According to the OFHEO House Price Index, house prices are down in Billings from the previous quarter. This is the first quarter-over-quarter price decline since 2001 and the steepest single-quarter decline since 1997.

Some caveats: 1. For now, this is just a blip. It will take a year or two to see if a trend is established. 2. This is not a large decline. It is only 0.5% down for the quarter, which annualized to just over 2%. This may be just the start. But it's important to note: Prices are down. We haven't returned to "normal" appreciation. Prices are not "flat." Home prices have declined. If anyone tells you different, print off these graphs below and show them some hard facts.

Here are the graphs, and my take on them (click to enlarge):




What this graph tells me: All Montana cities experienced 8 or so years of historically unrealistic appreciation rates (Billings averaged 9%). I believe this will require significant price declines to get back to the long term trend. You can't have 8 years of abnormal appreciation and then expect to return to "normal" appreciation with no correction. From the graph, house prices seem to finally be peaking out.

What this graph tells me: It appears that things are going south in a hurry! For the first time since 2003, home prices climbed less than 5% from the previous year. Note that this graph maps *change* from the previous year only. A dropping line means that the *rate* of change is going down. But if the trend continues, the line will soon dip below the 0% mark. That will mark a major milestone-- year-over-year price declines-- and things will start to look reminiscent of the 80's.

What this graph tells me: This is a rougher sort of plot. It shows change from the previous quarter. Since prices can fluctuate quite a bit in a short time, you see lots of ups and downs. However, the recent rapid break to the negative portion of the graph is hard to miss.

Speaking of anticipitation: Some of my commenters seem to be getting antsy for the next video. And I can't blame you! It has been 20 months since my last video. Honestly, things have been pretty dull in Billings real estate since then. But now it's starting to get interesting again, and I am excited about this video.

As noted previously, the release of my next video will mark two years since the first one. But I was wrong, it was not August, it was September 26, 2006. And the next video will be out 9/26/2008. Things are going well, but I still have a few more interviews I want to conduct. And of course, I can't miss the first mass house auction of this boom-bust cycle, slated for early September.



As always, thanks for your support and patience!