PureWest - Montana Real Estate

Improving Real Estate Market in Big Sky Mirrors National Vacation Home Trend

Stan Feagler — Mon, 10 Jan 2011 15:38:00 GMT

The Wall Street Journal published an article today highlighting the improving market for Vacation homes in a number of resort communities across the country. Several of the trends noted in the article mirror what is happening in Montana's Big Sky Ski Resort.

In 2010, Big Sky saw overall sales transactions increase by almost 50% as buyers jumped off the sidelines, often with cash. The overall dollar volume of sales in Big Sky was also up, but by only 15% as the average price fell 17% between years. PureWest Christie's Great Estates agents in Big Sky say that buyers who have been watching on the sidelines now believe the bottom is probably behind us and are moving to take advantage of bargain prices still available.

The upward trend in vacation homes defies expectations for home prices nationally where experts are calling for a further decline of 5% - 10% in home prices due to excess inventory, foreclosure pressure and the difficulty in obtaining mortgage finance.

The difference with the vacation home market is that prices fell much further and much faster. In Big Sky, home prices are down from the 2007 peak by over 50% and while credit for vacation homes is often only available with crystal clean credit and 25% down, luxury home buyers are coming to the closing table with cash so as to not pass up deals in some of the nation's most exclusive resorts.

Buyers are oftentimes affluent baby boomers looking for a family gathering spot on holidays and a place they can semi-retire when the time is right. Technology is helping the trend as owners schedule longer and longer stays in their mountain locations making them a nice replacement office away from the city grind.

Stan Feagler, PureWest - Christie's Great Estates

Bozeman, Big Sky & Paradise Valley

By S. MITRA KALITA

Sales in many vacation communities across the U.S. soared last year to levels not seen since boom times, driven by deep discounts, cash purchases and buyers' rising stock portfolios.

On Mercer Island, Wash., waterfront sales nearly tripled in 2010, compared with a year earlier, reaching par with 2006 volume there. Sales on Hilton Head Island, S.C., rose 14% for the year. Palm Beach, Fla., experienced a 40% annual increase and a 54% increase in homes under contract, indicating an especially strong fourth quarter. Palm Beach sales volume now is comparable to its 2007 peak. These figures were gleaned by brokers in each locale.

"The proverbial train has left the station," said Ned Monell, an agent with Sotheby's International Realty in Palm Beach. "We haven't felt energy like this in a long time. Buyers sense that they've been on the sidelines long enough."

The question now is whether the momentum will last. The strength of second-home sales paints a stark contrast to the overall housing market, which is expected to worsen in 2011.

Existing-home sales in November rose 5.6% on an annualized basis, according to the National Association of Realtors, a trade and lobbying group. Last month, the Case-Shiller housing index of 20 cities showed prices across the U.S. fell in October, and most analysts predict another 5% to 10% slide in the coming year.

Data for the nationwide vacation-home market aren't tracked regularly. The National Association of Realtors conducts an annual survey of home buyers, but results for 2010 won't be out till March.

Yet the market for vacation homes, based on local sales data, appears to be booming. The comeback, NAR economist Lawrence Yun said, has been helped by gains in the stock market and an improving economy, which have made wealthier Americans more upbeat about the future. "It also implies that prices in some markets have come down so much that people are fighting for those properties," said Mr. Yun, noting that demand is strongest in areas close to stable labor markets.

According to the NAR, one in 10 real-estate transactions in 2009 was for the purchase of a vacation home. And though a small fraction of the overall market, it is significant because vacation homes are often big-ticket properties and attract discretionary buyers. Just four houses sold last year on Madeline Island, Wis., for example, but the island's average dwelling sells at two to three times the price of the county average, said Eric Kodner, a realty broker on the island.

Sales of second homes are showing an uptick even in more-affordable communities. In some locations, prices are even inching upward. Cape Cod sales climbed nearly 9% in 2010 from 2009, while prices rose 7%. Monroe County, Pa., in the heart of the Pocono Mountains, saw a 3% decline in transactions, but its Lake Naomi resort community was up nearly 15%. A one-acre plot off Lake Naomi recently fetched $1.1 million, a record deal for the area.

