FEBRUARY 29Th 2016
“READY SET, WHOA OR GO!!, LOOKING AT 2016”
February’s market update starts with “Let’s think different and ask different questions”.
I believe it has been awhile since I addressed the issue of what I try to achieve with the information I collect and distribute. The first issue is to understand that essentially all the “numbers” I put together, in reality, are indexes of activity in the market place. Why may you ask is that important, while it is true I strive to create an accurate representation, in the end though, it is still a partial representation of the market place, since having “all” the information is impossible. Hence individuals may say well that’s not quite true and in reality they are to some degree correct. I have a quote that I like that deals with the issue “all indexes are wrong but it does not mean they are not useful”. My belief is that quote sums up my true effort , that of creating information that is useful.
The end of FEBRUARY 2016 numbers, closed sales up +7%, pending sales down -2 %, inventory up +11%, and interest rates down -1% from the year earlier. The interest rate trend of year over year declines did end in December and did not continued this month (FEBRUARY). My prediction, all things being equally, rates should be marginally higher in 2016 than 2015. Yet the wild card is the international markets where several central banks are forcing negative interest rate (banks charge to hold your money) if that becomes wide spread, should force money to flow towards the United states capital markets which in turn most probably will lower rates. Have to watch this one!!
As of the end of the week of March 11th 2016, the rig count in North Dakota is down -69 rigs since last year, 32 working in 2016 and 101 working in 2015. The week February 12th 2015 in Montana 3 rigs were working there are ZERO rigs this year 2016. So far the Million dollar question (again for 2016) “Will the decline in energy, show up as possible decline in business and jobs due to the decrease in energy/oil costs?” So far, with the rapidity of the decline and now the continuation for the rigs working in North Dakota, we are starting to see discernable effects to the Yellowstone county economy(although not major trauma). As a little historical perspective in February 2006 there were 29 rigs working in North Dakota, February 2006, there were 23 rigs working in Montana. The peak year in activity was 2012 in March of that year 196 Rigs working North Dakota, 17 rigs in Montana, interesting to think about the rapidity of incline and decline in ten years.
First let’s look at closed transactions, Number of closed residential sales in Yellowstone County, 254 through FEBRUARY 2016, as compared to 237 in FEBRUARY 2015 showing an increase in closed transactions of +17, which translates into a +7% increase year over year. FEBRUARY 2014 there were a total of 240 closed sales. The longer look back, 2012 there were a total of 204. So into 2016 to try and match or the record set in 2006 (at the end of February 2016 about 10.24% below 2006). As a side note and perspective, since 2006 Yellowstone county has increase on population by approximately 21,000, employment has gone up by approximately 3,400 jobs, average wage has gone by approximately $12,000 a per year per job, interest rate has dropped by 42.9%, so its costs approximately $83 less a month to own the average sales priced home in Yellowstone county even though the price is up by almost $56,000 ($191,850 in 2006 vs $247,838 in 2016.
Residential pending unit sales in 2016 are down