Taunya Fagan Bozeman Real Estate Blog: Montana Real Estate Blogs

Workforce Housing in the Bozeman MT real estate and other business markets has been a contentious issue. The Bozeman City Commission, with the input from Bozeman's "Affordable Housing Task Force," has approved an affordable housing ordinance. Often referred to as "Inclusionary Housing" or "Inclusionary Zoning," the concept of Workforce Housing seeks to promote the production of affordable housing by requiring developers dedicate a percentage of housing units in a future development at a specific price as low- and moderate-income housing to be used to help ensure adequate housing exists for the community's workforce, i.e., teachers, fire fighters, police, etc.

Always a contentious issue, with valid concerns surfacing like resale caps, maintenance guidelines, equity caps, segregation by socio-economic class, qualification caps, etc., the recent Idaho case, in which Idaho REALTORS® took the issue to court in Idaho and won, may very well encourage other REALTOR® Associations around the country to take the issue to court in their communities.

Here is the recent Idaho REALTORS® Press Release:

For Immediate Release

Contact: Melissa Gray, 208-342-3585, mgray@idahorealtors.com

(Boise) February 21, 2008--The Idaho Association of REALTORS® (IAR) and the Mountain Central Board of REALTORS® (MCBR) applauded the court decision made Tuesday which struck down an ordinance enacted by the city of McCall mandating private builders and developers to build and deed restrict properties for "workforce housing" In 2007 the MCBR filed a lawsuit against the city of McCall seeking a declaratory ruling that McCall's ordinance was an unconstitutional taking of private property rights, an illegal taxing scheme and that the city exceeded its jurisdiction and authority in passing the ordinances.

"We took every step we could to get the jurisdictions in Valley County not to adopt the ordinances," said Ray Moore, President of the Mountain Central Board of REALTORS®. "We even financed a print and radio media campaign letting citizens and officials know that adopting these ordinances was unconstitutional. Unfortunately, we were forced to bring the legal action."

Among other things, the ordinances required that developers and builders set aside, build and deed restrict 20 percent of a development for "workforce housing." Under the ordinances, the deed restricted properties are then reserved for people making 100% to 160% of the median wage in Valley County. The local government would then award priority points to certain types of jobs that would qualify for the housing. Such homes would be permanently price-restricted. The ordinances mandated an equivalent "in lieu of" fee as an option to building such homes.

IAR President Willis Stone said that while his organization and MCBR support affordable housing the city of McCall went too far by imposing a disguised tax and infringing on private property rights.

"The Court recognized that, while the goal of providing affordable housing may be laudable, there is no authority for enacting ordinances which require that developers provide affordable housing or to require a subsidy from landowners to further those goals," Stone said. "Workforce housing is a community problem. It ought to have a community solution. It is not fair to balance the problem on the backs of private property owners, or the real estate industry - a very important industry in our economy."

The 4th Judicial District Court included the following points in the Memorandum Decision:

• "These restrictions go much further than merely regulating the use of property; instead, they essentially regulate ownership of the property by dictating to whom a unit may be sold or rented."

• "This Court concludes such 'regulation' is arbitrary and unreasonable as a land use provision."

• "This Court is convinced that the imposition of the subsidy or fee required under Ordinance Nos. 819 and 820 are, in reality, a tax, and not a regulation."

The REALTORS®' lead attorney, David Gratton of Evans Keane LLP said the court's decision was well reasoned and thorough.

"The Court said pretty plainly that a fee charged to one segment of society to offset the burdens of the community as a whole is a tax - not a fee - and as such, is unlawful tax. Those types of disguised taxes exceed a city or county's authority." Gratton said. "We have made this argument from the beginning. There are a line of cases in Idaho a mile long supporting us."

IAR Chief Executive Kevin Price said his group and affiliated groups would continue to work with the state and local municipalities to provide affordable housing in communities like McCall. But he said that there were already plenty of provisions in the law to create affordable housing in any Idaho community.

"The City simply went too far and exceeded its authority. The imposition of this burden on the landowners or developers amounts to an unlawful tax. In addition, the ordinances go much further than the City's authority to regulate the use of property. By dictating to whom a housing unit may be sold or rented, the City has improperly attempted to regulate property ownership. We certainly agree with the Court's determination that this "regulation" is arbitrary and unreasonable" Price added. "There are other jurisdictions in Valley County that have enacted these ordinances. We will be watching carefully to ensure that those ordinances are repealed in a timely manner."

