In the last few years, dozens of publications and organizations have attempted to predict which cities will have the best housing markets. Most of those were overly optimistic. Then you've have Realtors making continually rosy predictions, and small voices like mine warning of potential trouble.

So whose predictions did you believe then? Whose do you believe now?

Enter a website called HousingPredictor.com. You may have seen it splashed all over Montana media in the last week. Here is their forecast for 2009:



They predict Billings to be the #2 market in the country with a 3.1% price increase in 2009. In addition, Bozeman, Great Falls, Missoula, and Livingston are all going to be positive according to them.

Fine, everyone's entitled to their opinion. According to the website, here's the methodology they use:

We examine more than 20 micro market characteristics in each market place, including income levels, employment trends and changes, school enrollment, business trends, regional political influences, real estate sales history and current housing market velocity. The factors are all considered to come up with each local market forecast.

While Yellowstone County still has low unemployment and has actually added positions lately, I'm not really convinced that $12/hr Cabela's jobs are going to pay for a whole lot of $200,000 houses. And as for business trends, perhaps if HousingPredictor could see the local business climate they might change their minds:



HousingPredictor.com contains no real information about who's behind the site, and it's also hidden from the domain registration information. But as noted here, HousingPredictor is actually run by Destin, FL real estate agent Mike Colpitts.

The 2008 predictions are conspicuously missing from the site now, but I've got an archived copy so we can see how the site did last year. In the table below, I compare HousingPredictor's 2008 predictions with the actualy market performance from OFHEO House Price Index (where available). All figures are percent change in house price.



Due to lack of 4th quarter data availability, percent change shown is actually Q3 2007 through Q3 2008. In most cases, declines are accelerating, so final figures will be even worse than shown.

Over half of the predicted top markets in 2008 actually went negative during the year. With this track record, how well do you trust HousingPredictor with its 2009 predictions?

Here's a prediction for you from someone who actually lives here and has been monitoring this market for years: Billings, Bozeman, and Missoula will not see positive house price growth this year. Now let's see who's correct.

How many months and years have we been hearing that Montana can "weather the storm" and that all the subprime housing troubles were "contained"? Too many, but anyone who's been observant of the local housing run-up and mindful of history knew that it was just a matter of time before trouble struck here.

Finally, this week, in January 2009, the Bureau of Business and Economic Research confirms it: Montana is not different. We're in a recession, and it's going to be long and difficult. Article here: Montana economy suddenly reflects global recession

So what does that really mean for housing? Let's look at the Bitterroot Valley. Relatively small population, but some big speculation in the last few years. Missoulian got around to reporting that the Bust in the Bitterroot is finally underway. And as commenter "kasey" insightfully notes:

Since we live in a non-disclosure state, sales prices are not public info. This makes it possible for realtors to keep a lid on the bad news. That's why the realtors knew the bottom was falling out in the Bitterroot as early as 2006, but the Missoulian just found out in 2009. Meanwhile, the Missoulian has been printing the realtors' press releases about how God isn't making new land and Montana is different.

Of course, readers of this blog with good memories will note that my June 2008 post tells how we could forsee the imminent downturn in the Bitterroot based on increased months' supply figures.

Interesting enough, but that's a whole different market clear across the state. Hey, wait a minute. Speaking of months' supply, Wayne Nelson of Stockman Bank in the Heights had something interesting to say in the Gazette this past weekend:

Billings has about a 10-month supply of unsold homes, according Nelson at Stockman Bank, up from the normal three months supply. And prices have softened, especially for higher-end property.

Uh-oh. Large inventory, low sales. Something is imminent, and I don't think it's a recovery.

My videos are titled "Housing Boom in Billings", since they have tracked the peak of explosive housing growth in Yellowstone County these last few years. Now I will say that the party really is over. The bust is here. The only questions from here are, How deep? and How long? Make no mistake about it, the bust is here.