Market update at glance
October 31st 2014
“Don’t bet against the Fed’s Printing Money”
A comment about the title, since 2008 the Federal Reserve has accumulated approximately 1.7 trillion dollars in Mortgage back securities. This October they indicated any principal received would be reinvested into the mortgage market, so the Fed’s oversized influence on the mortgage market will stay until they decide to reduce the size of the holdings, which is approximately 17% of all mortgage back securities, the main source of mortgage money.
First let’s look at closed transactions, October 2014 continued with fewer homes closed. Number of closed sales in Yellowstone County are 1865 October 2014 as compared to 1897 in October 2013, a 2% decline. Monthly year over year different story monthly year over year October 2013 171, October 2104 175 a 2.28% increase.
Residential pending unit sales are up 22% years over year. To compare; 2013 October pending unit sales were down-10% over October 2012, interest rates increased in august of 2013. (2012 there were 297 pending sales; 2013 there were 267 pending sales, 2014 there are 326 pending sales). With the pending sales in the pipe line it now appears probable 2014 closed sales will match 2013 most probably slightly exceed, not the out come expected unitll interest rates dropped.
The residential active properties for sale inventory in October 2014 is down -4% year over year, as a comparison, in October 2013 unit inventory was up 13% comparing 2012 (comparing 2012 to 2014 inventory is up 7.4%, 2012 there were 559 units for sale ; 2013 there were 667 units for sale ,2014 there are 647 units for sale ). Market time in October shows an increase of 2% year over year, as a comparison in 2013 market time was -19% lower than 2012(so a positive trend since the 2% increase is only 1 day longer on the market). The absorption rate shows an decrease of -7% in time year over year, as a comparison October 2013 absorption time was up 7% year over year bench marketing against 2012.
Single family permits: we see total single family permits for the first ten months of 2014 have a decreased -11% for year over year (2014 331 permits, 2013 372 permits). For October 2013 32 single family were issued, in October 2014 56 single family permits were issued an increase of 75% over 2013. If single family permits were to match 2013 39 single family permits would need to be issued each month remaining in 2014 , a highly unlikely event (in 2013 November, December 37 permits in total were issued. The single family new construction is beginning to show velocity in the market place.
Now for residential rentals, Through October of 2014 the market place an average of 416 units advertised for rent each Sunday, a year over year in increase of 21% (or 73 more units each advertised Sunday), as a comparison in 2013 inventory for rent was
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