"There are developments in Valley County constructed under the ordinances. When the market softened, consumers had a choice between purchasing deed-restricted lots that can't appreciate in price, or unencumbered lots for the same price. Naturally, buyers chose to purchase homes with no free-market restrictions. Some of these "affordable workforce housing units" have been laying vacant for months. The people who were forced to build them are really taking a bath."

The Idaho Association of REALTORS® represents over 9400 REALTORS® in Idaho. For more information about the group go to our website at http://www.idahorealtors.com/ For more information about the National Association of REALTORS® go to http://www.realtor.org/

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Bozeman Montana Real Estate Report 

Bozeman Montana Real Estate     Big Sky Montana Real Estate

Belgrade Montana Real Estate    Livingston Montana Real Estate

At first glance you may think this is a flu epidemic map below, but no...

It appears from the Foreclosure Map below for 2007 that the coastal regions were hardest hit by the foreclosure epidemic...

The map speaks for itself...

Click Here For a Larger Map      Heat Map from RealtyTrac.com/ForeClosurePlus.com

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Taunya Fagan Real Estate      406.579.9683     taunya.fagan@prumt.com      

Bozeman Montana Real Estate    Big Sky Montana Real Estate

Belgrade Montana Real Estate     Livingston Montana Real Estate

Featured Listings    Property Search    Realty Watcher

According to the Wall Street Journal, "If you own a home in a former bubble region like California or southern Florida, there's bad news... and really bad news."

Don't go bargain hunting in these markets (though there are always a few good bargains in all markets from time to time). Prices have been sinking in Arizona, Florida, and California, but still homes are way too high-priced for average personal incomes in these and other markets, so residential property prices will need to keep falling before the deals begin to surface, and especially in the aforementioned three states.

It could take another 10 years for California wages to rise to make today's home prices look reasonable. 

According to the WSJ article, "Median prices in California peaked in 2006 at 13.3 times per capita incomes. They may be down now to about 11.1 times." Click Here for the Complete WSJ Article 

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Taunya Fagan Bozeman Real Estate   406.579.9683   taunya.fagan@prumt.com

Bozeman Montana Real Estate    Big Sky Montana Real Estate

Belgrade Montana Real Estate     Livingston Montana Real Estate

Since California has such a large, dynamic real estate market, I think it is prudent to keep one's eyes on its trends to get a sense of the pulse of the overall, national real estate market. With that written, here is some interesting data:

Sales for new and resale homes and condos sold in California in January 2008 were 19,145; stats as low as this probably go back earlier than 1988.

Home sales were down 41% from January 2007 figures.

Median home prices were down 17,1% from January 2007.

The concerning figure is that the number of foreclosures for January 2008 was 19,821, which is MORE than the solds of 19,145. This is ~$8 billion worth of foreclosed loans.

The good thing from this may be that buyers are committing to lower-priced mortgages, which, hopefully, ensure a stabler than previous mortgage base.

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Taunya Fagan Bozeman Real Estate   406.579.9683   taunya.fagan@prumt.com

Bozeman Montana Real Estate    Big Sky Montana Real Estate

Belgrade Montana Real Estate     Livingston Montana Real Estate

Tour de France champion, Greg LeMond, David and Sacia Morris, and Jorge Jasson, each invested $2 million to purchase ~1% of the Yellowstone Club in its early days of the late 1990s.

In May 2005, Yellowstone Club owner, Tim Blixseth tried to buy their shares for a total of $13 million, offering them each $1.25 million in cash and one undeveloped lot at the resort, valued at about $2 million, but the plaintiffs said this figure was a fraction of the true value.

Last year, the parties reached a $38 million settlement, plus attorney's fees. Blixseth paid the first $4.5 million-per-share installment but on Jan. 31, 2008, he missed the other $5 million-per-share payment due date.

Lawyers for LeMond, just settled: the Yellowstone Club must compensate LeMond and the three other plaintiffs the total $20 million payment ($5 millon-per-share), plus interest, by April 15, 2008.

The total $38 million ruling, in essence, would give the four plaintiffs an ownership value of ~4% of the Yellowstone Club.

