Real Estate Market

August Market Update

Northwest Montana Market Update

We have been seeing increased activity with buyers looking but that isn't necessarily translating into sales. Our absorption rate is creeping up a little but is still much lower than this time last year. Currently we are at 30 months. There are 3,587 active listings with 449 new listings in July and 122 sold listings in July. The active median list price is $299,900, the new median list price is $289,000 and the median sold price is $197,450. Our sale to original list price ratio is 85.3% and the average days on market is 242.

The look of this newsletter is changing as I have switched my services. A few new things to note are the new website at www.BuyOrSellMontana.com as well as you can now follow me on Facebook or Twitter. If you go to the website you can click on the Facebook link or the Twitter one to get regular updates on our changing market conditions.

Hope your summer is going well and you are getting out and enjoying the weather!

Pending Home Sales Ease in Post-Tax Credit Market

Washington, August 03, 2010

Pending home sales edged down with near-term sales expected to be notably lower in contrast to the spring surge when buyers rushed to take advantage of the home buyer tax credit, according to the National Association of Realtors®.

The Pending Home Sales Index, a forward-looking indicator, declined 2.6 percent to 75.7 based on contracts signed in June from an upwardly revised level of 77.7 in May, and is 18.6 percent below June 2009 when it was 93.0. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.

Lawrence Yun,  NAR chief economist, said lower home sales are expected in the short term. “There could be a couple of additional months of slow home-sales activity before picking up later in the year, provided the job market continues to improve,” he said. “Over the short term, inventory will look high relative to home sales. However, since home prices have come down to fundamentally justifiable levels, there isn’t likely to be any meaningful change to national home values. Some local markets continue to show strengthening prices.”

Yun expects mortgage interest rates to remain historically low for the balance of the year, with very modest growth in employment. “We really need to see stronger job creation to have a meaningful recovery in the housing markets,” he added.

The PHSI in the Northeast dropped 12.2 percent to 58.8 in June and is 25.4 percent lower than June 2009. In the Midwest the index fell 9.5 percent to 64.1 and is 27.8 percent lower than a year ago. Pending home sales in the South rose 3.7 percent to an index of 85.8, but are 13.3 percent below June 2009. In the West the index slipped 0.2 percent to 85.1 but is 14.2 percent below a year ago.

Housing Markets Becoming Less Saturated with REOs

From DS News, Carrie Bay

The nation’s REO stock fell 0.6 percent in May to 524,000 properties, according to analysis released by Barclays Capital.

In addition, the research firm estimates that housing’s shadow inventory – which Barclays defines as the supply of homes that are 90 or more days delinquent or in the process of foreclosure, meaning they are nearing REO status – declined by 2.3 percent to 4.02 million properties.

A separate study released by Clear Capital supports the assumption that indeed, there are fewer REOs influencing the market. The real estate valuation firm reports that REO saturation – the percentage of bank-owned homes sold as compared to all properties sold – is steadily declining.

Data from Clear Capital shows that REO saturation dropped 22.7 percent nationally during the May to July period. The company says that’s nearly 20 percentage points less than the REO saturation peak hit back in the first quarter of 2009.

Fewer REOs, coupled with a boost in overall sales from the homebuyer tax credit, have given home prices a lift, according to Clear Capital’s study.

Home prices nationally gained 7.9 percent during the May to July rolling quarter, Clear Capital reports. On a year-over-year basis, prices were up 8.1 percent as of the end of July, but the analysts at Clear Capital note that the latest annual reading represents a slow-down from the 8.8 percent yearly increase recorded in June.

“While quarterly gains are showing strong momentum across the country, these recent price advancements are just the latest turn in a volatile housing market that has seen ‘W’ shaped price trends over the last two years,” said Dr. Alex Villacorta, Clear Capital’s senior statistician.

Villacorta said that despite the up and down behavior of prices since the worst of the housing downturn, national prices are still up 13.6 percent from the trough, providing a cushion against potential future declines and the start of a double-dip.

Future price declines are exactly what’s being forecast. The analysts at Barclays said in their report, “With the expiration of the homebuyer tax credit, we expect the elevated pace of distressed liquidations to depress prices by 7 percent over the next three quarters.”

In an appearance on NBC’s “Meet the Press” over the weekend, former Federal Reserve Chairman Alan Greenspan added his own caveat to the mix. Greenspan warned that a decline in home prices could upset the modest economic recovery, with that double-dip spreading beyond just property values and sending the United States down another sharp recessionary slope.

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Contact Information

Photo of Corey Olofson, Broker Real Estate
Corey Olofson, Broker
RE/MAX of Whitefish
509 E. 6th St.
Whitefish MT 59937
Office: 406.863.3400
Cell: 406.253.0531
Fax: 406.863.3400