About Yellowstone County, MT

Interesting market thoughts to ponder. What happens when the first time buyer credit is gone?

Yellowstone County as of this A.M. has 210 active single family homes priced between 100k to 200k

There are 159 single family pending sales for 75.7% percentage which indicates strength in that price segment

There are 486 active single family and 255 single family pending total in Yellowstone County so the 100k to 200k comprises 62.3 % of the pending sales and only 42.2% of the active properties

A question I asked my self after looking at the price segment absorption rates(sent out early) was why such a jump (almost double in the first step above 100k to 200k absorption103 days and the 200k to250k absorption 204 days) where were the sellers from below going.

Well out of the 159 single family pending 92 or 57.9% of the sales the homes were not move up sales either vacant or estate or short sales that leaves only 67 possible move up buyers.

Above 200k there are 96 pending sales if 100% of the possible 67 are move up that leaves a possible 29 pending sales that are in migration sales. Roughly that would translate into population growth in Yellowstone county of about 1300 people this year or 9/10ths of one percent, believable and probable.

So back to my basic question what happens to the market sales when the $8,000 first time buyer credit disappears. I believe you get a radical drop in sales caused by the market drawing on future first times into the market now. If we lose half of those 67 first time buyer sales and retain the 29 move in buyers that would indicate we would have approximately 141 pending sales right now or a drop of 45% in pending sales.

Now Billings is fairly healthy so you extrapolate this math nation wide and then factor in unemployment and underwater loans in the major markets and you have some very interesting scenarios upon which to ponder.

Huntley Project High School Burned to the Ground a year ago September 18th 2008. Since then the kids have been in trailer classrooms. The community has rallied together to build a pretty nice school with a groundbreaking ceremony this Friday at the building site in Worden at 8:30.

Despite this rather tough situation, the Huntley Project Red Devils managed to defeat a host of other Montana Class B Football teams last year and become State Champs.

I'm just wondering what will happen this year! After 5 games so far, the Huntley Project Red Devils point totals are 249, the opposing teams have totaled 0. I know that the Varsity only plays part of the game, same as last year. The next serious challenge for this team comes in a couple weeks when they meet the Columbus Cougars in Columbus Montana. If you're looking for a good game to go to, I'd pick this one Friday the 16th of October at 7pm in Columbus.

HERE ARE THE MARKET PERFORMANCE NUMBERS THROUGH THE END OF SEPTEMBER. WE ARE NOW ON A "CASH FOR CLUNKER" RACE TO THE FINISH LINE WITH THE EXPIRATION OF THE FIRST TIME BUYER CREDIT SET TO EXPIRE ON NOVEMBER 30TH 2009. IT WILL BE REAL INTERESTING TO SEE HOW THE MARKET PERFORMS ONCE IT IS GONE.

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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A quarterly report from the agency that oversees Fannie Mae and Freddie Mac shows delinquencies on mortgages backed by the two rose 21 percent in the second quarter.

The Federal Housing Finance Agency says another 80,100 loans became more than 60 days delinquent in May, reaching more than 1.3 million, up from 1.1 million in the first quarter. Curtailment of income continues to be the largest reason for delinquency, the FHFA says, growing from 34 percent in January to 40 percent in May.

Foreclosures also continue to rise, up 5 percent from April to May.

Even as delinquencies and foreclosures rise, loan modifications are slowing. FHFA says completed loan modifications fell for the second consecutive month in May. Modification completions are slowed by Fannie Mae and Freddie Mac's implementation of a new modification program that requires a three-month trial period for a borrower to demonstrate ability to make the modified payments.

The top five reasons for mortgage delinquency are a reduction in household income, excessive obligations, unemployment, illness and marital difficulties