Missoula real estate and homes for sale in neighboring communities. Anne Jablonski, Real Estate Specialist
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ANNE JABLONSKI   Broker/Realtor®<br />TONY JABLONSKI   Realtor®ANNE JABLONSKI Broker/Realtor®

(406) 546-5816 (Anne)
(406) 546-4079 (Tony)

Portico Real Estate
445 W Alder
Missoula, MT 59802

Your Real Estate Update

Your Real Estate Update

MAY 2018 - With home prices rising again this year, some are concerned that we may be repeating the 2006 housing bubble that caused families so much pain when it collapsed. Today’s market is quite different than the bubble market of twelve years ago. There are four key metrics that explain why:
  1. Home Prices
  2. Mortgage Standards
  3. Mortgage Debt
  4. Housing Affordability
1. HOME PRICES - There is no doubt that home prices have reached 2006 levels in many markets across the country. However, after more than a decade, home prices should be much higher based on inflation alone.

Frank Nothaft is the Chief Economist for CoreLogic (which compiles some of the best data on past, current, and future home prices). Nothaft recently explained:

“Even though CoreLogic’s national home price index got to the same level it was at the prior peak in April of 2006, once you account for inflation over the ensuing 11.5 years, values are still about 18% below where they were.” 

2. MORTGAGE STANDARDS - Some are concerned that banks are once again easing lending standards to a level similar to the one that helped create the last housing bubble. However, there is proof that today’s standards are nowhere near as lenient as they were leading up to the crash.

The Urban Institute’s Housing Finance Policy Center issues a Housing Credit Availability Index (HCAI). According to the Urban Institute:

“The HCAI measures the percentage of home purchase loans that are likely to default—that is, go unpaid for more than 90 days past their due date. A lower HCAI indicates that lenders are unwilling to tolerate defaults and are imposing tighter lending standards, making it harder to get a loan. A higher HCAI indicates that lenders are willing to tolerate defaults and are taking more risks, making it easier to get a loan.”

The graph below reveals that standards today are much tighter on a borrower’s credit situation and have all but eliminated the riskiest loan products.

4 Reasons Why Today’s Housing Market is NOT 2006 All Over Again | MyKCM
3. MORTGAGE DEBT - Back in 2006, many homeowners mistakenly used their homes as ATMs by withdrawing their equity and spending it with no concern for the ramifications. They overloaded themselves with mortgage debt that they couldn’t (or wouldn’t) repay when prices crashed. That is not occurring today.

The best indicator of mortgage debt is the Federal Reserve Board’s household Debt Service Ratio for mortgages, which calculates mortgage debt as a percentage of disposable personal income.  At the height of the bubble market a decade ago, the ratio stood at 7.21%. That meant over 7% of disposable personal income was being spent on mortgage payments. Today, the ratio stands at 4.48% – the lowest level in 38 years!

4. HOUSING AFFORDABILITY - With both house prices and mortgage rates on the rise, there is concern that many buyers may no longer be able to afford a home. However, when we look at the Housing Affordability Index released by the National Association of Realtors, homes are more affordable now than at any other time since 1985 (except for when prices crashed after the bubble popped in 2008).

4 Reasons Why Today’s Housing Market is NOT 2006 All Over Again | MyKCM

Bottom Line - After using four key housing metrics to compare today to 2006, we can see that the current market is not anything like the bubble market.


MARCH 2018 - FIND OUT THE DIFFERENCE A YEAR CAN MAKE! What will interest rates and home prices do over the next year?

??Are you one of the many Millennials (born between 1981-1997) who sees your friends and family diving head first into the real estate market and are wondering if now is the time for you to do the same?  NOW: the average 30 year interest rate is 4.3%, which means the monthly payment for a home loan of 250k is $1237.18.  According to the Freddie Mac's projection, next year the average 30 year rate will be 5.1%, which means that same 250k loan will not cost you $1415.74 per month (an increase of $178.56 per month / $2,142.72 per year / $64,282 over 30 years).  
  • The Cost of Waiting to Buy is defined as the additional funds it would take to buy a home if prices & interest rates were to increase over a period of time.
  • Freddie Mac predicts interest rates to rise to 5.1% by 2019.
  • CoreLogic predicts home prices to appreciate by 4.3% over the next 12 months.

BOTTOM LINE: If you are ready and willing to buy your dream home, it's time to find out if you are able to.  Contact a mortgage professional for pre-approval, and then contact a real estate professional.

FEBRUARY 2018 - Making Missoula Home: A Path to Attainable Housing
On January 30, 2018, Missoula Organization of REALTORS (MOR) released a 127 page report, detailing the status of our city and county, offering recommendations and an action plan.

MOR assembled partners from the private and public-sector to commission a study to analyse the housing and market conditions of Missoula, and provide recommendations for strategies to promote more housing affordability.  

As stated in this report, "Housing affordability is a rapidly growing issue for both renters and entry-level homeowners." Noting that in Missoula, there are "potentially as many as 6,000 renter households...that are aspiring homeowners. But there is little available housing priced to meet this demand and with increasing prices, few prospects to increase the supply meeting their needs in the future without direct interventions."

"42% of renters reported their housing doesn't meet their needs and that price and small size were the primary issues with existing rental housing." 

In this 127 page report, there are a number of recommendations and actions we in the city and county can do to create A Path to Attainable Housing, including the areas of regulatory environment, housing development, capacity building, program development, and funding; things such as create housing development incentives, proactive rezoning, targeting infrastructure development, form a housing advocacy coalition, and start a housing educational campaign. 

Bottom Line: There is a lot of work to do here in Missoula to achieve increased housing affordability, and preserve what affordability currently exists.  It takes a village! Please consider reading the full report, and becoming active in the solution.

Here's a link to the full report.
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