Thanks again to Jan-Martin for picking up this one. We at Doom were stunned when we saw this 12 minute video [1] about the Billings Montana housing market. There is really excellent use of footage of the houses, Geographical Info System (GIS) style maps placing the houses in context, and charts detailing trends in affordability, cash flow, inventory and much more. Kudos to blogger Doug Armknecht. More info on this Montana bubble blogger is here.[2]
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Notes and References
[1]: "December Update Video", by Doug Armknecht, Billings (Montana) Housing Market, December 11, 2006.
If you enjoyed my original video about the housing market, you should find this one interesting as well (the original can be found in the post below). Winter is in full swing, and I decided to make another video to show current trends and highlight changes since my September video.
This video was filmed entirely using an inexpensive digital camera, and is hosted on Google video. So quality is not optimal, but it still gives you a pretty good idea. Click the image below to begin the video.
[2]: "Digging Deeper: Newspaper, Bubble Blogs Feed the Real Estate Obsession", BestBlogSoftware, December 18, 2006.
I received an interesting email from Doug Armknecht, who was inspired by The Housing Bubble Blog to create his own web page with statistics and analysis for the Billings, Montana, housing market. He also created an informative 20-minute mini-documentary that you can watch on Google Video about the Billings market. It’s another example of an independent citizen countering the relentless positive spin of the real estate industry with some real research. Here’s what Armknecht told me:
When I hear friends talking about housing or talking about buying, I refer them to my page just so they will have all the facts and be able to approach the market with more information. If in fact real estate is in danger of a bust, then a lot of first-time homebuyers could get burned. And who can they ask about the market, except for realtors who are happy to say, "It’s a great time to buy"? My site provides an alternative.
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Great video!
Probably reflective of what we’re seeing here in AZ.
I especially enjoy the graphs at the end, and the pointers indicating where the “bottom” was called to the market… which went on to decline by over 30%!
I just received an email from a REALTOR from an area North of Phx (Anthem) indicating the the prices per sq. ft have probably hit bottom now, and will be heading back up soon.
FOR SALE signs littering the streets, increasing skepticism of the market and it’s chearleaders, buyers choosing not to buy… and yet we’ve hit “bottom.”
My comment to Mr. Armknecht was that I loved the video… and wished he lived in Phx to produce a similar one for our market!
Thanks again for sharing this with us!
John,
That is not GIS IMO. I use GIS at work all the time, but it was an interesting use oblique photography and graphic overlays.
BTW my sister-in-law lives in Billings and just upgraded to a 7000 sq ft house from a 2500. She is on the west side near the rim rocks. She paid around $700,000 and had a bear of a time selling the old place due to the inventory. The old place was off of poly on Augusta which is a nice neighborhood near the college.
Metro -
OK, it’s not really GIS, but still not bad for an amateur.
After spending nearly a decade working with Canada’s navy, I can recognize the the real stuff. It’s exciting that you are currently working with such S/W. Should you feel moved to try topping that MT video, has Twist got a job for you!
I saw the first one and was riveted in spite of the background music. I like smashup maps and they are quite approachable for the layperson to grasp if they are a tinkerer. GIS is useful but you do not want to be the guy behind a console all day doing that, at least not me.
Hey, thanks for the plug John! I’m glad you guys found it interesting. It’s been a fun project. Naturally, Phoenix, Vegas, or any place in California would have been more interesting. But you’ve got to go with what you know. And any fool with a digital camera and lots of time can do this in their ‘hood.
I am glad I can show the rest of the country that bubbles don’t just happen in the big cities. Bozeman and Missoula are actually much worse the Billings in terms of out-of-whack fundamentals. Yes, there will be pain even in Montana.
I didn’t use any GIS for this video. Everything was done using basic imaging software. The Ironwood segment just used random dots to represent houses. I do know a thing or two about GIS, but it wouldn’t have been that useful for what I was doing. But maybe I’ll put in the time to do some terrain visualization for a later video. Hmmm…
Hey metro, I could put together a no-music version of the videos for you.
Seriously, the background music is mostly an afterthought for me. My videos end up being much longer than I first intend, so I end up just throwing enough in so there’s no silence. The theme from Home Alone is called “Somewhere in my Memory”, but I doubt anybody got it. Oh, well. Then I ran out of music and needed something that had no vocals.. I went with Moby. Got any ideas for future video scores? It’s not really my forte.
By the way, metro, small world. Augusta is a nice little lane, I know it well. When did your SIL sell? Can I have five guesses which sub she bought in? 1) Augusta Ranch, 2) Ironwood, 3) Yellowstone Cliffs, 4) Falcon Ridge, 5) Vintage Estates. The scary thing is that there’s so many subdivisions in Billings with such expensive houses! I don’t know many people who make $225k/year.
Doug-
My husband comes from Lovell, WY- down the road from you. I sat on the curb in Lovell this summer waiting for the “Mustang Days” parade to pass by. I sat next to a woman boasting about her successes flipping in the local market! There was a lot of talk in town about real estate.
