Page 42 - Flathead Beacon // 12.30.15

KELLEY’S MARKET TRENDS
FLATHEAD REAL ESTATE IN PERSPECTIVE
BY JIM KELLEY
COMMERCIAL REAL estate is recovering along with the rest of the Flat- head real estate market.
A reliable statistical analy- sis of commercial property sales is mostly meaningless because the types of commercial prop- erties vary widely from low-cost warehousestohigh-valuemedi- cal o ces. In addition, the num- ber of sales has always been rel- ativelysmallwhencomparedto residential or land sale. For these reasons, an analysis of median or average price is meaningless.
Thisweek’sgraphgivesagen- eral idea of what the market of commercial properties has been in recent years, with both the number of sales and total dol- lar volume reaching the high in 2006 and 2007, then dropping to a low in 2010. Starting in 2011, the number of commercial prop- erty sales began recovering.
The key factors in commercial properties are the lease rate lev- els and the vacancy factor. Prior to 2007, commercial vacancy was 5 percent of less, then increased to as high as 15 percent to 20 per- cent in 2009 and 2010. During that time period it was common for lease rates to be dropped for existing tenants, just to keep the units leased. Over the last two years, commercial vacan- cies have mostly disappeared as vacancies rates have mostly stabilized at 5 percent or less. Although there are few com- mercial vacancies that are on the market, the monthly lease rates have not increased to any measurable degree. As we move into 2016 and if the commercial real estate market continues to strengthen, it is likely that com- mercial lease rates will also start to increase.
DOLLAR VOLUME
$50,000,000
$40,000,000
$30,000,000
$20,000,000
$10,000,000
0
$48,044,576
# OF SALES
80
70
60
50 40 30 20 10
$31,313,165
0
$6,320,80
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 0 DOLLAR VOLUME NUMBER OF SALES
In 1981, Jim started Kelley Appraisal in Kalispell and has since built an extensive data base of economic and real estate-related data on northwestern Montana. Over the last several years, he has published annual reports on the Flathead Real Estate Market and been a guest speaker on numerous occasions for various groups in the Flathead.
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for The Mortgage Group. “Doesn’t it make more sense to put those monthly chunks of money into your own appreciating asset rather than handing it over to your landlord and saying goodbye to it forever?”
Reason No. 3: Home Prices are Stabilizing
For the rst time in years, prices that have been climbing steadily upward are stabilizing, restoring a level playing eld that helps buyers drive a harder bargain with sellers, even in heated markets.
“Local markets vary, but gen- erally we are experiencing a cool- ing period,” says Postilio. “At this moment, buyers have the opportu- nity to capitalize on this.”
Reason No. 4: Down Payments Don’t Need to Break the Bank
Probably the biggest obstacle that prevents renters from becoming homeowners is pulling together a down payment. But today, that chunk of change can be smaller, thanks to a variety of programs to help home buyers. For instance, the new Fan- nie Mae and Freddie Mac Home Pos- sible Advantage Program allows for a 3 percent down payment for credit scores as low as 620.
Reason No. 5: Mortgage Insurance is a Deal, Too
If you do decide to put less than 20 percent down on a home, you are then required to have mortgage insur- ance (basically in case you default). A workaround to handle this, how- ever, is to take out a loan from the Federal Housing Administration – a government mortgage insurer that backs loans with down payments as low as 3.5 percent and credit scores as low as 580. The fees are way down from 1.35 percent to 0.85 percent of the mortgage balance, meaning your monthly mortgage total will be sig- ni cantly lower if you fund it this way. In fact, the FHA predicts this 37 percent annual premium cut will bring 250,000 rst-time buyers into the market. Why not be one of them?
Reason No. 6: You’ll Reap Major Tax Breaks
Tax laws continue to favor home- owners, so you’re not just buying a place to live – you’re getting a tax break! The biggest one is that unless your home loan is more than $1 mil- lion, you can deduct all the monthly interest you are paying on that loan. Homeowners may also deduct cer- tain home-related expenses and home property taxes.
Happy New Year from ...
Montana Cabinet & Canoe LLC
125 Marken Lane, Bigfork, Montana • [email protected] 406-837-4185 • www.montanacabinetandcanoe.com
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DECEMBER 30, 2015 // FLATHEADBEACON.COM
COMMERCIAL REAL ESTATE SALES
PRICES INCREASE IN 2016!