To have a clue about the future, you need to at least understand history.  Here's my attempt at gathering historic information about the Billings housing market and presenting it in a way that makes sense.

Click on any graph to get a higher resolution version.

Most of the following graphs use the House Price Index, or HPI, to show historic home prices in Billings.  But first, a long boring explanation of the HPI.  You can skip it if you want.


The House Price Index

When house price statistics are reported, the most often heard are the median or mean (average) sales prices. The median takes all homes sold during a period of time and reports the sale price where exactly half the homes sold for more and half sold for less.

This is an interesting figure and can give a general idea of price direction, but it's far from perfect.  Even if median prices decline from a year ago, it's not clear whether the same size house is selling for more or less than the previous year.  Maybe it's just that larger or smaller homes are selling better.  What you really need is to track the sales of a single house being sold year after year.

The House Price Index attempts to do this. It tracks sales of the same homes throughout the years, compares their sales prices, and derives an index from that.

The Office of Federal Housing Enterprise Oversight (OFHEO) reports HPI numbers quarterly. HPI's baseline quarter was the first quarter of 1995. In all metro areas, the HPI for 1Q 1995 is 100. Not that all areas had the same price during that time, but all figures in a metro area are expressed as a ratio to prices in 1995.

Here's a simplified example of how it works. Suppose in Billings, a house sells for $200,000. One year later, suppose the same house sells for $210,000. So prices have risen by about 5% in that year. The HPI would rise 5% as well, say from 150 to 157.5. Now do the same thing every quarter using a sample of thousands of homes, and you arrive at the index.

So on to the graphics.  Billings experienced a downturn in the late 80's, followed by a gradual recovery, and now prices are shooting off the charts.  Here's a graph of all the available HPI data for Billings, measured against the Consumer Price Index (inflation).




That's an impressive rise, but how does it compare nationally?  Take a look at the next graph.  This shows Billings HPI numbers plotted against those for Boston, Miami, Vegas, and Dallas.  Clearly, the Billings boom pales in comparison to those in California, Florida, the Northeast, and Southwest. But it's still significant, and far beyond appreciation in Dallas.  All cities rise unrealistically above the inflation curve, if history is any indication.




Now, a little closer to home.  This graph shows HPI figures for different cities in Montana and around the region.  Billings is about average, if a little behind.




Now on to some traditional industry figures.  Here are the price stats from the Realtors.  The mean (average) sale price for a house is now 2.5 times what it was in 1992.




Our last figure is a simple but effective pair of pie graphs.  It could be subtitled Why Demand from First-time Homebuyers is Drying Up