When to Sell the Temporary Rental - 4/15/2013  Some homeowners, who were not able to sell during the recession, chose to rent their homes instead.  In some cases, they didn't need to sell their home at the depressed prices and opted to rent it until the market recovered. It's a valid strategy but there are time restrictions that could have serious tax implications for some homeowners. The section 121 exclusion for gain in a principal residence requires that the home is owned and used as a main home for at least two years during the five year period ending on the date of the sale.  This allows a homeowner to rent their home for up to three years and still have some part of the exclusion available. The sale of a home with a $200,000 gain that qualifies as a principal residence would resul... 04/17/2013

Boomerang Buyers - 4/8/2013  It's estimated that 10% of the homes sold in 2013 will be to buyers who lost a home in the past five years.  Approximately 500,000 buyers who may have thought they wouldn't own a home anytime in the near future will be homeowners again. It's estimated that several million of these previous homeowners will purchase again in the next eight years.  This kind of activity will contribute significantly to the housing recovery. Some people thought that the housing crisis would cause a shift in values placed on owning a home but the boomerang buyers definitely don't support that theory.  Having a home of your own, where you can raise your family, share with your friends and feel safe and secure is still part of the American Dream. The rising rents, increasing prices... 04/08/2013

It appears we're seeing more good news that the Missoula residential market is on a steady pace of recovery.  Now that the 1st quarter is in the books I looked back at the amount of sales volume, the median sales price, the impact of REO/Foreclosure sales, and the amount of market supply.  The data shows pretty good news for the most part, continued volume recovery, fewer REO sales, and about as normal of market supply as one could hope for.  This is not without challenges though as we see the median sales prices are down yet again and some segments of supply are still in a stagnant spot. So lets look at this a little closer. First off starting with the best news we're seeing, sales volume.  For the 1st qtr in Missoula there were 185 residential sales, posting our best first quarter in ... 04/03/2013

Bunch Your Taxes and Save - 4/1/2013  One of the drawbacks to low mortgage rates is that the total interest and property taxes paid for the year may be lower than the standard deduction.  A little planning might be able to help you at least every other year. Most homeowners know they can deduct their qualified mortgage interest and property taxes on their Schedule A of their 1040 tax return or to take the standard deduction if it is greater.  See Your Deduction...Your Choice. Deductions are taken in the year that they're actually paid.  If a homeowner paid their 2012 property taxes in 2013, they would not be deductible on their 2012 tax return.  Then, if the 2013 property taxes were paid in 2013, both the 2012 and 2013 taxes could be deducted on the 2013 Schedule A. By delaying the paym... 04/01/2013

Eliminate the Mortgage Insurance - 3/25/2013  Pre-paying your mortgage can save thousands in interest and build equity in your home. As cheap as mortgage rates are currently, they're higher than you can earn on your savings. If you don't need the money any time soon, pre-paying the mortgage can be the better investment. If you have a FHA loan, pre-paying the mortgage can also benefit you by eliminating the annual mortgage insurance premium early. For example, if a person bought a home for $175,000 with a 3.5% down payment on a 4% FHA loan, the monthly mortgage insurance would be $178.99. It would take 116 months or over 9.5 years to reduce the principal enough to cancel the MIP. If the borrower would make additional principal contributions of $285.32 per month, the MIP would not be requ... 03/26/2013

Maintaining Comfort - 3/18/2013  Some people refer to the heating and air conditioning systems as the "comfort systems."  If you've ever had to be without one in the dead of winter or the heat of summer, lack of comfort may be an understatement.  Simple maintenance with a HVAC checklist is something that every homeowner can perform. Periodically Change your filter every 90 days; every 30 days if you have shedding pets. Maintain at least two feet of clearance around outdoor air conditioning units and heat pumps. Don't allow leaves, grass clippings, lint or other things to block circulation of coils. Inspect insulation on refrigerant lines leading into house monthly and replace if missing or damaged. Annual, in spring  Confirm that outdoor air conditioning units and heat pumps are on leve... 03/18/2013

