THOUGHT IT MIGHT BE NOTE WORTHY TO LOOK AT HOME SALES, EMPLOYMENT, INTEREST RATE AND POPULATION GROWTH TO SEE IF LENDING REQUIREMENTS ARE HAVING MORE OF AN EFFECT ON THE MARKET THAN THE OTHER THREE VARIABLES THAT AFFECT HOME SALES. THE TREND BEGINS IN 2007.
TO START OFF WITH A LOOK AT PRICING OVER THE LAST FIVE YEARS. SLIGHT PRICING DIFFERENTIAL BETWEEN WHAT MOST WOULD CALL THE CITY OF BILLINGS COMPARED TO THE COUNTY. IN THE COUNTY ARE HOMES THAT HAVE MORE LAND ASSOCIATED WITH THEM SO OVERALL PRICING IS A LITTLE HIGHER.
THEN USING THE ABOVE INFORMATION THE NEXT STEP IS TO COMPARE THE EFFECT OF INTEREST RATE ON MONTHLY COST TO OWN. I USED THE ABOVE COUNTY AVERAGE AND MEDIAN SALES PRICES AS LOAN AMOUNT, A 30 YEAR LOAN AND ADDED 25% FOR TAXES AND INSURANCE. A SMALL INCREASE IN PRICE (8/10’S OF 1%) IN THE PAST FIVE YEARS, YET A 22.3% DECLINE IN MONTHLY PAYMENT.
SO NEXT WE LOOK AT NUMBER OF NON FARM EMPLOYED TO TOTAL SALES IN 2007 THERE WAS .0267 SALES PER EMPLOYED PERSON LOOKING AT 2011 THE SALES RATIO DROPS TO .019 SALES PER EMPLOYED PERSON OR A DROP OF 28.83%. THIS WHILE THE COST OF THE MONTHLY PAYMENT DROPPED 22.3% AND EMPLOYMENT ONLY DROPPED .085% . SO WHEN LOOKING FOR THE CAUSE OF THE DROP IN UNITS SOLD I BELIEVE THE SPOTLIGHT FALLS DIRECTLY ON THE CHANGES IN REQUIREMENTS TO GET FINANCING. MANY OF THE CHANGES ARE THE RESULT OF THE BARNEY FRANK/CHRIS DODD FINANCIAL REFORM LEGISLATION.
SO NOW WE LOOK AT POPULATION TO TOTAL SALES IN 2007 THERE WAS .0153 SALES PER PERSON LOOKING AT 2011 THE SALES RATIO DROPS TO .0102 SALES PER PERSON OR 33.33%. THIS WHILE THE COST OF THE MONTHLY PAYMENT DROPPED 22.3% AND POPULATION INCREASED BY 6.92% . SO WHEN LOOKING FOR THE CAUSE OF THE DROP IN UNITS SOLD I BELIEVE THE SPOTLIGHT FALLS DIRECTLY ON THE CHANGES IN REQUIREMENTS TO GET FINANCING.
SO NOW WE LOOK AT EARNINGS TO PAYMENTS IN 2007 THE AVERAGE WAGE IN YELLOWSTONE WAS 59.46% OF AMOUNT IT TOOK TO QUALIFY FOR MEDIAN SALES PRICE PITI. LOOKING AT 2011 THE AVERAGE WAGE WAS 85.12% OF AMOUNT IT TOOK TO QUALIFY FOR MEDIAN SALES PRICE PITI OR AN INCREASE OF 43.16% IN TERMS OF AFFORDABILITY. THIS DUE THE COST OF THE MEDIAN MONTHLY PAYMENT DROPPING 22.3% AND AVERAGE WAGE INCREASING BY 11.12% . SO WHEN LOOKING FOR THE CAUSE OF THE DROP IN UNITS SOLD I BELIEVE THE SPOTLIGHT FALLS DIRECTLY ON THE CHANGES IN REQUIREMENTS TO GET FINANCING.
LASTLY JUST LOOKING AT YELLOWSTONE COUNTY AVERAGE WAGE IN AN INCREASING SLOPE PLOTTED AGAINST THE SALES DECREASING SLOPE. I BELIEVE, AGAIN POINTS A FINGER AT THE CHANGES IN REQUIREMENTS TO QUALIFY FOR FINANCING,
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