“WINTER OVER, DOES SPRING ARRIVE?”
With the first quarter of the year completed, still questions about how much winter effected the direction of the market. First let’s look at closed transactions, March 2014 continues with fewer homes closed, number of closed sales in Yellowstone County are 313 as compared to 427 in 2013, a 13% decline, the same percentage as in January & February, even with cold and snow, the market did not fall further behind, so the question is, does this show strength in the underlying market.
Single family permits: we see total single family permits have a decrease of 34% for March year over year (2014 68 permits, 2013 103 permits), then from August to March we have eight months year over year monthly decrease in permits issued. This is trend worth watching as spring arrives (to see when the trend ends); since I have no doubt that weather played a part with starts this winter. Residential pending unit sales are down 1% year over year, as a comparison; 2013 unit sales were up 7% over 2012 March.
The residential active properties for sale inventory is up 4% year over year, as a comparison, in 2013 unit inventory was down 12% over 2012 (did the weather increase inventory?). 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 11% year over year, as a comparison in 2013 market time was 21% lower than 2012(so both years show a positive trend). The absorption rate shows an increase of 37% in time year over year, as a comparison January 2013 absorption time was down 35% year over year (so is weather the culprit in increased absorption time). Now for residential rentals, Through March of 2014 the market place average 451 units advertised for rent each Sunday, a year over year in increase of 38%, as a comparison in 2013 inventory for rent was up 7.6% vs. March 2012. An argument can be made for both weather and an increased supply of new rental available in the market place, yet weather probably has more sway since availability of rentals increased in all price categories. A factor affecting the market place other than weather is interest rates, According to Freddie Mac, March 2013 had an average interest rate of 3.57% and March 2014 the rate is 4.34% for a 30 year fixed rate. To show the impact, the payment on the average sales priced house in March of 2013 was $1,279 PITI, March 2014 it is now $1,498 PITI. This change in price and interest rate translates in an additional $9,385 yearly income needed to qualify for the average sales priced home in March 2014, which is an increase of 17.12% in payment compared to March 2013. When talking about interest rates, loan qualifications are also a player in the market, the additional scrutiny caused by the problems of liar/no doc loans has most probably reduced the buyer pool. I saw one report that estimated the buyer pool drop of 33% nationwide, in Yellowstone County I would estimate it about 15% to 20% decrease in buyers from stricter guide lines.
Credit scores play a major role in obtaining a loan and there has been a slight “loosening” of credit score required to obtain a loan: FHA loan, 2014 average FICO for a closed loan is 688, 2013 it was 695 and in 2012 700. Conventional loans, 2014 average FICO for a closed loan is 727, 2013 it was 747 and in 2012 763.
Interest rate most probable direction is up during 2014 and if prices continue to move upward, these twin trends will moderate sales and pricing trends. The caveat would be employment and incomes, strong employment and income can drive sales. The latest figures available as of February 2014, there are 3525 more people working in Yellowstone County than in of 2012 and 5210 more working than in February of 2011 and we are about even with 2013. The number of persons employed is close to historical highs. Yellowstone County number of unemployed February 2014 is 3528 compared February 2012 4044 and 4486 in 2011 with 431 fewer unemployed than February 2013. The trends requires watching when thinking about the health of the market overall. I 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
Market update at glance |
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Year |
Percentage Increase |
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Yellowstone County |
03/31/2014 |
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2013 |
2014 |
or -Decrease |
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all information comparing year to date |
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Residential Closed Sales Units |
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427 |
373 |
-13% |
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Residential Pending Sales Units |
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294 |
292 |
-1% |
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Residential Active Property For Sale |
530 |
550 |
4% |
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Average sales price Single family Home |
$224,089 |
$239,116 |
7% |
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Average Square feet Single family Home |
2412 |
2456 |
2% |
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Median sales price Single family Home |
$201,000 |
$219,900 |
9% |
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Median Square feet Single family Home |
2268 |
2280 |
1% |
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Average Days on Market Till Offer Received |
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Single Family Home |
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64 |
57 |
-11% |
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Absorption rate - |
TIME IN DAYS |
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Time it would take for all existing |
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123 |
169 |
37% |
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properties to sell with no new inventory |
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coming into the market place - residential |
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SINGLE FAMILY PERMITS MONTH |
45 |
36 |
-20% |
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SINGLE FAMILY PERMITS YEAR |
103 |
68 |
-34% |
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Average # Rentals Advertised Sundays |
327 |
451 |
38% |
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Average Asking Price Rental Home |
$1,107 |
$1,138 |
3% |
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Average Asking Price Rental Apartment |
$694 |
$720 |
4% |
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Number of Person Employed Yellowstone County |
80,641 |
80,569 |
0% |
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