MARKET UP DATE AT GLANCE COMMENTARY THRU APRIL 2009
CAUTIOUSLY OPTIMISTIC, SEEMS TO BE THE BEST WAY TO DESCRIBE THE WAY THE REAL ESTATE MARKET BEHAVED IN APRIL. AS MENTIONED PREVIOUSLY AN INCREASE IN buyers coming into the market (first time buyers) were responding to their best self INTEREST WITH historically low RATES AND THE first time buyer tax credit.
the most active SEGMENT of the market was between 120k to 180k(PRIME FIRST TIME BUYER PRICE RANGE), that price range saw it's share of the market place jump from 22% by unit volume in 2008 to 29% by unit VOLUME in BY THE END OF APRIL 2009. THE SEGMENT BETWEEN 200K TO 250K HAS SEEN its SHARE MOVE FROM 17% TO 18% BY UNIT VOLUME INDICATING A MOVE UP MARKET TREND BEGINNING.
the question ABOUT FIRST TIME BUYERS REMAINS THE SAME over the next couple of months is, did buyers that would have been in the market later in the year purchase earlier, due to the tax credit. IF that proves to be the case we will see a SOFTENING of the pending sales compared to 2008 as we come into EARLY SUMMER.
THE inventory levels have CONTINUE TO moderated AN INCREASE OF 9% FROM a year ago, AS COMPARED TO 41% HIGHER IN JANUARY AND 25% FEBRUARY A YEAR AGO, THE decrease from a month ago is AFFECTED by the increase in pending SALES. IN THE COMING TIME PERIODS WE WILL PROBABLY SEE AN ACTUAL DECLINE FRO A YEAR AGO BECAUSE APPROXIMATELY A YEAR AGO INVENTORY LEVELS WENT UP SUBSTANTIALLY.
CONSTRUCTION numbers in APRIL, single family permits, still show a very SIGNIFICANT decline FROM LAST year. to put it in PERSPECTIVE the first 4 months of the year are as follows 1. 2009 47 single family permits, 2. 2008 99 single family permits, 3. 2007 155 single family permits. the new CONSTRUCTION market will struggle this year BECAUSE OF constrained funding and the DIFFICULTY of COMPETING against EXISTING homes that are priced SIGNIFICANTLY lesS THAN CONSTRUCTION cost would be to build a SIMILAR home. as i have stated previously the slowing in home construction is a POSITIVE in the overall market place because it reduces inventory, yet THAT DECREASE in new CONSTRUCTION sales also has an impact on sales price and size of homes that go iNTO the mix of sales.
the home sales prices below SHOW a slight price decline year to year YELLOWSTONE county has seen about a 4% DECLINE in closed PRICE. WHEN YOU FACTOR IN AN AVERAGE SIZE OF HOME BEING SOLD ALSO DECLINING BY 2% THE OVER ALL PRICE DECLINE SHOWS 2% FROM 2008. the actual sales price number is affected by the slow down in THE above 250k range and the SIGNIFICANT INCREASE in sales in the 120K to 180k range mentioned above.
the THREE POSITIVE forces in the MARKET REMAIN THE SAME, the STRENGTH of the below $200,000 (STARTING TO ALLOW SOME MOVE UP MARKET), no SIGNIFICANT FORECLOSURES of HOMES AND HISTORICALLY LOW INTEREST RATES 4.75% FOR A 30YEAR LOAN...
THE $200,000 and below STRENGTH is CAUSED, I BELIEVE, FOR two primary reasons #1 unemployment in YELLOWSTONE IS SUB 4.7% (AN INTERESTING SIDE NOTE TO YELLOWSTONE COUNTY IS ACTUAL NUMBER OF WORKING PEOPLE INCREASE BY 500 JO IN MARCH AND UNEMPLOYED INCREASED ONLY BY 100 PEOPLE) COMPARED to the state average of 6.1% and the NATIONAL of 8.5% giving people who want to own their home a job and A BELIEF that they will be employed, along with HISTORICALLY low INTEREST, approximately 4.75% 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.
THE #2 POSITIVE IS NO SIGNIFICANT FORECLOSURE activity. the importance of this fact can not be UNDERSTATED. when you look at other market places AND THE case /shiller index declines, the driving force is FORECLOSED properties sold by lenders.
the #3 positive is the $8,000 refundable tax credit for first time home buyers
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