Underwater, Underwater Everywhere
After some careful research, I can now confirm that falling prices having come to Billings. And the uncomfortable truth is that many houses are selling for less than they did a few years ago. This tells me that many people who purchased since 2006, with small down-payments, may now be underwater.
This is the first time I've been able to put down hard numbers on real money lost in the Billings housing market. Let's take a look around town:
This house on Jackson is in foreclosure proceedings and is scheduled for a June 8 courthouse sale. The price was just slashed 17% in an attempted desperation sale. Since the buyer can't bring money to the table, this is a short sale. The bank is willing to take a bath on the sale instead of foreclosing on the house.
Here's another South Side house whose price was just dropped below the amount owed. Price-cutting works; This home sale is pending now.
Lest you think that this phenomenon is confined to the less savory parts of town, here's one on Lewis (thanks Anon#1 for the tip). The California owner was featured in a September Gazette article. She probably could have done better by chopping the price early, but now she's out at least $21,000.
This 2004 home is in the High Sierra subdivision near Skyview in the Heights, a location I've featured several times in my housing videos.
Condos may turn out to be the hardest hit housing units in this bust. This West End condo's price has been rolled back past 2006 levels already.
Even nice newer houses are getting hit already. This owner is underwater on a 2006 Rehberg Ranch house. The house has also been offered for rent at $1,500/month.
And that's the roundup. This really does appear to be an amazing, widespread price decline. If anyone fretted about "missing out" on the housing gold rush back in 2006, good news! You didn't miss out, and you can buy today at 2006 levels. But frankly, I wouldn't recommend it. We're probably just getting started.
What do you think of this one, Anon#1? Seems like a pretty good sized 5/3/1 for the price, but you've probably been tracking downtown houses more than I have:
607 YellowstoneSomebody liked it. It's pending now.
Hey Doug, thanks for all the great updates. I've been busy busy getting ready for my move this week to Billings- we'll be renting a nice house on Rimrock, if you're curious. :-)
607 is still showing available on Realtor.com, not sure if it's pending or not- it's one of the houses on my watch list. It does look like a good deal, although the kitchen photo seems to indicate a serious need to upgrade. It's also got 1000 sq feet and two bedrooms in what looks like a non-egress basement, not a place I'd want to stick my children. Not having actually been in the house I can't say more.
134 Broadwater might be an even better deal, esp since it's been on the market for 151 days now and no price cut since I started tracking it a few months ago- I bet there's a good deal to be made there.
What I'm really curious about is the home owners that are apparently pulling their houses until better times. I've seen several of my watched houses vanish from the market but no record of sale show up on the county records. Some of them might just be long escrows, but I think there is a good contingent of homeowners who think they can wait this price drop out. When they finally get religion those higher-end homes might add more pressure to the market, but that's all speculation for now.
Thanks for compiling those NOD and inventory numbers, can't wait to see what the future holds.
PS- Any chance you could change the comment posting format to show the date posted along with the time?
Actually, I *am* curious. If this is a 1926 house with green carpet in a room or two, I'm rather familiar with it. Shoot me an e-mail if you want to know more. :-)
FYI regarding 607 Yellowstone ...I looked at this house with a contractor/friend and he felt it would need $75,000 to $100,000 worth of work. Plumbing and electrical are not up to code and it needs a new roof. In addition the kitchen and bathrooms need to be upgraded. Of course, it also needs painting, floors, windows, etc.
Thanks for all your updates on this housing market. I've followed them for several months and I agree with your analysis. However, a number of other "things" are happening here as a result of Montana's nondisclosure status which also affect this market.
$75k-100k of work, huh? That's always the trick. It seems like so many of the houses sold in the last few years needed a lot of work or $$$ to be functional. Maybe the day is coming when sellers scramble to make their house "move-in ready" in order to actually get it sold. Maybe the "needs work" houses will be the exception, and will be dirt cheap.
You're quite welcome, and I'm glad you've found my info useful. Am I to assume that the other "things" that result from Montana's non-price-disclosure status may themselves not be disclosed? Sounds pretty mysterious..
