house, the foundation work, the carpenter, the architect, electrician, plumber, roofer, flooring company, painters, and all the sub-contractors they hire out.  Then there’s also more need for city planners and engineers for oversight and permits, which in turn will help local governments.  The impact on our local market economy would be dramatic.  Now its widely known that there’s tons of buildable land and subdivided lots around Missoula, however those are mostly in high priced areas where a new home will intentionally be a rather expensive one. 

But if the recent trends have taught us anything, that’s not what will lead the charge in demand.  Our market, much like many others nationally is bifurcated (split), meaning that one half is strong (under $275k) and one half is weak (over $275k).  Add in that the Gen-Y / Millenials are surging into the market and the demand for high-priced new construction over $275,000 will not be there. People will want affordable, sustainable, centralized, and customizable housing.  All for a low-cost as possible. 

Where in Missoula can you find that now?  There’s one neighborhood that comes to mind that is about 75% complete, Windsor Park.  Another two are nearing completion as well, Canyon Creek is on it’s final street it seems, and Pleasant Views is about 90% complete.  After that… um… nowhere.  Sure there’s infill, but I don’t know a lot of people who want to live in an alley-access home that’s bracketed by a 4-plex and a 1972 Champion mobile home.  There’s a big shortage looming in Missoula and it could leave builders and city planners scrambling to get new projects on board.

The other piece to the puzzle that will make this tough to plan for is the city’s lack of concern for affordable housing.  Now let me say this, I like our Mayor he’s a great leader and very well respected around town, he’s done a great job here in Missoula.  On his main page he states affordable housing is one of his biggest concerns.  If that’s the case why did he just todayannounce additional taxation on home owners?  In recent years it seems that Main Hall and the City Council feel that developers and builders have deep pockets and that more and more tax burdens fall to them.  Well guess where all of those impact fees, permit fees, application fees, and over-zealous building requirements get passed onto? 

The home-buyer.

That’s right, I said it, the home-buyer.  If a builder/developer is facing $10,000 in total fees to build a single house those fees are getting put on top of that house’s asking price.  Thus killing the notion of making housing affordable.  Ok, deep breath…. look, I’m not refuting the need for the services our city provides, I just think they’re unfairly taxing the builders and developers here in Missoula which is directly passed on to the person looking to buy that home.  I know it’s been discussed before, but a local option sales tax would spread out a lot of fees that homeowners currently pay and have renters (like the near 14,000 college students each year) and tourists also contributing more to meeting Missoula’s tax needs.

OK, so here’s the thing, in the next two years most likely Missoula will need multiple large-scale new housing projects, they’ll need to be:

• Centralized and walk-able (not out of town, must be near local services)
• Sustainable (smaller lawns, focused on less water/energy usage)
• Affordable (most likely under $225,000)
• Customizable (the toughest challenge, they need to be something a Gen-Y/Gen-X buyer can customize to meet their individual needs)

Sounds a lot easier than it will really be, but its something that’s right around the corner, and Missoula needs to prepare for it.

It’s June 1st, and I haven’t blogged in almost a month, ugh.  Lets see, here’s some snippets of what’s been going on

In Mid-May I attended the NAR mid-year meetings in Washington DC, here’s some quick snippets:

• Lots of mixed messages about the health of our economic recovery.  Many opinions that prices will continue to decline due to the tax credits “propping up” values for the last 18ish months.  Missoula’s median is continuing to decline, regardless the tax credit, but I agree with those opinions.
•  It’s a nasty word, but mortgage-backed securities will help to lead the charge to recovery.  These securities would be based on the what is out there now, solid mortgages that were not “sub-prime” loans, but based on the newer and much more strict lending standards to date. 
• Expect a slower summer in terms of sales volume, many people who planned to buy hurried up and purchased during the time of the tax credits
• This is interesting, expect in 2012 a massive new construction housing shortage.  Nationally 1.6 million new homes need to be built each year to compensate market needs, however in the last few years with very little new builds happening our market is currently -2.35 million new builds short of the ongoing need.  As recovery strengthens, expect serious shortage in new homes.
• Mix in some governance meetings, presentation of Missoula’s “game-changer” (www.livemissoula.com), and some other things and this was a heck of a good md-year meeting.

OK, that was the biggie, I also had two separate trips to Helena:

• The state Realtors mid-year meeting, pretty basic stuff for the most part, nothing earth-shattering.  The RPR was a hot topic, the research done locally by myself and an advisory group that assisted me was really popular.
• Also we’ve got a new forms program coming out, I attended the training for that, it’s a great platform but will require some pretty big shifts in how people operate to get comfortable with it.

