Gillians’s Blog & REsources Portal: A Source for Buyers and Sellers of Montana Real Estate

a>Recently, I seem to have had a number of clients who are looking for a “Victorian” era home. As I talked with them, I realized that each person was focusing on different aspects of design. Some were imagining particular details such as elaborate exterior trim and carved oak moldings. Others were simply wanting to find a home “with character” or “something a little old fashioned”.

The term “Victorian” does not describe a single style, but an architectural “time frame” from about 1840 to 1900 when advancements and innovations in production and transportation simply made it possible to build more elaborate homes. Homebuilders often turned to pattern books for inspiration, but luckily Victorian houses are like snowflakes, with no two exactly alike. Queen Anne Victorians represent the quintessential Victorian - characterized by elaborate bric-a-brac, a complicated roofline, and expansive porches that wrap around the front and side of the house. Round towers or enormous round bay windows are other tell-tale features.

Livingston has many grand old homes, but sadly, they often lose their charm as a result of one too many remodels, or fall into disrepair over the years.

However, there is an occasional remodel of an older property which is so good, so meticulous that it just plain makes you happy when you look at it, and 230 S. 7th is one such home. Seeing houses day in and day out, I usually have a top ten list of favourite properties that I enjoy showing, because of their setting, or style, or condition. This little gem on S. 7th has all of those things going for it and more.

Thomas Burns, the well known local photographer and writer who remodeled the property and is selling it himself, describes all the benefits and attributes in his marketing brochure.burnsflyer_final.pdf

Don’t wait on this one….someone is going to come along soon and snap it up — it’s not often that an older home with this sort of location, in this kind of condition, come on the market. Call Thomas at 222 3905 to arrange a showing, or if you’d like my help, call me at 556 6829.

Thumbing through the pile of books by my desk, I came across “The Automatic Millionaire Homeowner” by David Bach, and was struck by his common sense perspective. I think it’s worth reviewing, especially at a time when gloom & doom predictors are denouncing real estate as a risky investment.

In his follow-up book to the bestselling The Automatic Millionaire, Bach has taken his winning strategies to the next level with The Automatic Millionaire Homeowner, a guide to assist with building wealth through real estate. According to Bach, the plan is quite simple, it works in any market, and it has been thoroughly time tested to work. For years, Americans used their investment dollars in the stock market to grow at a steady pace. When drastic changes occurred, much of that money moved to investment in the real estate market. The purchase of primary residences, home improvement projects, and the investment in second homes all witnessed steady growth as people’s wealth became heavily tied to their homes. The bottom line of Bach’s process is to buy a home, live in it, build wealth, get great tax deductions, and retire rich. Sound too good to be true? The emphasis, however, is that to truly follow this philosophy, it is not about booms and busts in the real estate cycle or timing the market to take advantage of trends, and certainly not to get rich overnight. It is understanding the fact that real estate is not a passing trend, and “as long as you’re alive, you have to live somewhere.” The real wealth building comes from a lifetime of homeownership.

Unfortunately, people often are drawn to schemes and plans with the promise of doing little and receiving much in return. Sometimes it really works, but most of the time it ends up with less than the desired effect. Buyers who flocked to speculative real estate markets to purchase preconstruction homes in order to “flip” quite often found this out firsthand. These situations are what have received much media attention while those who use real estate wisely take the back seat.

So, how do you build real wealth in the real estate market without becoming overleveraged? The key is long term commitment, making sound decisions, and putting yourself in the right mindset.

Some basic action steps to getting on the right road are included below:

Meet with a mortgage professional, whether a mortgage banker (direct lender) or a mortgage broker (independent consultant who will shop your loan with various lenders). Find someone who is knowledgeable and who you trust.

Chose the right type of mortgage to meet your personal needs. There are many options available including fixed rate, adjustable rates, low money down, etc. Ask enough questions to know the pros and cons of each type.

Get the best deal on your mortgage. Shop rates. Know your credit score. Obtain your credit reports and review thoroughly for accuracy.

Find the right home for your situation. What kind of home are you interested in? Where do you want to live? Use the internet to assist in research. Give yourself a “dream with a deadline.”

Work with a great real estate agent. The key things your agent should do for you is listen, help you find out how much you can afford, narrow your search, educate you on the market, assist with price determination and comparable properties, assist you through appraisals, inspections and closing.

Make the mortgage payment automatic. Paying off a mortgage early can save an extraordinary amount of money in interest fees. For example, splitting a monthly mortgage payment into two biweekly payments can cut 5-7 years off of the length of a 30 year mortgage and save tens of thousands of dollars in interest. The difference in your monthly budget will be so gradual, but the payoff is immense.