We met a guy from Cody who told us that prices there were going through the roof. He said that Jackson Hole was filled with billionaires now, so the millionaires were all moving to Cody. He said they were confident prices were bound to keep rising, as they were running out of land…
I figured when the bubble hit the Big Horn Basin, we were bound to have pain all over.
Wow, twist, flipping in Lovell! That’s hilarious, but sad in a way. I passed through Powell this summer and saw subdivision after new subdivision.
Your last line is dead on.
I think we’re going to have a major psychological shift these next few years. Real estate is just so hot in everyone’s minds that they can’t even think straight. Thousands of dollars for Bighorn Basin desert land? Why not? Real estate is hot! (I honestly didn’t intend that pun).
Once we start to see land as land and houses as houses, there will be nothing but fundamentals to support prices. People will suddenly see how stupid it is to buy a house for $800,000 just because everyone else is buying houses for $800,000. Or to buy wasteland for tens of thousands an acre. I think we’ll all look back and say, “What was so special about real estate again?”.
I gave advice to a local young couple recently who’d e-mailed me. They were thinking of moving up to a $250k new house (but it was a great deal at 10% off) on an uncertain income. I tried to talk some sense into them by asking if they would just stop and think a minute about what a Quarter of a Million Dollars is, really! Such is the nature of a mania. We buy things at ridiculous prices because, hey, someone bought it for almost as much last year.
(they’re staying put for now.. but some other friends who saw my videos bought their first home anyway)
Doug,
Thanks for the silent version. I am just kidding. It was something pointed out elsewhere and when they said it I could not help my self but to hear it. Good choices this time moody. She sold in March or April I think.
She now lives on Rocky Mountain Blvd. If you know where that is. It is a spec neighborhood. Maybe you can profile in your next installment. BTW I am not worried about her and her SO making the payments.
As for instrumentals, Moby is always cool.
A small aside, she also owns a hotel condo in BigSky which is also hyperinflated. One of her friends also bought and was happy for the appreciation after they lost like 2/3 of the value of their portfolio in the Dot.com fizzle. I am just waiting for this one to hit them both.
Doug,
Welcome to doom. And actually I enjoyed both of your videos immensely. It was strange to see a place I know fairly well (it is not a big town) where my wife kept saying I know where that is. Poly especially. Thanks!
Twist you laugh but WY has instituted some wild requirements for zoning. In some parts of the state they require a squaremile of land for a house/ranch. You can run out of land pretty fast.
From the video:
“Historically, the price : rent ratio of 120 has been shown to be a more sustainable figure.”
Doug, how did you arrive at the 120 figure?
Very intersting and as the old saying goes a picture in worth a thousand words.
I was taken back by the 850k house> on a corner, fire hydryant, marginal landscape, and of course snow on the ground the, 5,000 ft includes a basement i guess. I wonder if people really understand the market and what is happening out there.
Rocky Mountain Blvd. is in the Yellowstone Ridge sub (I goofed and said Yellowstone Cliffs earlier). It’s funny because I hadn’t even heard about this one until a few months ago. I actually thought it was one of the nicer of the new subdivisions. Instead of building some roads and throwing up a few high-end spec houses (a la Vintage Estates featured in the video), they somehow got a nice little community in less than three years. Maybe they just got lucky on the timing. Very few empty lots, and only 2 spec homes now (one going for over $700k).
It’s not a bad looking place, but these days there are so many McMansion farms that they all muddle together. Five years ago, if you wanted a nice house, you were either in Yellowstone Country Club or Briarwood (golf community south of town).
Actually, the final scene in the December video is me riding by bike down Rocky Mountain Blvd. The SIL should *really* recognize something there.
NVmike: It’s an educated guess, not yet backed by any research. I hear that 100-120 were fair averages nationwide before this boom. I also remember Bruce Williams saying that unless you could get 1% of the purchase price in rent a month, then your investment property wasn’t any good. Based on the fact that the monthly payment for buying/renting was a toss-up here just three years ago, I’d say 120 is a very reasonable estimate.
Montana is a non-disclosure state, so you can’t find historic selling prices. That makes it trickier. I really need to pull out some classifieds from 1998 or so. Look at how much a house is renting for, then look for selling prices for an equivalent house. That would give me a good estimate.
By the way, I’m doing a guest piece on housing for the January issue of a local business journal. I’ll let you know when it comes out.
Doug,
I think I caught her house in your video. Small world!
Doug I remember Bruce Williams saying the same thing. Ready for another small world moment. He used to own a business in the town I grew up in and as a kid I used to see him at times. That was way before he became the radio guy, and he started his career at the local station.
NVmike: It’s an educated guess, not yet backed by any research. I hear that 100-120 were fair averages nationwide before this boom.
FYI: The Economist’s data shows that in the United States, until the year 2000, 100 is actually closer to the historic price:rent ratio.
See http://tinyurl.com/yyg7oj (Full story here: http://tinyurl.com/6ozet)
I thought maybe you had seen some other data.
ps: Good job on the video.