When Mark Zuckerberg bought a 5,000 sq ft, 5 bedroom, 5.5 bath home in Palo Alto, CA in March 2011, he probably never thought of how much money he could save by buying a very similar home right here in Billings, MT.
Irrelevant? Maybe. While I highly doubt it would make any sense at all for Mark Zuckerberg to move to Billings to save $6.5 million dollars, it’s still interesting to ponder the differences between the Billings real estate market and other areas.
It is a little hard to estimate the value of an imaginary home, so I took what little information I could find about Zuck’s home and pulled sales data for similar Billings homes. My final estimate would be about $484k. However, this doesn’t accurately account for the neighborhood, lot size or amenities of the home. If I had all of the information and could get a feel for neighborhood placement, I would be able to pull together a more accurate estimate.
With the national media hinting at a housing recovery, it seems Billings might be heading the other way. But, not in the way you might think. Prices are rising and inventory levels are plummeting. Billings may soon be out of houses to buy!
The average sold price of a single family home in Billings for November 2012 was 218,998.00 compared to 210,581.00 at the same time last year. That’s an increase of $8,417. Looking back a little further to July, August and September there are significant price increases over the previous year as well:
Ok, so, Prices are going up. How does that cause a “crisis”? The rising prices aren’t as concerning as the dramatic plummet in inventory levels. It’s one thing to have to pay more for a house, it’s an entirely different thing to not have any houses to buy.
For example, in January 2012, there were almost 7 months of inventory left on the market. This is figured by the average consumption rate and how many houses are currently on the market. Fast forward to November 2012 and there are less than one month worth of inventory left on the market. Contrast that with November 2011 and you can see that the trend is alarming. November 2011, there were still just over 4 months of inventory left.
How many homes are we talking here? November 2011 saw 558 active listings with 130 homes sold. November 2012, 130 active listings, and 142 homes sold. That is an alarming difference.
In my opinion, we are heading for a serious housing shortage and lots of new construction. What do you think?
All of these statistics were compiled from the Billings Association of REALTORS MLS system used by the majority of local real estate agents. It doesn’t not necessarily include data on FSBO(For Sale by Owner). Data is current as of 12/1/12.