Billings, MT

HERE WE ARE ROARING THROUGH 2012. TWO MONTHS GONE AND TWO MONTHS OF WINTER WITH JUST SOME COOL WEATHER, NOTHING LIKE THE LAST TWO WINTERS IN TERMS OF SNOW. INTEREST RATES ABOUT AT 3.89% FOR A 30 YEAR FIXED RATE MORTGAGE, 20% BELOW LAST YEAR AT THIS TIME; THOSE TWO THINGS COMBINED ARE SHOWING UP IN THE HOME SALES IN YELLOWSTONE COUNTY. CLOSED SALES AT A NICE CLIP ABOVE 2011, IN THE FIRST TWO MONTHS, ALTHOUGH I WOULD CONSIDER IT A BIT OF MISS MATCH OF A COMPARISON WITH THE FACTORS MENTIONED ABOVE. THE REAL BRIGHT SPOT IS THE DECREASE IN INVENTORY THAT ALONE WILL GET THE MARKET BACK TO BALANCE FASTER THAN INCREASE SALES. THE BALANCE OF THE INVENTORY DROP MEANS SELLERS WERE DISAPPOINTED WITH WHAT THE MARKET WOULD ALLOW FOR A SALES PRICE AND HAVE MOVED TO THE SIDELINES UNTIL PRICING PROSPECTS LOOK BRIGHTER. WHEN YOU LOOK AT THE SINGLE FAMILY BUILDING PERMITS NUMBERS YOU CAN SEE THE EFFECT OF BOTH WEATHER AND INTEREST RATE ENVIRONMENT CREATING POSITIVE MOMENTUM, HOPEFULLY FOR NEW HOME CONSTRUCTION AND RESALE’S THE INCREASED ACTIVITY IS INCREASED INTEREST IN THE MARKET AND NOT ALL ATTRIBUTABLE TO THE WEATHER PULLING SALES FORWARD IN THE YEAR. THE RENTAL MARKET CONTINUES TO MOVE TOWARDS THE OWNERS SIDE WITH DECREASING INVENTORY MEANING PRICE INCREASES WILL BECOMING FOR RENTERS TOWARD MID SUMMER TO EARLY FALL. NEGOTIATIONS STILL ARE PRETTY TESTY BETWEEN BUYER AND SELLER, WHICH I EXPECTED, YET THE BUYERS HAND STRENGTH WILL WEAKEN WITH THE DECREASE IN INVENTORY AND INCREASE IN SALES AS WE PROGRESS THROUGH THE YEAR.

When reviewing the information about new construction whether permits, starts, or sales, if as many talking heads profess, that housing is “recovering” why are all categories 52 to 59% off the fifty year averages and down 72 to 76% from the peaks. And construction employment has dropped from 8,045,000 million people employed to 5,436,000 million people employed. The question i have to ask myself, if you go from no pulse in intensive care to a pulse are “recovering” or just not dead.

2011 END OF THE YEAR REPORT

THE GOOD, THE BAD, THE DIRECTION

MY FIRST COMMENT ABOUT 2011 IS, I AM GLAD IT IS IN TH REAR VIEW MIRROR. MY BELIEF IS 2011 GOES INTO THE RECORD BOOKS AS THE LOW POINT IN REAL ESTATE UNIT SALES AND MOST PROBABLY PRICING IN THIS REAL CYCLE IN YELLOWSTONE COUNTY. THAT BEING SAID THAT DOES NOT MEAN A BOUNCE IN 2012. WHAT IT MEANS IS, MOST PROBABLY, STABILITY WITH A BIAS TOWARDS AN UPWARD MOVEMENT. THE MOST DIFFICULT ASPECT OF 2011 WAS THE FINANCING ARENA, ALTHOUGH RATES ARE INCREDIBLE, THE HOOPS TO JUMP THROUGH TO OBTAIN FINANCING ARE NOT INSIGNIFICANT AND LEAD TO DISCOURAGEMENT OF PURCHASERS DURING THE PROCESS. 2011 WAS THE HIGHEST RATE OF FAILED TRANSACTION THAT I HAVE EXPERIENCED IN MY THIRTY YEARS IN THE BUSINESS. I HOPE 2012 SLOWS THE CHANGES WITHIN LENDING PRACTICES TO GIVE MORE STABILITY AND CONFIDENCE TO PURCHASERS.

FIRST THE POSITIVES OF 2011. THERE ARE ACTUALLY THREE MAJOR POSITIVES THAT YELLOWSTONE COUNTY ENDED 2011 WITH, ONE IS INVENTORY 20% BELOW 2010 AT THE END OF THE YEAR, THE PENDING SALES BEING UP 17% AS COMPARED WITH 2010 AND LAST WOULD BE THE SMALL DECLINE IN UNIT SALES COMPARED TO 2010. WE CONTINUED TO SEE NEW HOME CONSTRUCTION DECLINE AND 18% DECLINE COMPARED TO 2010 AND A FALL OF 54% SINCE 2007. WHILE EXTREMELY DIFFICULT BUSINESS ENVIRONMENT FOR MY FRIEND IN THE BUILDING OF HOMES, IN THE LONG RUN THE SURVIVORS WILL BE HEALTHIER AND MORE PROFITABLE. LAST THE RENTAL MARKET SHOWS THAT GROWTH IS OCCURRING WITH YELLOWSTONE COUNTY WITH LESS UNITS AVAILABLE AND POSITIVE GROWTH IN RENTAL RATES. AS THE RENTAL MARKET CONTINUES TO STRENGTHEN THIS WILL CONTRIBUTE TO THE CONFIDENCE OF PURCHASERS SINCE AT THIS TIME THERE IS JUST $86 DOLLARS DIFFERENCE IN THE MONTH COST TO RENT THE MEDIAN HOUSE FOR RENT AS COMPARED TO PURCHASING THE MEDIAN PRICED HOUSE PAYMENT WITH TAXES AND INSURANCE. THAT DIFFERENCE IN 2008 WAS $391.

FINALLY I WANT TO THANK ALL MY GREAT CUSTOMERS FOR ALLOWING ME TO HELP THEM ACHIEVE THEIR REAL ESTATE GOALS IN 2011, ALTHOUGH A DIFFICULT, WITHOUT LOYAL CUSTOMERS IT WOULD HAVE BEEN A MORE DIFFICULT YEAR.

Here is the headline from yahoo financial news

Housing Starts Surge to 1.5 Year High, Futures Rally

Here are the actual numbers--- whom is trying to sell what to whom ? ---- swamp land comes to mind

The national association of realtors has acknowledged that they have actually overstated home sales. They have also stated they are in the process of revising their methodology in coming up with their figures and will restate their “estimates” in the “near” future. To give you an idea of how their restatement may look here is an estimate of sales then two graphs on show the numbers below and one showing new single family sales to give a visual and actual bench mark for comparisons

Here is new single family sales as a bench mark comparison for you to decide what you think is the most likely scenario of home sales of the two sets of figure in the graph above

Thought to ponder which home sales market did you participate in?

neither is stellar yet one definitely shows a more stressful market