Market Update at a Glance August 2014

August 31st 30th 2014

 “End of the Summer”

First let’s look at closed transactions, August 2014 continued with fewer homes closed. Number of closed sales in Yellowstone County are 1424 August 2014 as compared to 1516 in August 2013, a 6% decline. Monthly year over year same story monthly year over year August 2013 199, August 2104 187.

Residential pending unit sales are down -3% years over year.  To compare; 2013 August pending unit sales were up 6% over August 2012. (2012 there were 350 pending sales; 2013 there were 372 pending sales, 2014 there are 359 pending sales).   

The residential active properties  for sale inventory in August 2014 is up 6% year over year, as a comparison, in August 2013 unit inventory was up 4% over 2012 (comparing 2012 to 2014 inventory is up 10.5%, 2012 there were  625 units for sale ; 2013 there were  652 units for sale ,2014 there are 691 units for sale ).   Market time in August shows a increase of 2% year over year, as a comparison in 2013 market time was -21% lower than 2012(so a positive trend since the 2% increase is only 1 day longer on the market).  The absorption rate shows an increase of 7% in time year over year, as a comparison August 2013 absorption time was down -2% year over year bench marketing against 2012.

Single family permits: we see total single family permits for the first eight months of 2014 have a decreased  21% for year over year (2014 246 permits, 2013 311 permits),  then in August monthly year over year we have the second time monthly  permits issued increased year over year , so  a positive trend. For August 2013  30 single family were issued in August 2014  38 single family permits were issued, an increase of 27%, If single family permits were to match 2013  an extra 16 single family permits would need to be issued each month remaining in 2014 , a highly unlikely event. The single family new construction is continuing to show a slow velocity in the market place.  

 Now for residential rentals, Through August of 2014 the market place  an average of 423 units advertised for rent each Sunday, a year over year in increase of 31% (or 100 more units  each advertised Sunday), as a comparison in 2013 inventory for rent was up 18% vs. August 2012. Rent average asking price have moved up $715 for August 2104 as compared to $692 for August 2013 an increase of 3%, as a comparison august 2013 was 3.2% higher than  August 2012. So rents are increasing slightly faster the national consumer price index.

 A factor affecting the market place  is interest rates, According to Freddie Mac, August 2013 had an average interest rate of 4.46% and August 2014 the rate is 4.12% for a 30 year fixed rate a decrease of  -8%. To show the impact, the payment on the average sales priced house in August of 2013 was $1,501 PITI (average sales price $236,169), August 2014 it is now $1,483 PITI (average sales price $243,014). This change in price and interest rate translates in a decrease $745 yearly income needed to qualify for the average sales priced home in August 2014.  When talking about interest rates, loan qualifications are also a player in the market, the additional scrutiny caused by the problems of the housing collapse 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. Of course with that happening it increases the renter pool, thus the increase in building of apartments the last few years, and the apartment market is heading for saturation/over supply from the high demand of the past. Typical cycle in the supply/demand world.

The mortgage brokers association reports that application for new purchase country wide has declined 12% from 2013 and the refinance index is down 74% from 2013. Interesting trends to watch to see how that plays out throughout the fall.

All the trends require 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

THOUGHT I WOULD ADD A DIFFERENT FLAVOR OF INFORMATION THIS MONTH TO GIVE PERSPECTIVE OF PRICE POINTS WITH THE MARKET PLACE. THE FIRST GRAPH IS THE MODERATE TO LOWER SIDE OF THE MARKET; THE SECOND GRAPH IS THE HIGHER SIDE OF THE MARKET. TWO POINTSAOF INTEREST TO POINT IN THE LOWER SIDE THE 140 TO 160 RANGE AS A PERCENTAGE OF THE MARKET HAS ALMOST DROPPED BY HALF AND THE 250 TO 300 RANGE HAS ALMOST DOUBLE AS A PERCENTAGE OF HOMES SOLD