I just typed up a report for the Montana Association of REALTORS(R) yearly end of business meetings, it’s all relevant stuff about what’s been going on here and so I thought I’d share it here!  Message as follows:

Residential market, urban Missoula area: YTD sales: 595, which is almost exactly on point to where it was last year at this time which was 597 sold homes.  The difference is that the current YTD median sales price for this year is $199,900 while at this same point last year it was $214,000.  This reduction in the median sales price, 6.6% is the largest decrease in a 12 month period that Missoula has seen since the begin in declining pricings stemming from the national housing market collapse.  A few encouraging signs of returned activity beyond the first time home buyer are two factors, the first is the median sales price of homes sold since July 1^st currently sits at $217,000 while the same range last year 7/1 -9/7 was $209,000 showing that the activity in the higher price range of our market is returning, albeit slowly.  Secondly in our MLS in the Missoula urban area we’ve seen a moderate uptick in multi-family sales, going from 25 at this point last year to 31 ytd this year.  Although both numbers are small 6 more sales ytd this year compared to last year represents a 24% increase in sales activity. 

So far this year MOR has had some awesome political success, with many thanks to our GAD, Ruth Link, our Gov’t affairs committee chaired by Kim Bennett Buchanan and the leadership of our board of directors.  First off with the combined efforts of MOR and the Missoula Builders Industry Association (MBIA) we were able to defeat some zoning language that carried over in Missoula zoning code re-write that essentially banned the new construction of any house with a garage that eclipsed the front plane of the house, referred to as “snout houses”.  MOR additionally held a housing summit which was well attended by local organizations and government officials to discuss affordable and attainable housing in our area, stemming from this summit MOR has a seat at the table in the ongoing planning and discussions in conjunction with the Mayor’s office and local government as they continue to address affordable and attainable housing.  Finally MOR completed and released a study that was partially funded with IMF money to provide research-based information about our areas agricultural needs.  Recently a local group concerned about agriculture lands has been successful in having land in new subdivisions set aside for agricultural purpose, in one such case a subdivision has nearly 1/3 of its land set aside by city council for ag use in a decision that wasn’t based on any studies and was put together on the spot.  MOR released this study, and has been able to use this information to argue the appropriate and inappropriate times to set aside land for ag use, and to counter-act hearsay with actual facts of what the area can provide to its residents.

Additionally as the board president of MOR I’ve been quite busy this spring and summer with two large-scale issues, the first is the research and successful contractual negotiations to enter into an agreement with the RPR which will soon be going live with our MLS.  Since that tackling of that issue in the spring we’ve been busy with finding our next AE, as Mae Hassman announced to us in June that she will be retiring this year after nearly 24 years with our association.  As this industry is emerging in a climate of major shift we’ve been actively working to find the next AE that will be a part of our organization as we sail through these choppy waters.  We began with a series of membership forums, obtaining feedback from our membership on what they felt their leaders should know and consider when making this hire and when considering future leadership plans of action.  With a search committee formed we revised our job description, wrote and placed an ad, and received nearly 45 applications over a 3 week span.  We’ve currently filtered out a top choice of applicants and are just beginning our 1^st round of interviews.  Our goal will be to make the hire in early October.

So as you can see, we’ve been busy in Missoula!

This CNN/Fortune Article: http://money.cnn.com/2010/08/20/news/economy/New_normal_economy.fortune/index.htm?hpt=T2 

Summarizes 5 new normal conditions of our country and our economy that we must get used to.  While all effect housing, naturally the fact that owning a house is no longer embraced by everyone as “the American Dream”.  Renting is emerging as a smarter thing to do in many markets because houses are not the piggy banks they once were viewed as, but rather long-term and stable investments that you purchase to pay-off, not to flip.

Growing up in a different market than today’s it’s an ongoing shift the American public is being forced to make, and while the younger Gen-Y generation is having an easier time embracing these changes it’s something the REALTOR community as a whole is still grappling with in many markets.

Take Missoula for example, in the article referenced above said that prices nationally have dropped 32% on average, in our market we’ve gone from a peak in 2008 of $218,000 to $199,900 according to the most recent MOR trends, found here: http://www.missoularealestate.com/index.php/fuseaction/market.main/ID/0d95f240 so that is just an 8% drop - suggesting one of two things; that continued price drops are on the horizon, or that Missoula avoided the major declines of the housing bust.  Time will tell, I think it’s a mix of both, our prices have dropped at their steepest rate this year, however the major effect of the median drop is now past (the first time home buyer tax credit).  Other factors still remain, the main issues are unemployment and over-supply which will remain in our local market for years to come.