With negative real estate tales at the forefront in the media, Bach gives a final bit of advice to “bubble proof” your real estate plan and survive potential downturns. First, make sure you can afford your mortgage. Don’t depend on possible sources of additional income or hope that adjustable rates will not rise. Make sure you have financial resources in place to ride out a cycle. Next, think local. Always keep in mind that the national market is irrelevant to you. Then, always get the facts. Know the local market inventory, prices that homes are actually selling for, and the amount of time that homes are staying on the market. Also, never purchase just in order to “flip” the home in hopes of a quick profit. Finally, know that in most cases, time cures all. Patience is the ultimate virtue in real estate.

As a footnote, thanks for all your encouraging calls & comments about this blog; I see that many people are visiting. Be sure & cruise the rest of the site — there’s a lot of useful information!

Where do people who buy real estate in Park County come from? This is a question I am often asked, especially by my clients who are selling property. At ERA Western Land, because it help us know how to target our advertising, we track the demographic information given to us by the buyers of ourlistings as carefully as possible.
In 2007, 52% of all buyers were considered local (which means Livingston, Clyde Park, Wilsall, and Emigrant). 11% were from Bozeman/ Belgrade and 10% were from other locations within Montana.
Outside of Montana’s borders, we saw 9% from the Pacific time zone, 2% from the Mountain zone, 7% from the Central zone, 8% from the Eastern zone, and 1% from out of the country.

2007-buyer-demographics.pdf

We also ask how a purchaser plans to use the property they are buying. 91% of our company’s sales in 2007 were owner occupied. Investment properties comprised 7% of the closed sales, and only 2% were purchased as a second home. Just looking at the buyers I have been working with since the beginning of the year — people from Colorado, Oregon, New York & New England — I think it’s likely this number is going to increase.

2007-property-use.pdf

Similar data from our Bozeman office shows that 63% of the buyers in 2007 were Local, 9.3% were from within Montana’s borders, 10.5% were from the Pacific time zone, 6.7% from the Mountain time zone, 6% from the Eastern time zone, 4.1% from the Cental time zone, and .5% were foreign buyers.

The Gallatin County market breaks down quite differently in terms of how the purchased property is to be used: 78% of the residential purchases in 2007 were owner occupied, with 11.6% used as investment property and 10.4% being purchased as second homes — I anticipate that Park County’s numbers in the second home market will begin to trend in this way.

It’s Friday in Livingston, and for those of you don’t live here, you may be surprised at what we get up to for fun in this quiet little town … I’m heading off now to the annual Chocolate Lover’s Party at the Depot, an event that gives all of us good reason to gorge on all kinds of chocolate desserts with a clear conscience as it’s a Rotary fund raiser.

Last night was an “adults only” Valentine’s Day bash at the Danforth Gallery on Main Street — another fundraiser — this time for Park County Friends of the Arts. The Gallery was slightly more packed than usual, perhaps because along with the fine art on the walls, there were three naked ladies being painted by three local artists. Check out one of my favourite sites artsmontana.com for a detailed description of the evening’s festivities. If these two events alone don’t make you want to move to Montana, I don’t know what will!

Realizing that first month of 2008 has already flown by, I decided looking at market data comparing January 2008 to the previous January. The results show a market that is both stable & busy.

At the end of January 2007, there were 191 residential active listings in Park County. 12 homes sold during the month, and 33 houses went under contract - that means that 33 buyers came to an agreement with 33 sellers. For the same category at the end of January 2008, there was a small increase in active inventory to 202, the number of closed sales for the month was 12, and 15 homes went under contract.

Within the city limits, the residential inventory has remained stable with 70 single family homes currently on the market versus 71 at the end of January 2007. There has been movement among the price points with less inventory now available for sale under $250,000, and the most noticeable change occurring in the $250,000 - $300,000 range with 14 properties now in this price range versus only 5 a year ago.

The land data for Park County shows that at the end of January 2007, there were 252 building lots or vacant land parcels available, 8 properties sold during the month, and 34 listings were under contract. January 2008 shows an increased inventory to 309 active listings with 5 sales for the month and 45 pending transactions.

So, despite all the national gloom & doom about the housing market, Park County is in excellent shape, and I am anticipating that we will have a busy Spring, with a busier Summer. My phone is ringing, with enquiries coming from all over the country. People are asking me to look for different kinds of property in different price ranges, knowing that they will be out here shortly. Regardless of what is going on in the rest of the country, here in south west Montana, we have what most people want: space, safety & great beauty & natural resources.

At the 33rd Annual Montana Economic Outlook Seminar held recently in Bozeman, economist Paul Polzin assured the audience that Montana’s economy is likely to be resilient to a possible recession: he went on to say that Montana’s basic industries such as agriculture, energy & precious metals are seeing record-high prices in the world market
“That’s why we are so optimistic about Montana’s economy,” said Polzin.

Add to all of this good news the fact that interest rates for a 30 year fixed were at 5.625% at the beginning of this week, and that there are still many exciting financing options available to buyers in Park County, such as Rural Development and Montana Board of Housing loans.

Please call me with any financing questions, or to make a start on buying or selling….I’m here to help!