Market update at glance spetmebr 2013 Billings Montana

Market update at glance

September 30th 2013

The last quarter shuffle

Three Quarters of the year over, the residential market in Billings entering the last Quarter of the year,   what behavior might we expect from the market place. Typically the market slows in the last quarter inventory normally shrinks and sales slow as we head into the holidays, usually the real noticeable shift comes in the second week of November just before thanks giving.                                                                                                            In single family permits we see the second year over year monthly decrease (permits down 28% from September 2012, yet total single family permits still up 24% for the year. The increase in residential unit sales is up 10% year over year, the decrease in market time is 19% year over year, the absorption rate shows a decrease of 6% year over year, the decrease in pending sales is a negative -2% year over year, showing a more moderate decrease. This showing the market velocity is a decreasing increase year over year; this is a positive within the market. The reason for its positive effect is the increase in unit sales becomes a sustainable momentum and not a setup for a bad stumble. The other positive from the market behaving in this manner is that the movement of prices up becomes a more solid base to build appreciation on. The market has experienced a 7.07% approximate pricing movement since the end of 2012 and about 8% year over year, confidence in the economy of Yellowstone County means the price gains are becoming solid. The two major factors in the market place are interest rates and employment; interest rates have started to move upward. According to Freddie Mac, September 2012 average interest rate of 3.47% and through September 2013 the rate is 4.49% for a 30 year fixed rate, to show the impact of that increase, the payment on the average priced house in September of 2012 was $1,228 PITI at the end of September 2013 is now $1,496 PITI. As interest rates move upward and prices move upward they will moderate sales and pricing trends. The caveat would be employment, strong employment can drive sales. The latest available figures of August 2013, there 612 more people working in Yellowstone County than in August of 2012 and 2529 more working than in August of 2011. The number of persons employed is at historical highs. Yellowstone County unemployment is now 3.9% compared to 4.8% State Wide.   Pricing trends continue along a positive trend, even with interest rates higher than last year, total monthly payment has risen above the previous year again, ending the trend of rising prices with lower monthly payments. Yet the monthly payment has a way to go to match 2007, with the average sales price home monthly PITI was $1,602 in 2007, compared to today’s average sales price home PITI of $1,496. Another fact of the market place, to purchase the Average priced home in September 2012 your payment was $200 a month more than renting the Average home for rent, in September 2013 it now costs $398 more in monthly payment to own, as compared to renting the Average  rental home  in Yellowstone County. This bodes well for the cash flows from rental properties as the cost of ownership goes up rents will follow the upward trend by a few months. Of course with the positives in the resale market, new construction is experiencing another positive year and has seen a 24% year over year increase in single family permits. As a side note both the single family new construction and single family resale are showing the decrease of the increase velocity in the market place. Hope you find the information both useful and enlightening, if you have any questions about either buying, selling or the market in general do not hesitate to call or email