January 31st 2014
“THE ANSWER OF THE YEAR?”
We start 2014 with lots of questions about the direction of the market, with conflicting signals and yellow flashing warning lights. First let’s look at closed transactions, changed dynamics in 2013 continue in 2014 with fewer homes closed, number of sales in Yellowstone County are 112 as compared to 129 in 2013 , a 13% decline, only one month of small data, does not a trend make. Yet In single family permits we see total single family permits have a decrease of 26% for January year over year (2014 20 permits, 2013 27 permits) , and then from August to January we have six months year over year monthly decrease in permits issued, this is one trend of the flashing yellow caution light. The residential pending unit sales are up 1% year over year, as a comparison; in 2013 unit sales were up 14% over 2012 in January. The residential active for sale units are up 10% year over year, as a comparison, in 2013 unit inventory was down 18% over 2012, another flashing yellow caution sign. Both the single family new construction and single family resale are continuing showing a decrease of velocity in the market place. Market time has a decrease of 5% year over year, as a comparison in 2013 market time was 33% lower than 2012. The absorption rate shows an increase of 2% in time year over year, as a comparison January 2013 absorption time was down 17% year over year. Now for the large yellow flashing caution light residential rentals, January of 2014 the market place average 479 units advertised for rent a year over year in increase of 37%, as a comparison in 2013 inventory for rent was down 2.8% vs. January 2012. All This showing the market velocity is decreasing. A major factor affecting the market place is interest rates, According to Freddie Mac, January 2013 had an average interest rate of 3.41% and December 2013 the rate is 4.46% for a 30 year fixed rate. To show the impact, the payment on the average sales priced house in January of 2013 was $1,211 PITI, January 2014 it is now $1,604 PITI. This change in price and interest rate translates in an additional $16,842 yearly income needed to qualify for the average sales priced home in January 2014, which is an increase of 34.43% in payment compared to January 2013. When talking about
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http://www.realestatemontana.com/blog/Market-Update-at-glance-January-2014
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