It’s not all negative news though, we’re seeing an uptick in out-of-state buyers, people returning to Western Montana for the lifestyle choice, and are having good success negotiating prices that fit for them here in our area.  Another positive sign that goes hand-in-hand with one of these 5 new normals is the surge in investor activity.  So far this year there have been 35 multi-family sales in our MLS (duplex or greater, but does not include single unit townhomes or condos), last year there were 45 total for the whole year, assuming we stay on pace, we’ll eclipse last years sales in the next 3 months.  Combine the low interest rates, high supply, lower prices, and emerging trend of renting vs buying and the time to invest in markets like Missoula is really strong.

Recently the Missoula City Council proposed a new special district tax on certain areas around town to help fund their upcoming budget shortfall.  The story is gaining ground as the protest provision is in effect right now.  Just yesterday Mayor John Engen was on CNBC touting the special districts to help Missoula’s budget, and in this http://missoulian.com/news/local/article_b3421fa4-ab4b-11df-a18f-001cc4c03286.html article there’s more talk of how the tax-exempt properties in town will not be part of the special districts.

The issue is this - the special districts are not what they seem, they go to the general fund, so even though the name of them makes you think they’re funding parks and streets, they certainly might not.  The other argument is that it’s just $12 or $13 now, but they’re uncapped - and the intention is to use these to fully fund projects down the road.  In cases across the US special districts usually climb higher than $500 a year, that’s going from a dollar a month to over $41 per month.

In an age when our local government is hoping to support more affordable housing this will eventually be doing just the opposite.  I’m very glad that the Missoula Organization of Realtors is opposing this district as it’s written due to the future consequences that it could pose for the cost of home ownership, the fact that the City Council has not clearly defined where the funds will go, and that these special districts are uncapped.

As the REALTOR(R) image continues to slip in many aspects leaders of associations, brokerages, and the industry find themselves facing a critical junction as the new market emerges.  Gone are the days where the phone rang with new prospects almost every day, the lack of need for broker accountability, and endless association funds - instead those who skated by on new business and burned bridges are finding other lines of work, brokers are looking at quality over quantity, and REALTOR(R) associations are having to make tough choices in terms of services and benefits to local agents and the public. 

The market is changing too, dramatically.  Over the last 10 years the primary demand was boomers wanting bigger homes for their family and their possessions, now those same boomers with their kids mostly grown and gone are now shifting the primary demand by downsizing into homes that are less work and less space.  People my age (late 20’s / early 30’s) jumped into this market feet first with the 1st time tax credit, and many are still sitting on the fence waiting for possibly lower rates and lower prices.  Foreclosures and short sales which were incredibly rare in Missoula even 3 years back are now a major player in the market - and the only player in some markets.  Agents need to know how to use online asset-management sites, they need to understand technology, and come to grips that they aren’t the gate-keepers anymore but that information is everywhere, and all control of what their clients see and read is gone. 

In these tumultous times the leadership of the industry is coming to a fork in the road, to continue to be actively invovled in the process or to become a spectator sitting on the sidelines while other players take over entirely.  As an agent of now 10 years, the current president of the local board, and someone who plans to be a REALTOR(R) his whole life I want in, I refuse to get shoved aside due to the laggards in my industry and will continue to fight for what I believe in. 

Who has the best interests of the real estate purchaser and seller?  It’s not a clear answer - although I do believe it’s the REALTOR(R) Association over other parties.  It’s not the government, heck here in Missoula our local government almost shut down most major new construction with garages facing forward due to concerns over trick-or-treaters.  Google, Zillow, and Trulia could care less about the real estate consumer, they’re media sites, they sell ads and that’s what they’re loyal to.  Local media?  Please.  The public sets trends, but they’re such a diverse group that I don’t think a source of leadership will arise from the public ranks.

That leaves the individual REALTOR(R) and the association.  As I said earlier this week I do not think the individual REALTOR(R) has the capacity to raise the bar industry wide, for every two or three excellent agents out there there are still one or two crap-tastic ones.  Recent trends suggest that The Code of Ethics holds little water in the consumers eyes - and rightfully so as agents don’t like to tell on each other.  The individual is judged by the lowest-common denominator, don’t believe me?  Ok, I’m a REALTOR(R) - and the person who drives this car that’s triple-parked over these handicapped parking spots is as well (notice the car is branded)

realtors rock.jpg

So now what do you think of REALTORS?  Yeah, I thought so - and that casts upon me too, even though I would never do something like that.

