While nationally it is being reported that the housing market is struggling, it remains on a pretty even keel for Billings, according to a group of brokers with Coldwell Banker The Brokers, during a recent free-wheeling discussion about the real estate market.
That the market is holding steady in Billings is not too surprising, said Blaine Poppler, co-owner of Coldwell Banker The Brokers. Yellowstone County and Montana in general have always lagged behind national trends, he said.
“Both good and bad,” added George Warmer, also a co-owner of the firm.
The Billings market has been performing at pretty much the same level for several years now, points out Lowell Cooke, Broker Associate, emphasizing that the local market is for the most part balanced – that means that demand and supply is in equilibrium. It’s an equilibrium that has kept prices advancing at a steady 3 percent.
One thing is certain, said the Coldwell Banker The Brokers group – with 1806 closed sales, they have sold more homes this year than ever before.
Swings in the Billings market have always been very compact. It is because of that that Billings did not suffer as much during the housing crash a decade ago.
Year to date, the average sales price in the greater Billings area increased 3.8 percent, from $246,969 in 2017 to a current $256,453. The median purchase price is $237,000 – up 3.9 percent from the previous year.
Nationally, “”the housing market has essentially stalled,” states Mortgage News Daily. July home sales, new and existing, were down for the fourth consecutive month to an annualized rate of 5.97 million units, they reported. New home construction also lost momentum in the second quarter, falling 4.5 percent from the first quarter.
The National Association of Manufacturing reports, “The latest data show housing market struggles persisting, with activity much weaker in the second half of 2018 than the rates earlier in the year.”
The sales of existing homes, nationally, is off by just over five percent.
In the Billings area, the number of listings so far this year (3925) are up 3 percent and closed sales (2323) are up 10 percent. The total volume of sales, at $598,048,23 through November, is up 6.8 percent.
Reasons for the national decline is attributed to a combination of higher interest rates and higher construction costs. Workforce issues and the weather have also played a role.
But higher interest rates, currently hovering between 4.5 and 5 percent, has not made much of an impact on home sales locally, except perhaps to prompt potential buyers who have been putting off purchasing to act now before interest rates go any higher. That’s what Kerry Martinson, CB broker, said she has experienced with some of her clients.
A one-fourth increase in interest rates can mean a $36 jump in monthly mortgage payments – that is motivating buyers. It is being speculated that the Federal Reserve will once more increase the rate in December.
Asked if they worry about increasing interest rates, everyone laughed and said, “Always!”
“You can’t buy as much house when interest rates start rising.”
A common impact of higher interest rates is that rather than buying, home owners focus on remodeling and renovating, said Brittani Hunter, Residential Sales Manager.
Whether it’s a buyer’s or a seller’s market in Billings depends on what price range one is looking at, said Martinson. For homes below $400,000 it remains a seller’s market, but over $400,000 it becomes a buyer’s market. There are more people who can afford homes under $400,000, and fewer who can afford higher priced homes, so there is less demand. “It just makes sense,” she said.
As demand outstrips supply, and as construction costs and interest rates increase, affordable housing is increasingly difficult for many people to acquire.
While the cost of housing edges upward so are rental rates increasing. Poppler who closely tracks the rental market, said that Billings needs 800 new living units and Billings’ builders are just barely hitting that market. There were about 500 new homes built in Billings last year, and about 300 new rental units. “We are growing but growing modestly,” said Poppler.
Agreeing that there needs to be more new construction in Billings, Poppler added that it needs to be for affordable housing – and that’s the problem. “Affordable housing is hard to do – especially acquiring the land.”
People are coming to Billings for the job opportunities. Relocation firms who specialize in helping companies relocate workers have kept real estate agents very busy. In addition, Montana’s marketing of the great outdoors is working, said Martinson. A common story she hears from clients is that they are moving here because they want to raise their families in an area where access to the outdoors is easy.