Community News

For those who are involved with real estate, the first signs of spring often signal the beginning of a hopefully busy selling season.  Sellers commence sprucing up their homes a little more thoroughly, and buyers start to take it up a notch from casually perusing the Sunday ads. 

This year, we are already seeing indications, both nationally and locally, that this surge should not bypass us.  According to the National Association of Realtors® (NAR), the pending home sales rose in the month of February, which is possibly a sign that the response to the home buyer tax credit was favorable yet again.  Specifically, the Pending Home Sales Index, which is based on real estate contracts that were signed within the designated month, rose 8.2% over January 2010, and furthermore, it remains at 17.3% above February of 2009.  The figures are indicative of contracts to purchase and not actual closings.  The closings generally take place within two months of pending status. 

NAR chief economist, Lawrence Yun, states the following.  “The rise in buyer contact activity may signal the early stages of a second surge of home sales this spring. The healthy gain hints home prices are continuing to flatten,” he said. “We need a second surge to meaningfully draw down inventory and definitively stabilize home values.”
With the home buyer tax credit now expiring as of May 1st, many who would have benefited from the credit but did not commit are still in a buyer-friendly market that marries good inventory with very low-interest rates.  And though much attention is given to affordable starter homes, many real estate professionals are also seeing buyers upgrade at this time while it is easier to sell their current homes and move up to larger residences or preferred school districts. 

Anecdotal stories from around the country include the resurgence of multiple offers in certain markets, healthy gains in pending transactions in most regions, and even an increase in international buyers who are able to take advantage of the lower prices in destination locations.  The natural real estate cycle is falling home prices bringing buyers back to the market leading to an increase in the number of sales and back to a state of recovery and stability.

Another sign that markets could be improving is an increase in the number of new housing starts.  For instance, the City of Bozeman reports that permits for 10 housing units were issued in February 2010 compared to just 1 permit in February 2009.  Year-to-date stats show 20 housing units in 2010 versus 7 in 2009.  National figures for March 2010 were reported in a joint release by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.  The number of new, privately-owned housing units authorized in permit-issuing places increased by 34.1% comparing March 2009 to March 2010.  In the West, the numbers are up a total of 31.1% for all housing types and up by 68.7% for structures with one unit.  Furthermore, the number of new, privately-owned housing units started to increase by 20.2% from March 2009 to March 2010, and again the West showed an 82.8% jump in the single housing unit category. 

To give a snapshot of our current market conditions, as of March 31st, there were 792 homes (both over and under 1 acre) available for sale according to Southwest Montana Multiple Listing Service.  This data encompasses Bozeman, Belgrade, Manhattan, Three Forks, and the surrounding area.  The average list price for these homes is $594,807.  Year-to-date, there have been 138 sales of homes in this same geographical area at an average sales price of $304,978.  As for the condo/ townhouse market, there were 309 units for sale at an average price of $220,599.  There have been 37 sales thus far in 2010 at an average sales price of $173,410.  Vacant land is readily available with 1597 parcels on the market at an average asking price of $245,726.  There have been 52 closings this year with an average sales price of $79,153. 

The good news, which has continued for the past 6 months, is that sales are up year over year.  From October 1, 2009, through March 31, 2010, home sales are up 48%, condos sales are up 53%, and vacant land sales have increased 85% from the previous year.  Inventory levels continue to decline, in some market segments to a 4-year low.  We are seeing lots of new housing starts at affordable entry-level price points.   

As always, historical perspective is unmistakably more accurate than future predictions…only time will tell the full story of how quickly, and to what degree, a housing recovery will occur.  Each market is its own inimitable entity with a unique set of circumstances.  Stay tuned as the summer market unfolds.