Still, in most markets where demand has improved, prices haven't. For Realtor Andy Twisdale in Hilton Head, S.C., it is too soon to rejoice; prices are down almost a third over the past five years. "People are buying at the very low end of the product," he said. "The financing is very difficult. Banks are requiring 25% down and crystal clean credit."

Buyers who qualify or can pay cash say this is the time to take the plunge. On New Year's Day, the Makarewicz family arrived in Pocono Pines, Pa., to look for a vacation home. They already own their primary residence in northern New Jersey and own a property in Damascus, a northeastern Pennsylvania town along the Delaware River. But the family says the latter doesn't offer enough things to do: Not enough shopping. Not enough activities for kids. Not even enough fish.

"How's the bass here?" Joe Makarewicz, a vice president for sales at a financial-services firm, asked Re/Max Realtor Rob Baxter as the two looked at floor plans.

The family plans to sell the Damascus house, which would allow them to pay cash for one near Lake Naomi. The resort community at Lake Naomi boasts pools, tennis courts, a recreation center and a golf course—and is equidistant from New York and Philadelphia.

Some second homes had been stuck on the market because sellers wouldn't budge on price; unlike owners of primary homes, they often aren't in a hurry to move.

"Sellers have become aware that they have to price their homes accordingly," said Harald Grant, a senior vice president at Sotheby's in New York's ritzy Hamptons region. "There's a perk in the market because a lot of prices have come down to where they should be."

This shift became clear to K. David Hirschey, who runs a consulting business in Minneapolis, as he hunted for a home on Madeline Island.

After competing in a summer swimming competition on the island, Mr. Hirschey decided to buy a home there, perhaps to rent it a few years and maybe retire there eventually. The first offer he made was rejected, he recalled, because the seller said, "We don't negotiate on properties here." The same thing happened with his bid on the next house.

Then he found a third property—four bedrooms, three baths—that began as a sale by owner, was taken off the market, then relisted under one broker, then another. It had been initially priced at $1.25 million, and remained on sale for two years.

"When I saw it, it was listed at $687,000," said Mr. Hirschey, a father of four children. He offered $530,000, furnishings included. "They wanted to negotiate and I said no," he said.

The tactic—an all-cash offer—worked, and Mr. Hirschey closed on the house in November, just in time for his family to spend the holidays there.

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Some Say Housing Shortage in 2011

Stan Feagler — Sun, 09 Jan 2011 05:27:00 GMT

This past year saw an increase in the number of home sales transactions as well as an increase in the overall dollar volume of sales transactions in the Bozeman Area, Montana. Economists predict that a home shortage, or at least in certain markets, may materialize in 2011. While there are still record foreclosures, the number of people need housing continues to rise each year.

While some markets are down to 6 -7 months of inventory, Bozeman still has ample unsold homes. At the beginning of January, there were $343 million listings as compared to $178 in total sales during 2010. As in many markets, the sub-$500K priced homes are moving well but over $1.0 million is slow. See Bozeman Market Statistics for 2010.

Repost from Forbes.com

Economist: Housing shortage coming in 2011

He says that if new houses aren't built soon in the U.S., there won't be enough next year.

By Alexandra Zendrian of Forbes

more on Forbes.com

The focus of the U.S. real-estate market lately has been the number of foreclosures and people trying to purchase cheap housing. But Brian Wesbury, chief economist at First Trust Advisors, says that if Americans don’t start focusing on building new houses, the market will have a much bigger problem on its hands.

“We need one and a half million houses per year just to keep up with population growth,” Wesbury said in an interview with Steve Forbes. “And then if you throw in, you know, fires and tear-downs and just worn-out properties, we need 1.6 million or more per year. Right now, we’re down to about six and a half, seven months’ inventory whether you look at new homes or existing homes.”

