market update at a glance September 2014

“Oh what a difference interest rate makes”

First let’s look at closed transactions, September 2014 continued with fewer homes closed. Number of closed sales in Yellowstone County are 1636 September 2014 as compared to 1700 in September 2013, a 4% decline. Monthly year over year different story monthly year over year September 2013 150, September 2104 172 a 14.66% increase.

Residential pending unit sales are up 16% years over year.  To compare; 2013 September pending unit sales were down-2% over September 2012, interest rates increased in august of 2013. (2012 there were 302 pending sales; 2013 there were 296 pending sales, 2014 there are 344 pending sales). With the pending sales in the pipe line it now appears probable 2014 closed sales will match 2013 or slightly exceed, not the out come expected unitll interest rates dropped.

The residential active properties  for sale inventory in September 2014 is up 6% year over year, as a comparison, in September 2013 unit inventory was flat  comparing 2012 (comparing 2012 to 2014 inventory is up 6.5%, 2012 there were  661 units for sale ; 2013 there were  663 units for sale ,2014 there are 704 units for sale ).   Market time in September shows an increase of 4% year over year, as a comparison in 2013 market time was -19% lower than 2012(so a positive trend since the 4% increase is only 2 days longer on the market).  The absorption rate shows an increase of 9% in time year over year, as a comparison September 2013 absorption time was down -6% year over year bench marketing against 2012.

Single family permits: we see total single family permits for the first nine months of 2014 have a decreased  19% for year over year (2014 275 permits, 2013 275 permits),  then in September monthly year over year we are flat  permits issued  year over year. For September 2013 29 single family were issued in September 2014 29 single family permits were issued. If single family permits were to match 2013  an extra 22.5 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 September of 2014 the market place  an average of 418 units advertised for rent each Sunday, a year over year in increase of 18% (or 82 more units  each advertised Sunday), as a comparison in 2013 inventory for rent was up 18% vs. September 2012. Rent average asking price have moved up $715 for September 2104 as compared to $702 for September 2013 an increase of 2%, as a comparison September 2013 was 2.8% higher than  September 2012. So rents are increasing slightly faster or at the national consumer price index.

 A factor affecting the market place  is interest rates, According to Freddie Mac, September 2013 had an average interest rate of 4.49% and September 2014 the rate is 4.16% for a 30 year fixed rate a decrease of  -7%. To show the impact, the payment on the average sales priced house in September of 2013 was $1,500 PITI (average sales price $235,161), September 2014 it is now $1,490 PITI (average sales price $242,996). This change in price and interest rate translates in a decrease $480 yearly income needed to qualify for the average sales priced home in September 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 11% 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