Market Update At a Glance December end of year 2014

Market update

 “Looking back, Looking forward”

In the immortal words attributed to Yogi Berra "It's Hard to Make Predictions, Especially about the Future". I think that best describes 2015 Market.  At the end of the 1^st half  2014, closed sales down -6%, pending sales down -12%, inventory up 6%, and interest rates up 2% from the year earlier. At that point I would have let you bet a dollar and I would have matched with $50 about 2014 catching or surpassing 2013, you would have taken my $50. As I have said, probably should not bet against the people with control over the money printing press.  So the Million dollar question for 2015 “Will the decline in energy costs and interest rates offset any possible decline in business and jobs dues to the decrease in energy/oil costs?”

First let’s look at closed transactions, Number of closed sales in Yellowstone County are 2209 December 2014 as compared to 2206 in December 2013, essentially a tie. Monthly year over year different story monthly year over year December 2013 130, December 2104 155 a 19.23% increase.

Residential pending unit sales are up 17% years over year.  To compare; 2013 December pending unit sales were down -13% over December 2012, interest rates increased in august of 2013 and were a full percentage point higher, a 33% increase from December  2013 . (2012 there were 217 pending sales; 2013 there were 186 pending sales, 2014 there are 217 pending sales). With the pending sales in the pipe line it 2015 will start with an extra boost.

The residential active properties  for sale inventory in December 2014 is down -6% year over year, as a comparison, in December 2013 unit inventory was up 13%  comparing 2012 (comparing 2012 to 2014 inventory is up 6%, 2012 there were  511 units for sale ; 2013 there were  575 units for sale ,2014 there are 542 units for sale ).   Market time in December shows an decrease of -4% year over year, as a comparison in 2013 market time was -14% lower than 2012(so a positive trend).  The absorption rate shows an decrease of     -10% in time year over year, as a comparison December 2013 absorption time was up 3% year over year bench marketing against 2012.

Single family permits: we see total single family permits for 2014 have a decreased -4% for year over year (2014 392 permits, 2013 409 permits). For December 2013 16 single family were issued, in December 2014 32 single family permits were issued an increase of 100% over 2013. The single family new construction is gaining velocity in the market place.  

 Now for residential rentals, Through December of 2014 the market place  an average of 414 units advertised for rent each Sunday, a year over year in increase of 19% (or 66 more units  each advertised Sunday), as a comparison in 2013 inventory for rent was up 19% vs. December 2012. Rent average asking price have moved up $725 for December 2104 as compared to $711 for December 2013 an increase of 2%, as a comparison December 2013 was 3% higher than  December 2012. So rents are increasing slightly faster or at the national consumer price index. Homes for rent, through December 2014 average asking rent is $1,199 for 2013 asking rent for a home was$1,127 an increase of  6% year over year  on top of a 4% rise 2013 over 2012. (2012 average asking was $1,082.)

 A factor affecting the market place  is interest rates, According to Freddie Mac, December 2013 had an average interest rate of 4.46% (up from 3.35% December 2012) and December 2014 the rate is 3.86% for a 30 year fixed rate a decrease of  -13%. To show the impact, the payment on the average sales priced house in December of 2013 was $1,502 PITI (average sales price $236,438), December 2014 it is now $1,442 PITI (average sales price $243,852). This change in price (up $7,414) and interest rate decline translates in a decrease $3000 yearly income needed to qualify for the average sales priced home in December 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.

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