Community News

Plenty of mid-year national stats and forecasts are being released, and it is positive to note that our region is trending at or above most of the data. The National Association of Realtors (NAR) reported via its 2013 Housing Pulse Survey that American consumers believe owning a home is a positive situation with 68% of those surveyed agreeing now is a good time to buy and 80% feel buying a home is a good financial decision. This is the tenth survey of its kind and respondents were certainly more optimistic than in the recent past despite the fact that the economy still faces uncertainty. NAR President Gary Thomas is quoted as follows: “Homeownership matters to Americans, who consistently realize the many benefits it provides to communities, families, and the nation’s economy.”

So how does a mostly upbeat national attitude translate into hard facts and figures? Once the second quarter figures were published, the most striking fact is that in most metropolitan markets (87%), median home prices for existing single-family homes witnessed the largest year-over-year increase in 7 ½ years. The shrinking supply of inventory started to drive prices higher in the simple situation of supply and demand. The fact that interest rates are beginning to rise may cause a leveling of sales in some markets. Nationally, the median home price for a single family was $203,500 in the second quarter, an increase of 12.2% from the second quarter of 2012. Lawrence Yun, the NAR chief economist, attributes some of the price increases to a smaller percentage of distressed homes (foreclosures and short sales) being in the sales figures.  Those distressed sales decreased from 26 percent of total sales in 2012 to only 17% this year. On a local note, median sales prices rose in five out of the six markets that we track when comparing June 2013 versus 2012. In the Bozeman city limits, there was a 7% increase to $279,900; the Bozeman area outside city limits improved 15% to $344,000; Belgrade rose 12% to $190,000; Manhattan/ Three Forks grew 16% to $201,750; and Park County/ Livingston increased 39% to $180,000.

New home construction is a key to evening out the supply and demand which also attributes to price stabilization. Glancing at the City of Bozeman building permit report shows that we will be experiencing construction starts that we have not seen in some time.  Through June 2013, there have been a total of 947 permits issued, including those for 210 new housing units, with a total project valuation estimated at $82,889,986. These are the highest numbers in all categories since 2007. The National Association of Homebuilders shows similar good news with a 25% increase in the number of building permits nationally through the first two quarters of 2013 over last year.

The forecast for the remainder of 2013 varies somewhat comparing NAR to Fannie Mae, though both give good news. NAR (which is generally more accurate in an upward-moving market) predicts an 8.7% increase in the number of units sold and a 10.2% increase in average price. Fannie Mae (which is generally more accurate in a downward market) is looking for units to rise 6.8% and average sales price 5.1%. To compare with our local numbers, through June of this year, the Bozeman area's number of sales units has grown by 20% and the average price by 7%.

International buyers are making a big difference as of late with the biggest impact in Florida, California, Arizona, Texas, and New York. They reportedly comprise 6% of total sales and 50% of second-home sales. The other noteworthy fact is that 63% of the transactions are cash with the most buyers coming from Canada, China, Mexico, India, and the United Kingdom.  With a robust international tourism season and the ability for private jets to clear customs at Bozeman-Yellowstone International Airport, we may see this trend start to impact our region.