Privately owned housing starts in December 2009 were at a seasonally adjusted annual rate of 557,000, according to the U.S. Census Bureau and the Department of Housing and Urban Development. This is 4% less than where it was in November, which had 580,000 housing starts.

Video: Is stimulus enough? Real-estate trends

Housing completion numbers also contribute to this dire picture, with privately owned housing completions reaching a seasonally adjusted annualized rate of 768,000 in December 2009. That was down 11.2% from the 865,000 completions in November and down 25.3% from the 1.03 million completions in December 2008.

MSN Money: Find a mortgage under 5%

Some people might shrug these statistics off, considering the number of foreclosures on the market. “Yes there’s foreclosures coming into the market, but we’re only starting right now,” Wesbury says. “... We’re starting one-third of the houses we need just to keep up with population growth, and that can’t last.”

On our blog, 'Listed': Rent is cheap now, but a shortage looms

There were 315,716 properties last month with foreclosure filings, according to RealtyTrac. These filings include default notices, scheduled auctions and bank repossessions. Though last month’s filings were 15% more than a year ago, they were 10% less than in December.

More Real Estate Deals Ahead?

View more MSN videos Go to CNBC

Jason Thomas, chief investment officer for Aspiriant, a California wealth-management firm, says he doesn’t see the foreclosure situation getting better until the labor market picks up. “So many people are getting to a point where they just can’t hold on anymore, and we may see another wave of that if we don’t see a pretty robust turnaround in the labor market,” he says.

The unemployment rate is currently 9.7%, down from 10% at the end of 2009, according to the Bureau of Labor Statistics.

Thesis Fund Management portfolio manager Stephen Roseman says the likelihood of a housing shortage is slim to none. “You need to have an accurate housing turnover number, and right now we have anything but that,” he says.

There is some demand, though, from companies that are scooping up whole floors or housing developments because they have the cash on hand, Roseman says.

And for those people who can get a mortgage, homes are very affordable. The median price for U.S. existing single-family homes in metropolitan areas was $173,200 in 2009, according to the National Association of Realtors, compared with $198,100 in 2008.

Find foreclosures in your area

Mortgage rates are also very low. For instance, both JPMorgan Chase and Wells Fargo are offering 30-year fixed mortgages at 5%, and some can be found for a hair less.

“A mortgage is not difficult to get if you have the right income stream,” says Margaret Starner, senior vice president for the financial services firm Raymond James.

But even if you can get a mortgage, maintaining the income to pay for that mortgage isn’t easy. “There’s a lot of potential problems that can come out if unemployment continues to drag; people deplete their savings and their credit card,” says Michael Ervolini, head of behavioral finance at Cabot Research. “It appears to be more of an income issue than a housing issue that we’re going to be looking at for the next couple of years

Bozeman Area Single Family Home Sales Volume by Price Category for 2010

Stan Feagler — Sat, 08 Jan 2011 20:55:00 GMT

Bozeman, MT - Key home sales indicators begin to improve in 2010. The total number of sales, the total dollar volume of sales and the average home price all trended up in 2010.

The year 2009 was the lowest sales year from both a dollar volume and transaction number standpoint since 2005. That year was also characterized by marked slowdown in the sales of higher priced homes. As a percentage of sales, sales of homes priced under $500K climbed to 78% of sales from an average of close to 60% in the previous three years.

Bozeman Area Single Family Home Sales - $ Millions By Sales Level
	2010	2009	2008	2007	2006	2005
Under $500K	$127.1	$120.0	$127.9	$141.4	$169.5	$210.7
$500K - $750K	$24.9	$13.8	$26.9	$42.1	$49.1	$47.6
$750 - $1.0MM	$8.7	$3.2	$14.6	$14.2	$22.6	$20.9
$1.0MM - $1.5MM	$8.7	$5.1	$14.4	$17.4	$15.0	$8.0
Over $1.5MM	$9.0	$11.2	$23.2	$18.7	$24.3	$8.1
Total	$178.4	$153.4	$207.0	$233.8	$280.6	$295.2

