Market update at glance February 2015

Market update at glance

February 28^th 2015

 “Oh what difference weather and interest rate makes, within the market place”

I think I will start Februarys market update with the quote from an ad on television I remember as I was growing up from alka sizzler,” plop, plop, fizz, fizz Oh what a relief it is”. I think that best describes the activity since weather warmed and interest rates dropped in 2015 Market.  At the end of February 2015, closed sales down -7%, pending sales up 23 %, inventory down    -7%, and interest rates down-15% from the year earlier. As of the end of the week of March 6th the rig count in North Dakota is down 65 rigs since last year 105 in 2015 and 170 working in 2014. 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,  226  through February 2015 as compared to 240 in February 2014 showing a decrease in closed transactions of 14 which translates into a -6% decline year over year.

Residential pending unit sales in 2015 are up 23% years over year.  To compare; 2014  February pending unit sales were up 1% over February 2013, interest rates increased in august of 2013 and were .67%  higher, a 22% increase from February  2013 . (2013 there were 267 pending sales; 2014 there were 269 pending sales, 2015 there are 331 pending sales).

The residential active properties  for sale inventory in February 2015 is down -7% year over year, as a comparison, in February 2014 unit inventory was up 5%  comparing 2013 (comparing 2013 to 2015 inventory is down -1.8%, 2013 there were  482 units for sale ; 2014 there were  508 units for sale ,2015 there are 473 units for sale ).   Market time in February shows an decrease of -2% year over year, as a comparison in 2014 market time was -8% lower than 2013(so a positive trend).  The absorption rate shows an decrease of     -7% in time year over year, as a comparison February 2014 absorption time was up 3% year over year bench marketing against 2013.

Single family permits: we see total single family permits for 2015 have an increased 53% for year over year (2015 49 permits, 2014   32 permits). For February 2013, 31 single family were issued, in February 2015 35 single family permits were issued an increase of 9.3% over 2013. Yet I would caution one month a trend it does not make,  single family new construction ha been gaining velocity in the market place held back only in peoples ability to finance without their present home sold.  

 Now for residential rentals, Through February of 2015 the market place  an average of 404 units advertised for rent each Sunday, a year over year in decrease of -14% (or 67 less units  each advertised Sunday), as a comparison in 2014 inventory for rent was up 38% vs. February 2013. Rent average asking price have moved up $738 for February 2105 as compared to $730 for February 2014 an increase of 1%, as a comparison February 2014 was 6% higher than  February 2013. So rents are increasing slightly faster or at the national consumer price index. Homes for rent, through February 2015 average asking rent is $1,182 for 2014 asking rent for a home was$1,135 an increase of  4% year over year  on top of a 3% rise 2014 over 2013. (2013 average asking was $1,107.)

 A factor affecting the market place  is interest rates, According to Freddie Mac, February 2015 had an average interest rate of 3.67% (down -15% from 4.40% February 2014) and February 2013 the rate was 3.53% for a 30 year fixed rate an increase of  3.8% from 2013. To show the impact, the payment on the average sales priced house in February of 2015 was $1,334 PITI (average sales price $230,810), February 2014 it was $1,513 PITI (average sales price $239,723). This change in price (down $8,810) and interest rate decline translates in a decrease $8,592 yearly income needed to qualify for the average sales priced home in February 2015. These numbers are skewed by the drop in average sales price which is reflective of lower priced homes selling most probably influenced by the increasing rents and renters moving to ownership which had been delayed. When talking about interest rates, loan qualifications are still a player in the market; the additional scrutiny caused by the problems of the housing collapse has most probably reduced the buyer pool. To give this some perspective in Yellowstone county since the peak year of 2006 when 2040 residential sales took place we have approximately 7,000 more people employed, about 19,000 more residents in Yellowstone county, average income is up about $10,000 a year and interest rates are down about 40% with all those positives the year end sales for 2014 were 8.5% lower than 2006.

So even with the demographic shifts in renting versus buying I would venture that Yellowstone County has a very stable base in home sales as compared to economic activity.

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