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. ...

 Existing-home sales got back on an upward path in November, resuming a growth trend since bottoming in July, according to the National Association of Realtors®. Existing-home sales1, which are completed transactions that include single-family, townhomes, condominiums and co-ops, rose 5.6 percent to a seasonally adjusted annual rate of 4.68 million in November from 4.43 million in October, but are 27.9 percent below the cyclical peak of 6.49 million in November 2009, which was the initial deadline for the first-time buyer tax credit. Lawrence Yun, NAR chief economist, is hopeful for 2011. “Continuing gains in home sales are encouraging, and the positive impact of steady job creation will more than trump some negative impact from a modest rise in mortgage interest rates, which remain historically favorable,” he said. Yun added that home buyers are responding to improved affordability conditions. “The relationship recently between mortgage interest rates, home prices and family income has been the m ...

Seasonally adjusted sales of new homes rose 5.5% in November but the best news is that the number of new homes available for sale fell to 197,000 or 8.2 months, the lowest level since 1968.  One must keep in mind that the big overhang on the market is the vast overbuilding that took place since 2000 and the resulting stock of existing homes for sale will but some estimates take two years to absorb.     The two articles below summarize and analyize the recent Case Shiller release of November single-family home sales data.  To read the full articles: Reuters Article  WSJ New single-family home sales rose in November but to a lower- than- expected rate , a government report showed on Thursday, highlighting the weakness in the housing market even as the broader economic recovery gains momentum.   The Commerce Department said sales increased 5.5 percent to a seasonally adjusted 290,000 unit annual rate after a downwardly revised 275,000 unit pace in October. Analyst ...

  Existing home sales rose 5.6% in November and ew home sales rose 5.5% in November to 290,000 units. Existing home sales were 4.68 million annualized in November 2010, up from 4.43 million in October but down  18% from the peak of 5.65 million in 2007. (NATIONAL ASSOCIATION OF REALTORS®) -Statistics of Existing Home Sales and Averge Prices Novemember sales were down substantially from the prior November but the Homebuyer Tax Credit accelerated sales into last year at the expense of sales after the credit expired.  Total Existing Home Sales -- Annual 2007                  5,652,000 2008                  4,913,000   2009                  5,156,000   Total Existing Home Sales -- Monthly 2009 Nov     ...

Well, Big Sky and Bozeman didn't make the top 10 Real Estate Markets that will Thrive in 2011 but they also didn't make theCase Shiller: Top 15 Markets That Will Fall in 2011 Neither did any other resort or mountain communities.  While Big Sky experienced the price run-up in 2007 -2008, Bozeman home prices remained less inflated and have seen less decline as a result, at least in the $300,000 and below range.  PureWest Christie's Great Estates Agents have experienced a dearth of transactions over $1.0 mm during the first half of 2010 but the luxury home market in Bozeman is beginning to thaw.  With an unemployment rate of 7.2% in November, Montana is well below the national average and despite the recent recession, Bozeman has continued to grow at over 3% anually.  Macro demographic trends all favor relocation to Bozeman.  Mountains, skiing 30 minutes away, three blue ribbon trout streams, hunting, hiking and camping for the outdoors enthusiast, and the friendliest population Nor ...

 Big Sky – Gap of Sales Price to Original Listing Widens   As we close our books for real estate sales in 2010, the gap between original list price and actual sell price widened.  Actual sell prices in Big Sky were 79% of original list, compared with 87% last year and 92% the year before.  Traditionally, the gap has ranged 5% - 10% but has grown recently as market prices have fallen and seller have had to deeply discount to sell.  And it’s clear sellers want to make deals.  The number of transactions is expected to increase by 50% over last year while the average sales price continues to fall.  Average sales price is expected to be $482k in 2010, down 17% from last year.  With buyers and sellers meeting on price, it is likely a bottom has been reached for most types of real estate.  Less expensive condos and townhomes moved briskly and the luxury mountain home markets is reviving as well.  Total real estate sales in Big Sky are expected to be $62 milli ...

It's hard to argue with the Deflationary chart below when Case-Shiller Index of home prices continues to fall.  The same macro trend has been at work in Big Sky Montana since Q4 2008.  While sales of luxury Mountain Homes in Moonlight Basin and the other Big Sky Luxury Resorts remained robust in 2007 - 2007, sales of condos, lots and mountain homes alike fell off the cliff in 2009.   The chart below highlights average selling prices, based on MLS data for 2010 sales and pendings thru yearend.              Average Sales Price (Big Sky and Gallatin Canyon North and South) 2005         $543,600 2006         $865,800 2007         $1,022,500 2008         $1,036,000 2009         $578,385 2010        $482,000    When looking at the quarterly data, one can be more optimistic ...

Bank closures are expected to peak in 2010 after reaching 140 in 2009.  The majority of bank closures involve banks of less than $1.0 Billion in assets, in other words the community banks that often are the lifeblood of local real estate.   The Fed is now attempting to shore up these banks by keeping interest rates low and lending them funds for virtually interest free allowing them to earn maximum spreads on their loan portfolios.  Many of these troubled banks can't sell real estate and have no access to capital so earnings are their only way to boost capital. In many cases, these same banks are under FDIC instructions to increase capital, improve liquidity and lower real estate exposure making new loan funds for real estate purchases extinct. Many community banks are in various stages of working with troubled developers and foreclosures are in progress.  As such, much of this developed real estate in the portfolio's of banks has not come to market.   Vulture real estate  fund ...

 Average Big Sky Sales Price Shows Declines in 2010 The average selling price or residential real estate dropped to a six year low in Big Sky for 2010*  Average selling price topped $1.0 million in 2006 and 2007 as luxury mountain homes in Moonlight Basin and Spanish Peaks moved swiftly.  The lower end of the market has seen the most activity recently as buyers are comfortable betting on the bottom when less capital is at risk.  The high end of the market is still slow but properties are moving at when priced aggressively. The number of transactions was 139, about 50% over last year and closing on the 2005 peak of 158. Agents at PureWest Christie’s Great Estates attribute the decline in the averages to both falling prices on existing properties and also a higher weighting of less expensive condos and townhomes.   The rule of thumb for all types of real estate in Big Sky is a decline of 50% to 55% from the peak in 2008.  The graph below shows the average sales price by quarter ...

Clearly the rising interest rates in the long end of the curve will have an impact on mortgage rates, and in fact already are doing so.  With interest rates rising in the face of the Fed's QE2 efforts, the Fed is losing it's hold over interest rates and investors are saying they see rising rates in the future.    With this much move over the past month, the trend is going higher and while the conventional wisdom is to not "fight the Fed", it seems that now may be a good time to lock in rates.    While the percentage of cash buyers in Big Sky and Bozeman, especially for luxury real estate has increased dramatically over the past two years, interest rates do matter, even in resort properties.  Jumbo mortgages are starting to free up but money for second homes remains extremely tight.  Althought most purchasers are cash buyers, many of them leverage some other area of their portfolio to raise the cash.  With interest rates rising, they will be less inclined to do ...