market update at glance commentary SEPTEMBER of 2009

MARKET UP DATE AT GLANCE COMMENTARY THRU SEPTEMBER 30TH 2009

I'LL BEGIN THIS MONTH WITH THE COMMENT "cash for clunkers" and a race to the finish line THE BEST WAY TO DESCRIBE THE WAY THE REAL ESTATE MARKET IS BEHAVING this fall.

WHEN YOU LOOK AT THE NUMBERS THE THING that JUMPS OUT AT YOU IS A 63% INCREASE IN THE NUMBER OF PENDING SALES YEAR TO YEAR, WHICH IF YOU WANTED, YOU COULD SHOUT ABOUT THE INCREASE, YET WHEN YOU NOTE THAT LAST YEAR AT THIS TIME THE BUYERS WITHDREW FROM THE MARKET PLACE AND CAUSED A PLUNGE IN PENDING SALES, IT TEMPERS ENTHUSIASM. I BELIEVE we are in race with first time buyers trying to purchase before the tax credit goes away.

THIS BRINGS UP A GOOD POINT IN THE OVERALL NUMBERS WE WILL EXPERIENCE THIS FALL AND THE REST OF THE YEAR. THE MARKET FELL FROM THIS POINT FORWARD FOR THE REMAINDER OF 2008 THIS YEAR APPEARS TO HAVE STABILIZED WITH INVENTORY AND PENDING SALES REMAINING IN A SOLID RELATIONSHIP TO EACH OTHER. THAT FACT IS why IS MEASURED OPTIMISM.

the most active SEGMENT of the market HAS REMAINED between 160k to 180k(PRIME FIRST TIME BUYER PRICE RANGE), that price range share of the market 13% by unit volume in 2008, INCREASED TO 17% by unit VOLUME AT THE END TO september 2009. THE UPPER RANGE SEGMENTS 300K TO 500K HAS SEEN AN INCREASE IN inventory with not as much A MOVE UP traffic as i would expect based on the first time buyer MARKET TREND. it may just be a lag in timing, WE WILL WATCH CLOSELY AS THE PENDING SALES SHOW UP IN THE CLOSED SIDE OF THE EQUATION TO SEE HOW THE MOVE UP MARKET PLAYS OUT FOR THE REST OF THE YEAR.

the question ABOUT what happens to FIRST TIME BUYERS when we MOVE TO NOVEMBER 30^TH as THE FIRST TIME BUYER TAX CREDIT EXPIRES, HOW MANY FIRST TIME BUYERS WILL CONTINUE TO COME INTO THE MARKET AFTER the tax credit EXPIRES? IF thE CREDIT MARKETS AND INTERESTS RATES CONTINUE TO BE KIND TO FIRST TIME BUYERS, WE SHOULD CONTINUE TO SEE STABILIZATION IN THE MARKET, YET I SUSPECT WE WILL SOME SORT OF DECLINE IN SALES FOR A TIME MAYBE into the SECOND QUARTER OF THE 2010.

THE inventory levels have CONTINUED TO slight A DECREASE IN PROPERTIES FOR SALE OF 1% FROM a year ago, AS COMPARED TO 41% HIGHER IN JANUARY AND 9% HIGHER IN MARCH A YEAR AGO, THE decrease from a year ago is AFFECTED by the increase in pending SALES AND STABLE INVENTORY..

THE PENDING SALES LEVELS CONTINUE TO moVE HIGHER, AN INCREASE OF 63% FROM a year ago, AS COMPARED TO 37% LOWER IN JANUARY AND 12% LOWER IN MARCH. THE CONTINUED INcrease from a YEAR ago is AFFECTED by the increase in FIRST TIME HOME BUYERS AND slight MOVE UP TRAFFIC. THIS MONTH AS IN COMING TIME PERIODS WE WILL SEE INCREASES FROM A YEAR AGO, BECAUSE A YEAR AGO PENDING SALES LEVELS WENT DOWN SUBSTANTIALLY.

CONSTRUCTION numbers in september: single family permits, IN TOTAL still show A DECLINE FROM LAST year, 22% LOWER. to put it in PERSPECTIVE the first 9 months of the year are as follows 1. 2009 178 single family permits, 2. 2008 227 Single family permits, 3. 2007 361 Single family permits. WE CONTINUE A TREND IN new CONSTRUCTION market THAT PERMITS IN FOR THE MONTH ARE AT OR HIGHER THAN THE YEAR BEFORE AND september DID ADMIRABLY WELL AGAIN 23 PERMITS 2009 AND 21 IN 2008. AS WE MOVE FORWARD THE TREND WILL MOST PROBABLY CONTINUE DUE THE STEEP DECLINE IN PERMITS LAST YEAR, AGAIN THIS SHOWS A MARKET THAT IS STABILIZING AND FOUND ITS FLOOR of activity.

the home sales prices below SHOW a slight price decline year to year YELLOWSTONE county a 4% IN AVERAGE AND 3% IN MEDIAN SALES PRICE. I WOULD SAY WHEN THE SMALLER SIZE OF HOME SELLING IS FACTORED IN THE DECLINE YEAR TO YEAR WOULD BE ABOUT 3% WITH HOMES IN POOR CONDITION OR LOCATION EXPERIENCING GREATER THAN THAT.

THE POSITIVE forces in the MARKET REMAIN THE SAME, the STRENGTH of the below $200,000, no SIGNIFICANT FORECLOSURES of HOMES AND HISTORICALLY LOW INTEREST RATES 5% FOR A 30YEAR LOAN AND STRONG EMPLOYMENT NUMBERS. the importance of A LOW FORECLOSURE RATE CAN not be OVERSTATED. when you look at other market places AND THE case /shiller index declines, the driving force in downward price pressure is FORECLOSED properties sold by lenders.

unemployment in YELLOWSTONE COUNTY IN JUNE WAS 4.9%, NOT SEASONALLY ADJUSTED, COMPARED to the state average of 6.6% , GALLATIN VALLEY OF 5.5% MISSOULA OF 5.7%, THE FLAT HEAD OF 8.7 % and the NATIONAL of 9.8% giving people who want to own their home a job and A BELIEF that they will be employed, (A SIDE NOTE TO YELLOWSTONE COUNTY ACTUAL NUMBER OF WORKING PEOPLE IN JUNE WAS 80,100 PRELIMINARY) along WITH low INTEREST, approximately 5.% on a 30 year fixed rate, and you have a good case for buying a home if your intention is staying put three plus years.

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