Bozeman Area Single Family Home Sales - Percentage of Total Sales
	2010	2009	2008	2007	2006	2005
Under $500K	71%	78%	62%	60%	60%	71%
$500K - $750K	14%	9%	13%	18%	18%	16%
$750 - $1.0MM	5%	2%	7%	6%	8%	7%
$1.0MM - $1.5MM	5%	3%	7%	7%	5%	3%
Over $1.5MM	5%	7%	11%	8%	9%	3%
Total	*100%*	*100%*	*100%*	*100%*	*100%*	*100%*

The dollar volume of sales for homes price under $500K were $127K comprising 71% of the dollar volume. More typically, homes in this price range represent closer to 60% of total sales. Home sales over $1.0 million totaled $17.7 million for 10 transactions which is down from over $35 million in each year 2006 to 2008 when transactions averaged over 20 per year.

Stan Feagler

PureWest Christie's Great Estates

Bozeman, Big Sky, Paradise Valley

Real Estate Listings in the Bozeman Montana Area by Property Type at January 1, 2011

Stan Feagler — Wed, 05 Jan 2011 20:25:00 GMT

At January 1, 2011, condos and townhomes comprised about 30% of all properties on the Bozeman market and single family homes made up the remaining 70%.

	Condo	Townhome	Single Family	All Listings
Number of Listings	148	40	456	643
Percent	23%	6%	71%	100%

Total Listing Volume in Millions	$31.6	$9.6	$303.1	$343.8
Percent	9%	3%	88%	100%

Average Listing Price	$213,692	$239,837	$664,766	$534,616
Median Listing Price	$169,900	$184,950	$362,400	$294,500

Average Days on Market	177	340	208	210

Single Family Homes – Single family homes make up the majority of listings in the Bozeman Area, comprising 71% of the number of listings and 88% of the total listing dollar volume. The average listing price of single family homes is $664k due to the pull of higher priced homes on the overall average price. About 10% of the listed homes are priced at over $1.0 million and the highest listing is currently priced at $8.9 million. The mid-point or median for a Bozeman area property is $362K and the average home has been on the market 208 days.

Days on Market rises with price point. The graph below show that single family homes price under $300K average 165 days on market while the average climbs to 364 days or just over a year for luxury homes priced at over $1.5 million.

Single Family
Days on Market	Average	Mean
Under $300K	165	129
$300K to $750K	227	159
$750K to $1.5MM	256	227
Over $1.5MM	364	262

Condominiums make up a much smaller percentage of the housing stock in the Bozeman area, comprising only 23% of the number of listings and only 9% of the dollar listing volume. The average listing price of a condominium in the Bozeman area is $213K with a median of $170K.

Days on market for condos averages 179 (6 months) for price points under $300K but climbs to 255 days (about 9 months) when the price is above $300K.

Townhomes represent the smallest category of fixed residential unit in the Bozeman area. At the beginning of the year, there were 40 townhomes listed representing 9% of the overall listing count in numbers and only 3% of the dollar listing volume.

Townhomes also exhibit longer days on market than any other category with those priced below $300K at an average of 269 days and those above $300k averaging a staggering 787 days or 26 months (over 2 years).

	Single				All
Average Days on Market		Family	Condo	Townhome	Listings
Under $300K		165	179	269	180
$300K to $750K		227	255	787	252
$750K to $1.5MM		256			256
Over $1.5MM		364			362

*Bozeman Area including surrounding area such as Bridger Canyon, Trail Creek, Gallatin Gateway, Four Corners, North and Northwest of city.

**Source for all information is Gallatin Association of Realtors MLS

Stan Feagler - PureWest Christie's Great Estates, Montana Real Estate

Bozeman, Big Sky, Paradise Valley Montana

Bozeman Montana Real Estate Listings by Price Category at January 1, 2011

Stan Feagler — Wed, 05 Jan 2011 00:11:00 GMT

Bozeman Montana Area Real Estate Listings by Price Category at January 1, 2011

The following summarizes the real estate listings for the Bozeman Area* at January 1, 2010.

