market update at glance march 2015

March 31^th 2015

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

I think I will start March’s market update with an analogy to the college basketball events that occur every year and that is “March Madness” only we do not end up with a final four. I do think “March Madness” best describes the activity since weather warmed and interest rates dropped in 2015 Market.  At the end of March 2015, closed sales up +5%, pending sales up +33 %, inventory down    -11%, and interest rates down-13% from the year earlier.

As of the end of the week of April 3th the rig count in North Dakota is down 88 rigs since last year 90 in 2015 and 178 working in 2014. So the Million dollar question for 2015 remains the same “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,  405  through March 2015 as compared to 382 in March 2014 showing an increase in closed transactions of 18 which translates into a +6% increase year over year.

Residential pending unit sales in 2015 are up +33% years over year.  To compare; 2014  March pending unit sales were down -1% over March 2013, interest rates increased year over year  comparing March of 2014 to 2013  interest rates  were .77%  higher, a +22% increase from March  2013, March 2015 to March 2014 interest rates declined -15% . (2013 there were 294 pending sales; 2014 there were 292 pending sales, 2015 there are 388 pending sales).

The residential active properties  for sale inventory in March 2015 is down -11% year over year, as a comparison, in March 2014 unit inventory was up +4%  comparing 2013 (comparing 2013 to 2015 inventory is up +14.28%, 2013 there were  427 units for sale ; 2014 there were  550 units for sale ,2015 there are 488 units for sale ).   Market time in March shows an increase of +2% year over year(57 days 2015 vs 56 days in2014 and 64 days in 2013) , as a comparison in 2014 market time was -11% lower than 2013(so a stable trend).  The absorption rate shows an decrease of     -10% in time year over year, as a comparison March 2014 absorption time was up 37% year over year(probably weather and interest rate related) bench marketing against 2013.

Single family permits: we see total single family permits for 2015 have an increased +7% for year over year (2015 73 permits, 2014  68 permits). For March 2013, 45 single family permits were issued, in March 2015 24 single family permits were issued a decrease of -46.66% over 2013. Yet I would caution one month a trend it does not make,   a huge increase in single family permits happened in February 2015 due to code changes that became effective March 1^st that add $2 to $3 dollars per square foot cost to a new home) 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 March of 2015, the market place had an average of 384 units advertised for rent each Sunday, a year over year in decrease of -15% (or 67 less units advertised each Sunday), as a comparison in 2014 inventory for rent was 451 units advertised in Sundays, up 38% vs. March 2013, only 327 units were advertised each Sunday. Rent average asking price have moved up $749 for March 2105 as compared to $720 for March 2014 an increase of +4%, as a comparison March 2014 was also +4% higher than  March 2013. So rents are increasing slightly faster or at the national consumer price index. Homes for rent, through March 2015 average asking rent is $1,180 for 2014 asking rent for a home was$1,138 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, March 2015 had an average interest rate of 3.77% (down -13% from 4.34% March 2014) and March 2013 the rate was 3.57% for a 30 year fixed rate an increase of  +5.3%  for 2015 from 2013. To show the impact, the payment on the average sales priced house in March of 2015 was $1,406 PITI (average sales price $240,422), March 2014 it was $1,502 PITI (average sales price $239,759), March 2013 it was $1,279 PITI (average sales price $224,089). This change in price (up+ $633) and interest rate decline translates in a decrease $5,008 yearly income needed to qualify for the average sales priced home in March 2015as compared to march 2014.

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 yearend 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