Courtney (my wife) and I bought a house, it’s our 3rd place we’ve owned, moving was… fun.

Add in finishing up the semester at the UM, local business, local Realtor leadership stuff, and family things and I think you’re getting to see why I’ve slacked off in posting.  Well, now it’s June, hopefully I’ll be more on the ball, in fact I’m going to get working on an in-depth post in the looming new-construction shortage.

As promised!

A week ago I checked and saw that in the greater Missoula area (not Lolo, Frenchtown, Bonner, or further beyond in those directions) had 190 houses that were pending sale.

This afternoon I pulled up the MLS and right now it shows that in those same MLS areas we have 201.  So… a slight uptick, ho-hum…

However, there’s something else to consider, how many of those 190 under contract listings on the 23rd have sold and closed over the last week?  I checked those numbers and I was shocked to see that there were 41 sales according to the MLS.  41 in a week, wow!

So now lets apply those 41 homes sold.  Removing 41 homes from the 190 that were pending on April 23rd and that leaves 149 houses still pending sale.  Today we’re at 201, so in the last week or so, we’ve had 52 more homes go under contract.  Wowzers.

From here the tracking will get REAL interesting, seeing what activity goes on now that we’re post-tax credit.

With 1 week to go before the tax credit expires things are frantic to say the least, buyers are making offers left and right, and some houses are getting quite a bit of activity right now!

I thought it would be interesting to see how our market holds up with new buyer activity once this tax credit has expired.  So, I took a quick look at the numbers today.  Right now in our MLS as of the 23rd of April, we’ve got 831 active listings in Missoula, 190 under contract homes, and 67 sold in the last 30 days.  That’s a market absorption rate of about 15 months, suggesting over-supply.   However we’ve always had over-supply in the early/mid spring, according to a report that the Missoula Organization of Realtors makes available to all agents that tracks these rates, the absorption rate last spring for the entire market was 13.29 and in 2008 it was 20.53.

As a refresher, the absorption rate tracks how long it would take for the entire listed inventory to sell based upon the last 30 days worth of activity.  So for right now with an absorption rate in our market just over 15, there is 15 months worth of listed inventory currently for sale or under contract in our market.  If there were no new listings to come out, and sales remained constant, 15 months from now there would be nothing for sale.  Now clearly we know that wont happen, but it’s a decent indicator of how saturated your market is.  Anything over 12 months is a sign of over-supply, and I believe anything under 6 months is a fairly hot market.

I’m going to check these numbers again two weeks from Monday, what I’m really curious to see is if that number of 190 houses under contract homes changes much!

So, I know a popular trend in blogging is continual updates of an ongoing event.  For the last month I have been attempting to get a short-sale approved for some clients of mine.  This is not typical of all companies, some are better, some are worse, but in this case I thought most of you would find it interesting (and horribly frustrating) how the process goes in some cases.  The bank in this case is US Bank.

 I will continually update this as things unfold.

March 1: Offer comes in, after searching US Bank website for an hour to find any hint of a short-sale department I take a guess as their site has no information on who to contact.  After getting the run-around I try to google-search some options, I find a few numbers from fellow Realtor bloggers who have direct-lines to the short-sales department, not surprisingly, those numbers are all disconnected.  Finally after my 5th attempt I get the right department, cleverly masked as a loan-counseling department with no mention of short-sales.

March 2: I fax in the offer, the authorization to contact, and supporting documents.

March 4: They still didn’t get my fax

March 5: No luck, told to be patient

March 9: They got the authorization, but oddly, not the buy-sell

March 10 / 12 / 16 / 17 / 19 / 24 / 25: The buy-sell magically is still not available, I’m told on each day to be patient, and to re-send each time.  The sellers/owners are calling as well, no luck at all.

March 26: Still nothing, I re-send the offer again.  Each fax I have confirmation of delivery to three different numbers.  Now a 2nd offer comes in, both offers are re-sent including a hard-ship package two three different numbers, attention to two different people.

March 30 / April 1: No word, when I ask for Andrew the person who I was told to send the offers to I get a voice-mail that’s full, and hangs up on me.

April 2: The sellers call in, no luck

April 5: The file is set up, but… only on the 1st offer that was sent over a month ago.  No clue on when the 2nd will be processed.  Once again, Andrew’s voice-mail is full and hangs up on me.

April 6: The main line is too busy, I’m told to try again later and it disconnects the call.