Listings totaled $343.8** million at the beginning of the year, of which 88% are single family residential. Homes defined as luxury, $750K and above comprised a total of $174.0 million in listings in the ultra-luxury category defined as homes priced over $1.5 million comprised $121 million in total listings (or roughly one third of the total dollar listing volume).

Condos and Townhomes comprise only 12 % of the listing volume at year end and none are priced above $1.5 million.

The following shows the breakdown of residential real estate listings in the Bozeman area at January 1, 2011 in dollar millions.

			Single	Single Family	All	All Listings
	Condo	Townhome	Family	%	Listings	%
0 to $300K	$31.63	$9.6	$45.0	15%	$72.4	21%
$300K to $500k	$22.16	$5.9	$39.0	13%	$47.6	14%
$500k to $750K	$5.55	$3.0	$46.1	15%	$49.2	14%
$750K to $1.0MM	$2.37	$0.7	$26.5	9%	$26.5	8%
$1.0MM to $1.5MM	$1.55		$25.5	8%	$27.0	8%
$1.5MM to $2.0MM			$27.8	9%	$27.8	8%
$2MM to $3MM			$40.4	13%	$40.4	12%
$3MM to $5MM			$25.5	8%	$25.5	7%
Over $5MM			$27.4	9%	$27.4	8%
Total	$31.63	$9.6	$303.1	100%	$343.8	100%

Of the listings under the $300K threshold, almost half were condos and townhomes. The sub-$300K category comprised over half of all listings in the Bozeman area but only one fifth of the dollar volume of listed real estate due to the comparatively low average list price.

The $300K to $750K range make up about 39% of the number of listings and 28% of the dollar volume.

Luxury homes in priced in the range of $750K to $1.5 million totaled 50 or 8% of the total listing count but 16% of the dollar listing volume.

			Single		All
	Condo	Townhome	Family	%	Listings	%
0 to $300K	129	32	187	41%	347	54%
$300K to $500k	14	7	101	22%	122	19%
$500k to $750K	4	1	76	17%	81	13%
$750K to $1.0MM	1		30	7%	30	5%
$1.0MM to $1.5MM			20	4%	20	3%
$1.5MM to $2.0MM			16	4%	17	3%
$2MM to $3MM			15	3%	15	2%
$3MM to $5MM			7	2%	7	1%
Over $5MM			4	1%	4	1%
Total	148	40	456	*100%*	643	*100%*

There are 32 luxury properties priced in the $1.5 to $3.0 million price range (5% of the listing count) and they comprised 20% of the listing dollar volume.

There are 11 homes priced in excess of $3.0 million at the beginning of the year and they comprised 15% of the dollar listing volume.

*Bozeman Area including surrounding area such as Bridger Canyon, Trail Creek, Gallatin Gateway, Four Corners, North and Northwest of city.

**Source for all information is Gallatin Association of Realtors MLS

Stan Feagler

PureWest - Christie's Great Estates

Bozeman, Big Sky, Paradise Valley

Home Owners Recoup More with Exterior Replacement Projects, REALTORS® Report reposted by Jason Frey

Jason Frey — Tue, 28 Dec 2010 22:27:00 GMT

As part of the 2010-11Remodeling Cost vs. Value Report, REALTORS® recently rated exterior replacement projects among the most cost-effective home improvement projects, demonstrating that curb appeal remains one of the most important aspects of a home at resale time.

“This year’s Remodeling Cost vs. Value Report highlights the importance of exterior projects, which not only provide the most value, but also are among the least expensive improvements for a home,” said National Association of REALTORS® President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I. “Since resale value can vary by region, it’s smart for home owners to work with a REALTOR® through the remodeling and improvement process; they can provide insight into projects in their neighborhoods that will recoup the most when the owners are ready to sell.”

Nine of the top 10 most cost-effective projects nationally in terms of value recouped are exterior replacement projects. The steel entry door replacement remained the project that returned the most money, with an estimated 102.1 percent of cost recouped upon resale; it is also the only project in this year’s report that is expected to return more than the cost. The midrange garage door replacement, a new addition to the report this year, is expected to recoup 83.9 percent of costs. Both projects are small investments that cost little more than $1,200 each, on average. REALTORS® identified these two replacements as projects that can significantly improve a home’s curb appeal.