Your Deduction...Your Choice - 3/11/2013  Taxpayers are allowed to decide each year whether to take the standard deduction or to itemize their deduction when filing their personal income tax returns.  Roughly, 75% of households with more than $75,000 income and most homeowners itemize their deductions. The 2012 standard deduction, available to all taxpayers, regardless of whether they own a home, is $11,900 for married filing jointly and $5,950 for single taxpayers. Let's look at an example of a homeowner couple with a $150,000 mortgage at 3.5%.  The standard deduction would give them $2,650 more than the total of their interest paid and property taxes of approximately $9,250.  If they were in the 28% tax bracket, the actual tax savings would be $742.00. When mortgage rates were conside... 03/12/2013

Low inventory is a relative term depending on how you're comparing it. Would the comparison be to total number of homes on the market last year, homes in a certain price range or homes in a certain area? In some situations, it's a combination of all of those things. In any given market, inventories will fluctuate based on area and price range. The National Association of REALTORS® considers a balanced market to be six months' supply of homes. If it takes longer than six months to sell, it is thought to be a buyer's market and less than six months, a seller's market. Most buyers and sellers probably feel inventory equilibrium is more like three month's supply of homes. Inventory has a direct impact on price. During the housing bubble, demand decreased, supply ballooned to four million ho... 03/06/2013

The 3.5% down payment on FHA loans could be more expensive for buyers than expected. Beginning April 1, 2013, the mortgage insurance premium will go up by .1% to 1.35% which may not even be noticeable to most would-be homeowners. The staggering increase will occur on 6/3/2013 when FHA's policy on the duration of the required mortgage insurance will be increased for the life of the mortgage. It basically doubles the amount of total MIP if the loan is paid to term.  Example: Purchase Price $175,000 with 3.5% down payment at 4% mortgage rate on 30 year term   Current After 6/3/13 MIP duration 78% of original loan Life of mortgage Cumulative premium $20,838.24 $42,447.93 Currently, the MIP is required for approximately 9 years 9 months with normal amortization. The new program would require... 03/06/2013

Ahh the Mullan Road area, the fastest growing area of town and the place I call home.  Of course our main attraction out here is "North Reserve" which is full of the typical big-box commercial stores you'd find in towns all across the US.  This area features a school that is bursting at the seams, I've got a daughter in kindergarten there and there are 8 total kindergarten classes this year.  This area features a predominant mix of medium sized planned neighborhoods. I've also lumped together the larger neighborhoods one finds out Expressway which is north of Broadway and out by the airport, those two main areas, Canyon Creek and Windsor Park feature many of the traits you'll find in other Mullan Road neighborhoods like Pleasant Views and 44 Ranch. 2012 numbers show another strong year,... 01/27/2013

One of the older parts of town the Northside is usually referred to as the residential area which can be found north of the train tracks that come through town and the old Westside is south of the tracks, north of Broadway, and head as far east as Russell Street.  These areas feature some of the oldest homes you'll find in Missoula, the areas are very diverse and feature a mix of older homes, in-fill construction, condos, and even some larger trailer parks!   Taking a look at the numbers, in 2012 there were 69 residential sales with a median sales price at $149,000.  Looking at the difference between original list price and final sales price it looks like homes were selling on average for about 96.6% of their original list price.  Taking a look back to the prior year there were 59 sales... 01/27/2013

A little history lesson, as I was always told - who knows maybe it's just a myth.  Missoula used to just be north of the Clark Fork River however as it began to expand a few prominent families moved south of the river and streets/city blocks begun to form.  The Higgins family and Stephens family were two that were early movers, however the construction of their homes did not match up with the standard grid lot and block system.  As I've been told the Stephens family had their home at an angle and the road past their place (which would become Stephens Ave) created the diagonal "slant" streets as they're referred to these days.  Who knows, maybe totally untrue but it sure sounds legit.   Need reference?  Just look at the satellite maps and you'll see where this odd grouping shows up.  As ... 01/25/2013

Alright, lets get these neighborhood-specific reports going for year-end activity.  I've been awfully busy these last few weeks so that's kept me from getting these up sooner.  Over the next few weeks I will post more areas/neighborhoods - also I'll provide numbers from the Bitterroot Valley as well. So lets start with an area near and dear to my heart, where I grew up, the University Area.  The U-district experienced an explosion of sales compared to 2011.  Sales volume actually doubled (and then some), there were 24 sales in 2011 and in 2012 we saw 52 sales!  That represents an increase of 117%!  The median sales price in 2012 was $325,000 where the median original list price was $339,950 which suggests that on average sellers were selling for about 95.5% of their original list price.... 01/25/2013