April 7: The same run-around, the file is set up, no I can’t get a rush, no I can’t talk to anyone, we’ll call you, don’t call us.  I ask for assistance if the lady on the line can deliver a note to this Andrew guy, she says she doesn’t know him but could email him.  She proceeds to tell me it won’t do any good, and there’s no way a “rush” could be placed.  Much like prior operators she expresses little to no concern for the clients, the buyers, or US Bank’s asset against the property.  By the grace of God Andrew’s voice-mail isn’t full, I leave a message…

April 12: The system tells me they’re too busy and hangs up, I call back an hour later, same thing.

April 13: Still no call back from Andrew

April 14: 3 calls made, 3 hangups due to a “backlog”

April 15: Yee haw, tax day, yet another hangup due to a backlog of callers

April 16: Hung up on in the late morning, 2nd attempt…. holy cow!!  I got through… And we’ve been assigned some lady who is our contact.  I now have an email account to send stuff too, and of course… they’re missing paperwork.

April 22: One offer is now off the table, they found something else, and a new one shows up on the same day.

April 23: The new offer is all signed off on and sent in to this new email account I have to send them stuff…

April 27: Everything is confirmed in, alright!

May 6: Our contact with USBank quit… so that means… what?  Can’t get an answer on that one yet.

May 7: Ok, we’ve got a new person, she seems much more “on the ball”

May 13: CONTRACT APPROVED!  Sweet!  Hopefully the buyer’s bank doesn’t suddenly request any changes!

May 18: We’re given the green-light to close anytime.  It’s funny after all the headaches going through just getting a person to look at the file, things are incredibly smooth now. 

May 26th: Closing day, hooray!  The sellers sign off and the buyers are very happy, whew.  So it took just about 4 months to get this done.  It’s been a bumy ride, but I’m glad that I was able to help our sellers avoid a foreclosure and the large-scale credit issues that come with those.

2010 missoula housing report-pdf.pdf

The report is attached above (sorry it’s big), LOTS of info and not just housing sales, but economic, rental, financing, lots, and new construction. 

It’s a mixed bag as the reports have been, volume was up 3%, median sales price was down a little over 3%.  There’s some good signs on the horizon, and there’s remaining challenges.  This year so far hasn’t seen the spike in sales that we saw the last time the tax credit was nearing expiration, so how will that play in?  Also with unknowns such as FHA mortgage reform, interest rates, and the ever-brewing double-dip fears you can pretty much confirm these are fragile times.

A very interesting observation made from this report is that while Missoulians point to the closing of Smurfit Stone and the large Macy’s store downtown as the two big contributors to our rising unemployment, new construction plays an equally as large (if not bigger) factor.  Think about the amount of people that are needed to build just one house, you start with the engineers, then the planning office, then all of the sub-contractors from the foundation, to framers, plumbers, electricians, HVAC, finish work, landscapers, and so on.  Beyond that as well is the supplies, with local suppliers providing all the tools and needed material for the builders and their sub-contractors.  It’s a big supply-chain!  The good news is that nationally new home starts are expected to rise this year, hopefully we’ll see that here in Missoula as well.

I was just forwarded an email courtesy of one of the team-members who served on MOR’s annual housing report task force.  It featured two very interesting charts from http://www.calculatedriskblog.com that looks at the total percentage of homeowners that are late, or severely late on their mortgages, state-by-state.  And a second chart that looks at how many people have “negative equity” (how many people owe more than their house is worth).

The numbers for some states are staggering (Nevada!) but once again, we here in Montana can breathe a collective sigh of relief to see that we’re hanging in there and one of the best preforming states in both of these categories.

I’m not a big fan of stealing images from other bloggers sites, in fact I’m sure it’s probably not legal, so what I’ll do is simply link it here: http://www.calculatedriskblog.com/2010/04/texas-and-housing-bubble.html .  The article itself is mainly about Texas and how it’s bucking the trend for high-population states, but both graphs are right there!

The charts show Montana is 5th “best” in delinquencies, with what looks like about 7.5% past-due, and less than 5% beyond 90 days past due.  The 2nd chart shows that just about 10% have negative equity or are approaching it, which would be the 3rd best.

It’s early March and I’m two months into my board presidency, as many of you probably know I’m the 2010 president of the Missoula Organization of Realtors.  So far it’s been a blast, I’ve been really busy with both work and being the organization’s leader but I love being a part of this organization.  At the end of this month I’m headed to Houston on behalf of MOR to an information symposium that will feature Google, Zillow, and Realtor top execs talking about the next wave of information technology that is coming forward.  In May I’m headed to Washington DC for mid-year meetings, and then I’ll be in New Orleans sometime this fall.

 It’s shaping up to be a busy year, but as a younger leader in our organization I’m really enjoying the people I work with, the tasks I face, and the information that is available to me. 

As these trips out of town approach be on the lookout, I’ll be posting updates from them, and as always I post updates on my facebook page, so come find me there!

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