Market update at glance Feburary 2013

Market at a Glance February 2013

We are now two months into the year and the good numbers continue to roll through the housing market here in Yellowstone Count, Inventory lower by 18%, pending sales up by 16%, closed sales up by 24%, new home permits up 61% all outstanding performance for the residential market. The driver for most of this outstanding performance comes from three things interest rate and jobs and population growth.   First let’s talk about interest rates, the Federal Reserve through  buying mortgages and not selling any of previous mortgages has managed to drive and keep interest rates to historical lows, 9.3% below 2012 and 43.52% below where they were in 2006,which was the peak year in sales for Yellowstone County. From to December 2011 to December 2012 the Billings MSA added 1700 non-farm payroll jobs and population has increased approximately 1450 people. Lots of positives in the economy.

With all these positives, pricing structure is starting to change, from the first two months of 2012 to the first two months of 2013 by 3.5% to 4% year over year when you take size and price into the actual formulation of price change. When all the positives are taken into consideration, on first blush, that would seem a more than modest price increase than demand would indicate.  I have asked the question before and believe that the underlying reason is the same, caution on both the buyers and sellers within the market place. Yes sellers do want the highest price that they can achieve yet, they do want to sell, so while you might assume sellers interest are not aligned with the buyer at this point in the market place the assumption is most probably wrong. Just as you reverse the process and look from the buyer’s side and assume that the lowest value would be most wanted yet with a lower inventory being able to purchase the home and location wanted becomes more paramount. So with interest rates favorable buyers will move some in pricing of purchase yet not as much as positives would lead us to believe. We are now seeing an influx of buyers moving out of rentals into the market as purchasers, since the Yellowstone County economy continues in a positive direction with jobs being more secure. As always it’s fascinating to me to watch the market and how it operates with all the different forces involved. This year should be interesting to see of how the market responds

Howard Sumner

Howard Sumner Real Estate

404 North 31^st Street

Suite 130

Billings Montana 59102

Voice 406-245-6890

Fax 406-254-2972

Web page http://www.RealEstateMontana.com