So that leaves the association, which must force the bar to be raised, or else wallow in the mud with the guy that triple-parks his boat in the handicapped spots.  More thoughts forthcoming, as I look ahead beyond my presidency which ends in 4 months the need for continued leadership has never been greater…

This is the the second attempt of a blog post, the first was a little narrow-focused and upon writing it I got to thinking about a listing practice in Missoula (and probably a lot of the US) that is now DOA.  The old trick, “Lets price it up and we’ll negotiate down when a buyer comes along.”  So that said, I’d like to thank you all for reading this eulogy for a dead practice that worked in NINA (no income, no asset) loan-era.

Pricing up to negotiate down had a good run, it was an awesome technique in an age when people could just state they made more income to fill the gap, and were happy to over-pay.  Now, almost 3 years after the collapse this strategy and many other practices led to, that technique is dead.  It had people questioning REALTOR value at an all-time high (and rightfully so), and diluted the negotiation abilities of new agents as they came about in a market that didn’t require agents to be transaction coordinators and facilitators but rather “yes-men” or “yes-women”.  I’m no hypocrite - I did this too, most all agents did.  However I was grounded in the expertise and knowledge of markets from years past with Mom as someone who had worked through multiple down-markets and trends where the financing sector tightened up.  This allowed us to work through these tough times and learn lessons from the boom years in what practices need to be put behind us.

That said, we recently fell victim to this old trick with a pair of listings we lose this week, two unique properties that we thoroughly researched on pricing but then proceeded to list the properties at about 20% - 25% higher than we suggested because the sellers thought we could just negotiate down when the right buyer comes along.  Well, look where we are, the end of our listing contract and not even a single nibble - hardly even any inquiries.  We attempted discuss a reduction to no success.

Days before these contracts expire with us I reflect upon this screw-up, we should have stuck to our guns, we should have told the sellers if they want to list for the prices they did they should find someone else, but we didn’t.  Now months later we’re losing these listings that we never should have taken, considering their list price.  Despite our research we fell into the belief that pricing up won’t matter with these properties, and the market responded exactly as expected - negatively.  It’s our own fault, lesson learned, onward and upward.

Upon this blog post I find myself reflecting on agents who came about in the last 3 - 7 years, they learned to strive in a market that didn’t require business sense, networking skills, negotiation tactics, or knowledge of the market.  Gee, and we wonder why REALTORS in general aren’t the most favorable profession in consumers eyes.  To move forward we (as an industry) must embrace the new market, a market that requires proficient agents who know much more than how to email and MLS search and open a lock-box.  The challenge ahead lies with who will be the catalyst for change in our industry - because surely the individual agent will not do that.  The agent as an individual does not care about the profession like an association or the entire trade industry does.  That is why I only see three forces that can lead the industry to change, the public, the REALTOR association, or the government.  So who is it going to be?  More thoughts tomorrow…

Check out this new Duplex property that I just posted on my Web site. It is at 1960 S 13th Street W in Missoula. This Duplex property has 4 bedrooms and 2 baths. A unique property in the middle of town with options to either be used as a duplex or a larger single-unit home. With some remodeling/updates done in 2000this home has 3 good sized bedrooms on the main floor with a large kitchen. The lower level has 1 bedroom but there is a large unifished room that could befinished out to possibly add more space. The lot is fenced off, there is off-street parking, plus additional storage units and an older single garage. Zoned formultiple uses.

A Blog I read quite often is called The Calculated Risk Blog, in this story: http://www.calculatedriskblog.com/2010/07/existing-homes-double-digit-months-of.html the story I’ve linked to talks about expected supply of double digits in the months to come regarding re-sale homes.  CRB expects supply of existing homes to get into double digits and stay there for a while.  Usually when we talk supply 8 months or less is considered a “healthy” market.  Based on this blog I thought I’d see how Missoula stacks up.

Missoula active listed inventory: 941

Sales to date: 522

Using the CRB math for supply: 941/522 * 7 = 12.62 months so a slightly over-stocked market.  That’s the total market though, lets pull apart new construction from re-sale, and look at them side-by-side.

Active listed (new – resale): 140 — 801

Sales to date (new — resale): 50 — 472

So then the supply for new construction at this point is a whopping 19.6 months of supply, a pretty top-heavy market with way too much for sale.  Looking at re-sale we have a better number of 11.88 months, still too much supply but a little better when you pull out new construction.  That shows that the current amount of listings does not match up with the sales so far this year to be a healthy market.  Despite boosted activity from the tax credits we still see too much supply, especially in new construction.  Missoula’s market is still dealing with issues of over-supply and finding its way through.  Opportunities are great, with high supply and good rates.  Qualified buyers have awesome choices and can expect to negotiate good deals, however move-up buyers that need to sell a home right now might find things to take a little longer to get into that next home as they’ll be battling with the current amount of over-supply. 

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!