Recently I came across an article in The Washington Post by David Charron, who is the president and CEO of a multiple listing service in the Washington D.C. area.  He was looking at the five real estate trends to keep an eye out for in 2015. Though our local market may be apples to DC’s oranges, real estate as a whole consists of these top areas of discussion.
 
Inventory: The lack of available homes on the market has had a large impact on our sales recently.  Many properties under $350,000 are receiving multiple offers and selling for more than the full asking price. Buyers’ choices are limited and require fast action when properties come on the market.  However, at least in the immediate Bozeman area, the single-family inventory is rising a bit.  At the end of March 2015, there were 123 homes for sale in the Bozeman city limits compared to 99 at the same time in 2013 and 106 in 2014. Inventory in the other markets we closely track is still on the decline, down 9% in Bozeman outside of city limits, 37% in Belgrade, 13% in Big Sky, 18% in Livingston, and 15% in Ennis.   We are once again seeing growth moving outside of the city of Bozeman and buyers commuting further, based on lower sales prices in the communities of Three Forks, Ennis and Livingston.
 
The condo and townhome inventory ended the first quarter with 59 available listings in the Bozeman city limits, up slightly from 53 the prior year. The real disconnect is that for the price ranges up to $250,000, there is less than 3 ½ months of available inventory on the market, so still, more entry-level properties are needed for sale.
 
Year-to-date closed sales in all of the markets are looking good in 2015 with increases over last year’s numbers in all areas except Big Sky.  The large number of transactions that are currently pending shows regional real estate market strength should continue to hold. Many of these pending sales are newly constructed homes that are under contract and awaiting completion. 
 
Price: Intuitively using the basics of supply and demand, if and when our inventory levels grow, the average prices should level off.  The average sales price as of the end of March for a single-family home within the Bozeman city limits was $360,221, which is a 14% increase over 2014.  Prices also were higher year-over-year in the Belgrade, Big Sky, Park County, and Ennis markets.  Median sales prices showed gains in all of the markets.
 
In-town condos and townhomes also increased in average sales price to $241,265 from $213,583 at the end of March each year.  Belgrade attached housing average prices increased by 34% to $140,318. Big Sky grew by 14% to $494,701.
 
Interest rates: Since rates are more “national” than other real estate figures, the following information is taken directly from Charron’s article. 
“At this time last year, most people in the industry predicted mortgage interest rates would rise above 5 percent in 2014. But as of this writing, they are still hovering around 4 percent and have been decreasing incrementally over the past 10 months.
 
We expect this trend will reverse direction and rates will slowly increase well into 2015. At the beginning of the year, it is likely that buyers will see more favorable rates than those at the end, with no sudden spikes anticipated.”
As always, check with your lender to find out current rates and how they will affect your home purchase decisions.
 
First-time homebuyers:  First-time homebuyers are a demographic that is very important to the vitality of the real estate market.  Charron made some very valid points in his article including the quoted statements below.  
“This segment of the population has dominated the conversation for at least the past year and will no doubt continue to do so in 2015. Many obstacles — from tighter loan restrictions and higher down payment requirements to student loan burdens and lack of available, affordable homes — prevented first-time buyers from entering the market in 2014.
 
The National Association of Realtors reported that first-time buyers currently comprise only 33 percent of buyers. That represents their lowest market share since 1987, when first-time buyers made up only 30 percent of the market, largely because mortgage interest rates were double what they are now.
 
But there is some great news. The recent announcements of new 3 percent down payment programs by Fannie Mae and Freddie Mac should put purchasing a house within the reach of more buyers, especially those who have good credit and steady employment but have not been able to save enough for a 10 percent or 20 percent down payment. With these new programs, we’re optimistic that 2015 will be noticeably easier on many first-time homebuyers.”
 
While we do not track first-time homebuyers for our demographics, one related statistic that is interesting is the breakdown of property use.  In 2014, 64% of properties purchased (by buyers who purchased homes through our company) were for primary residence, 10% were second homes and 26% were for investment purposes.
 
New Neighborhoods to watch: Though this category can be quite different in a major metropolitan area versus our smaller city and rural areas, there are always indications of the direction the real estate market might be heading which generally trickle down.  Big Sky is such a unique market in our state, but the happenings in that area definitely reflect what will be happening throughout our region.  Big Sky’s positive gains flow to Bozeman and then to the outlying markets of Belgrade, Livingston, Manhattan, Three Forks, and beyond.  Within Bozeman, popular new neighborhoods that are leading the pace include the Knolls, the Crossings, and Norton Ranch.  
 
These facts and figures are the briefest snapshot of the real estate market and are very fluid as each month passes, but they make for both interesting conversations and items for consideration if you are thinking of buying or selling a home in the near future.