Anon#1-- you had me at "134 Broadwater." A residential unit fronting Broadwater? Not for me. And 1xx Broadwater?! Sit in your car in that neighborhood for an hour some Saturday night. That sucker better be a mansion if it's anything over 100k. For me, at least.
The dates-on-comments thing always bugged me, too. I'll look into it.
As for the pending properties, take a look at the "Status:" tag on the Floberg link I provided. If it shows up blank there, it's a pending or contingent sale. Otherwise it will show up as "Active."
Here's my vote for "real estate euphemism of the week":
Prairie-style living, serene surroundings accentuate Laurel country home
Translation: This subdivision is dead, dead, dead. Nobody's buying here, nobody's moving here, and good luck trying to resell if you ever need to!
Doug--no "mystery" just manipulation as far as I can determine.
As you know, there is a public MLS and a private MLS (realtors only). I worked with an agent for six months who inadvertently sent me all the "new" listings (including the private ones) The private listing gives more information than the public one.
During that time I noticed a number of "for comp purpose only" listings (approx. 4 dozen). They listed for one day then were taken off. Being curious, I decided to research some of those listings and found that they were properties that had sold 1-2 years before. They weren't new property listings at all. If you understand how the appraisal process works here, then you will understand what "for comp purpose only" means i.e. if information is controlled through the private MLS then the stats and prices are also controlled. Just my opinion but I haven't figured out any other justification for them. Any ideas would be appreciated.
How DOES the appraisement process work here? I've always wondered about that since you can't access purchase prices.
Maybe we need to form a group to pressure the legislator to make MT a disclosure state...
Sent you an Email Doug.
For comment formatting, go to Customize, Settings tab, Formatting, and I think you want to change the "timestamp" item.
To follow-up on that disclosure comment, I seem to remember Carol over at Missoulapolis saying on another housing blog about a year or so ago that someone in the MT govt was trying to make us a disclosure state by administrative rule, ie bypassing the legislature, but that's the only place I ever saw that reported. I may even be remembering that wrong.
I called one of the local banks (in February) and asked that same question. I was told the bank hires an independent, certified appraiser. The appraiser supposedly looks at a number of factors including the condition of the house. But, they mainly rely on the MLS stats kept by the Board of Realtors to get sold prices for similar houses in the neighborhood.
However, I was told by my agent that most of the time the appraiser only does a cursory drive-by and totally relies on the MLS stats. I'm sure you see the problem!
There have been several attempts to change the nondisclosure law here but the Montana Realtors Association has a very strong lobby.
FYI: if you have a complaint against an agent for unethical behavior, your only recourse is to file a complaint with the local board and maybe in six months (after a lot of hassle) they might make a decision. Do you really believe they police themselves?
My agent told me she once filed a complaint against a listing agent who refused to pass on a buy offer to a seller. The listing agent was reprimanded. Do you think the buyer waited around?
Anonymous-- Drive-by appraisal, "we need this number"-wink-wink, and outright fraud were very common in the major U.S. bubble areas in the last few years. I don't know how widespread they were here, but maybe we'll find out over the next few years.
When home values are going up 10-20k a year, who gives a rip about appraisals?
Then the music stops, and here we are bailing out the banks for $1T+. Suddenly, appraisal and loan scrutiny sound like pretty nifty ideas.
I've seen NAR ads that brag about the fact that Realtors are required to take ethics training. Doesn't that make you feel better?
Staying on the topic of good deals (decided not to clutter up the new post) how about 640 Wyoming?
Don't be fooled by the date, this thing has been on the market for months and months- they just decided to unlist/relist to refresh it. It's Realtor owned and seems like a pretty nice place for the price.
It is (or was) up for rent too. We inquired about it, but the terms were ridiculous- it has to be ready to show at all times and the owner will boot you the second they sell.
Give how long it's been on the market, the fact that it is sitting empty, and that it's owned by a Realtor (whose income is no doubt down) I bet you could get it for a decent bit less then list.
That's not a bad house at all. I've seen it quite a bit, but never really looked closely. With an attic and finished basement, it's a lot more space than you might think at first glance.
The price is getting close to within $20k of the amount owed, last purchase August '05.