“Curb appeal remains king – it’s the first thing potential buyers notice when looking for a home, and it also demonstrates pride of ownership,” said Phipps.

The 2010-11Remodeling Cost vs. Value Report compares construction costs with resale values for 35 midrange and upscale remodeling projects comprising additions, remodels and replacements in 80 markets across the country. Data are grouped in nine U.S. regions, following the divisions established by the U.S. Census Bureau. This is the 13th consecutive year that the report, which is produced by Remodeling magazine publisher Hanley Wood, LLC, was completed in cooperation with REALTOR® Magazine.

REALTORS® provided their insight into local markets and buyer home preferences within those markets. Overall, REALTORS® estimated that home owners would recoup an average of 60 percent of their investment in 35 different improvement projects, down from an average of 63.8 percent last year. Remodeling projects, particularly higher cost upscale projects, have been losing resale value in recent years because of weak economic conditions.

According to the report, replacement projects usually outperform remodel and addition projects in resale value because they are among the least expensive and contribute to curb appeal. Various types of siding and window replacement projects were expected to return more than 70 percent of costs. Upscale fiber-cement siding replacement was judged by REALTORS® the most cost effective among siding projects, recouping 80 percent of costs. Among the window replacement projects covered, upscale vinyl window replacements were expected to recoup the most, 72.6 percent upon resale. Another exterior project, a wood deck addition, tied with a minor kitchen remodel for the fourth most profitable project recouping an estimated 72.8 percent of costs.

The top interior projects for resale value included an attic bedroom and a basement remodel. Both add living space without extending the footprint of the house. An attic bedroom addition costs more than $51,000 and recoups an estimated 72.2 percent nationally upon resale; a basement remodel costs more than $64,000 and recoups an estimated 70 percent. Improvement projects that are expected to return the least are a midrange home office remodel, recouping an estimated 45.8 percent; a backup power generator, recouping 48.5 percent; and a sunroom addition, recouping 48.6 percent of costs.

Although most regions followed the national trends, the regions that consistently were estimated to return a higher percentage of remodeling costs upon resale were the Pacific region of Alaska, California, Hawaii, Oregon and Washington; the West South Central region of Arkansas, Louisiana, Oklahoma, and Texas; the East South Central region of Alabama, Kentucky, Mississippi and Tennessee; and the South Atlantic region of the District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia and West Virginia.

The regions where REALTORS® generally reported the lowest percentage of costs recouped were New England (Connecticut, Massachusetts, Maine, New Hampshire, Rhode Island, and Vermont), East North Central (Illinois, Indiana, Michigan, Ohio and Wisconsin), West North Central (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota and South Dakota), and Middle Atlantic (New York and Pennsylvania).

“It’s important to remember that the resale value of a particular improvement project depends on several factors,” said Phipps. “Things such as the home’s overall condition, availability and condition of surrounding properties, location and the regional economic climate contribute to an estimated resale value. That’s why it is imperative to work with a REALTOR® who can provide insight and guidance into local market conditions whether you’re buying, selling or improving a home.”

Results of the report are summarized in the January issue of REALTOR® Magazine. To read the full project descriptions, access national and regional project data, and download a free PDF containing data for any of the 80 cities covered by the report, visitwww.costvsvalue.com. “Cost vs. Value” is a registered trademark of Hanley Wood, LLC.

Hanley Wood, LLC, is the premier media company serving housing and construction. Through four operating divisions, the company produces award-winning magazines and websites, marquee trade shows and events, rich data, and custom marketing solutions. The company also is North America’s leading provider of home plans. Founded in 1976, Hanley Wood is a $240 million company owned by JPMorgan Partners, LLC, a private equity affiliate of JPMorgan Chase & Co.

REALTOR® Magazine is published by the National Association of REALTORS®, “The Voice for Real Estate” and America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.