I was hoping to get them together this last week, however we sometimes hit issues with late reporting.  A little preivew for the Missoula area.   - A little over 960 sales accounting for just about a 20% volume increase - A final median sales price close to $210,000 for the market - A slow new construction rebound - A big lack of inventory in afforadble ranges   ------   I'll be breaking this down by neighborhood and will do seperate blogs for each and then a summary post which gives a full view of the Missoula market.  The following week I'll do the same for the Bitterroot Valley. 01/06/2013

For the third part of my recap blog I figured I’d give a preview of the additional events that you take part of and sights that you see when attending the NAR end of year convention.   The days don’t just end when the classes wrap up around 4 or 5 pm.  There are all sorts of events that take place throughout the day and into the evening.  There are meetings with vendors, the expo, parties, and even political events for those working their way up through the NAR ranks.    First let’s take a look at maybe my favorite thing to attend, the expo.  This massive event goes on each day from usually the later morning until the early evening.  It’s huge, there are hundreds of vendors there and it ranges from franchises, to software companies, to banks, to jewelry displays, to scarf dealers.  Abou... 12/10/2012

Thanksgiving and just being busy in general interrupted my chain of posts I wanted to do upon my return from the NAR convention in Orlando.  My first part was some overall opinions on some points where I see a disconnect between NAR, the common Realtor, the consumer, and the marketplace.  For this post I’m focusing a little more on what I heard.  The third and final post of this series will involve the more fun aspect of the meetings and being at convention.   My trip to Orlando started early as MOR is a member of the Pinnacle Group which is partially funded and supported by NAR in an effort to lay the groundwork for the next generation of associations.  In fact a lot of the inspiration for my first blog came from this one day meeting which I attended.  This day-long meeting took place ... 11/30/2012

Missoula has just kicked off its 4th quarter and the market is still moving at a tremendous pace compared to years before.   As always, here are some numbers to show you how things are going in our little college town here in Western Montana. Missoula’s 3rd quarter was a busy one, in our valley we saw 298 residential sales occur.  This is up compared to last year by 51 homes, or an increase in sales volume by 21%.  To find the last time the 3rd quarter had similar numbers you’d have to go back to 2007 where we saw 403 sales over the same time span.  The next year in 2008 sales dropped to 280 units and the next year during the height of the new buyer tax credits sales were at 285.  On the year through the first three quarters we’ve seen 726 homes sell in our MLS (in the Missoula valley).... 10/05/2012

I've just put a very general description together of the difference on these two different types of sales processes.  I still have people asking me weekly what the difference is - so I figured I'd throw this out there.  As I said, very general and specific to my own experiences and observations here in Missoula, MT.     The difference between a short sale and a foreclosure     1. Short Sale – Short sales are properties that have not yet been foreclosed on.  They may still be occupied by the owner.  With these sales the seller is attempting to sell the house for less than what they owe against it.  A short sale requires bank approval to complete and can take upwards of 3 to 4 months to close, if not longer.    Positives:  In some cases a buyer can negotiate the sales price well below cur... 10/04/2012

The other day at the Missoula Organization of Realtors board meeting the discussion came up that a lot of reports you see which show the list price of a home compared to the sales price isn't the most accurate.  One of my colleagues pointed out that the MLS grabs the price at the time the offer was written and not the original listing price.  With a recent update to our MLS system a newer export code popped up for "original price" which allowed me to export original listing price and compare it to final sales price. So for fun, I downloaded data broken apart by 6-month intervals and looked at the average difference those houses came down from their original listing price to their final sales price.  I would imagine the numbers in the chart wont totally shock anyone - as you can see as t... 07/26/2012

Taking a quick snapshot at our market and how it's doing, looking at what's currently active vs what has sold in the last 31 days: $0 - $150k:       70 active / 21 sold = 3.33 months $150k - $200k:  187 active / 22 sold = 8.5 months $200k - $275k:  146 active / 28 sold = 5.2 months $275k - $350k:  100 active / 22 sold = 4.5 months $350k - $425k:  38 active / 5 sold = 7.6 months $425k+:            134 active / 5 sold = 26.8 months Total market:      675 active / 103 sold = 6.55 months   Wow, Missoula's summer market continues to be very strong.  As you can see activity from $0 all the way up to $350,000 has seen a steady amount of sales across all of the points and the only area that's really beat up with too much inventory is the $425,000 and up market, for now.  Our total market is pre... 07/24/2012