Market update at glance
September 30th 2015
“History and Fall, a couple favorites of mine”
September’s market update starts with discussion Historical perspective. Those that have read these report for a while know that the high point in activity for residential sales was 2006, in that year there was 2043 “home sales” in Yellowstone county, there was 551 single family living units (single family plus duplex) created by permits taken out in the city of Billings. Average sales price was $191,850; 30 year fixed rate was 6.41%, making the PITI payment $1,531 dollars per month. Fast forward to this year 2015 residential sales so far 1461,projecting out to December 31st probably 1884 units sold so most likely -7.75% below 2006. So far there have 342 single family living units created by permits taken out in the city of Billings, projecting out to December 31st probably 448 units so most likely -18.98% below 2006. Average sales price is $249,451; 30 year fixed rate was 3.89%, making the PITI payment $1,481 dollars per month. So comparing 2006 to 2015, average sales price up 30%, average interest rate down 39.78%, average payment down 3.26% Number of household making more than $75,000 a year up approximately 35% (from approximately 13,000 to 20,000). When looking at the positives in the market place it gives an idea of the magnitude of the financing changes have had on the market place. These numbers are not affected by the rules that went into effect October 3rd 2015, which I believe will frustrate both buyer and sellers in the market place with another layer of rules without providing any benefit. Graphs are at the bottom showing the history
The end of September 2015 numbers, closed sales up +6%, pending sales up +17 %, inventory down -8%, and interest rates down -6% from the year earlier.
As of the end of the week of October 2nd the rig count in North Dakota is down -124 rigs since last year, 65 working in 2015 and 189 working in 2014. So far 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?” So far, with the rapidity of the decline in the rigs working in North Dakota, no major discernable effects to the Yellowstone county economy. As a little historical perspective in September 2009 there were just 37 rigs working, interesting to think about the rapidity of incline and decline in six short years.
First let’s look at closed transactions, Number of closed sales in Yellowstone County, 1756 through September 2015 as compared to 1662 in September 2014 showing an increase in closed transactions of +94, which translates into a +6% increase year over year. September 2013 there were a total of 1700 closed sales.
Residential pending unit sales in 2015 are up +17% year over year (403 units pending). To compare; 2014 September pending unit sales (344 units pending) were down -16% over September 2013 (296 units pending).
Interest rates decreased year over year comparing September 2015 (3.89%) to September 2014 (4.16%) interest rates declined -6%. Going back a year September of 2014 (4.19%) to 2013 (4.49%) interest rates were .33% lower, a -7% decrease from September 2013,
The residential active properties for sale inventory in September 2015 (650 units active) is down -8% year over year, as a comparison, in September 2014 (704 units active) unit inventory was up +6% comparing 2013 (663 units active) (comparing 2013 to 2015 inventory is up +1.96%).
Market time (the time to receive any offer) in September shows an decrease of -4% year over year(46 days 2015 vs 48 days in2014 and 47 days in 2013) , as a comparison in 2014 market time was +4% higher than 2013. The absorption rate of inventory shows an decrease of -6% in time year over year, 134 days 2015, as a comparison September 2014 absorption time was up +9% year over year 146 days, bench marketing against 2013 140 days.
Single family permits: total single family permits for 2015 have an increased +10% for year over year (2015 302 permits, 2014 275 permits, 2013 336 permits). For September 2015, 30 single family permits were issued, in September 2014 29 single family permits were issued a +4% over 2014 (September 2013 September saw 29 permits issued). A huge increase in single family permits happened in February 2015 due to code changes that became effective March 1st that add $2 to $3 dollars per square foot cost to a new home) March saw a slight decline in permits issued.
Now for residential rentals, Through September of 2015, the market place had an average of 382 units advertised for rent each Sunday, a year over year in decrease of -8% (or 34 less units advertised each Sunday), as a comparison in 2014 inventory for rent was 416 units advertised in Sundays, up 24% vs. September 2013, only 336 units were advertised each Sunday. Rent average asking price for an apartment have moved up $765 for September 2105 as compared to $715 for September 2014 an increase of +7%, as a comparison September 2014 was +4% higher than September 2013 ($691 asking price). So rents are increasing slightly faster or at the national consumer price index. Homes for rent, through September 2015 average asking rent is $1,197 for 2014 asking rent for a home was$1,182 an increase of 1% year over year on top of a 8% rise 2014 over 2013. (2013 average asking was $1,098.)