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Taunya Fagan Bozeman Real Estate   406.579.9683   taunya.fagan@prumt.com

Bozeman Montana Real Estate    Big Sky Montana Real Estate

Belgrade Montana Real Estate     Livingston Montana Real Estate

Bundling of loans into assets that were then hawked to investors is a major issue in this mortgage storm we are all feeling by now.

What contributed in a large part to this financial disturbance was a weak system of accountability, termed "moral hazard, by Atif Mian and Amir Sufi of the University of Chicago's business school, between those who evaluate a borrower for the borrower's realistic ability to afford the loan he/she is taking out and those who will be responsible for dealing with the borrower's default.

The bundling of these loans, called "securitization" (property and the associated loans are great for securitization because property is illiquid and has a steady cash flow.) and the demand to trade them for profit led to the weak lending standards.

These were standards allowing both those who could not afford the homes they were buying to purchase anyway and those who would lend money the flexibility to lend money they had no right lending...a perfect storm of irresponsibility.

By now most of us see securitization as a major force for having brought together the housing high and the mortgage low.

Do the conditions remain for this type of irresponsibility to happen again?

Will new systems arise to cause another storm in the future, and what could they be, so we can predict it now?

I am not sure about this site...seems it could be an avenue for lawsuits, especially if last names and/or addresses are used, but RottenNeighbor.com (first started in Avon, MA) is a "real estate search engine" that allows a person to rate and review good and bad neighbors before moving in or just for the heck of it, I suppose; the reason, as the site purports: "so you can make a smart real estate decision."

Joe Citizen can comment on his neighbor, either in a positive or a negative light, create his own neighborhood trends, or simply search for property. The company reviews submissions, so I imagine this review process would take the teeth out of most complaints, making for fewer lawsuits...and less accurate, less acerbic "rotten neighbor" information. But it would seem that both the website and the commenter should think carefully about what is written down...

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Taunya Fagan Bozeman Real Estate   406.579.9683   taunya.fagan@prumt.com

Bozeman Montana Real Estate    Big Sky Montana Real Estate   

Belgrade Montana Real Estate     Livingston Montana Real Estate

"Metropolitan Regional Information Systems, which manages a database for 60,000 real estate professionals in the Washington area and parts of West Virginia and Pennsylvania, is changing an element of its ‘days on market' listing for homes. It involves decreasing from 180 to 90 the number of days a property is required to be off the market before MRIS resets that number to zero when it gets back on an active listing for ‘days on market." In short, it makes it look like homes that have been lagging on the market for several months haven't been out there that long, said Stephen Israel, president of Buyer's Edge, a Bethesda real estate firm that only represents homebuyers, not sellers."  (Thursday, February 14, 2008 Home listing change irks some real estate agents Washington Business Journal - by Joe Coombs Senior Staff Reporter)

Here in the Gallatin Valley of Montana, like in the Philadelphia, PA area, homes may be relisted be a real estate agent as soon as 30-days have elapsed. Sellers in Minneapolis, MN must wait 365 days!

1. What is the time frame in your market?
2. What would a good figure be for the United States as a whole?
3. Should there be a national figure?

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Taunya Fagan Bozeman Real Estate   406.579.9683   taunya.fagan@prumt.com

Bozeman Montana Real Estate    Big Sky Montana Real Estate

Belgrade Montana Real Estate     Livingston Montana Real Estate

Although the increasing tremors of recession and economic instability have been agitating the national landscape, Bozeman and southwest Montana have experienced only minor trepidation; the landscape here  remained pretty steady during the tremulous year of 2007.

So the upward growth was slower than in recent years, but upward it still moved, resisting the shakeup the national scene was experiencing. The steadiness of growth just couldn't continue, even here; the whole land is connected; the whole land eventually had to shift...

According to Paul Polzin, chief economist at the University of Montana's Bureau of Business and Economic Research, in Missoula, Montana, "Even if the U.S. goes into a recession, we think most of Montana will not be impacted," he was quoted as saying in a January 2008 article in The Missoulian, Missoula Montana's chief newspaper.  

Within the Bozeman, Montana city limits, the 2007 average sales price for a home was $337,683, which is down a bit more than $10,000 from 2006, but since 2005 the figure has increased almost $25,000. Belgrade, Montana's increase for the same period, between 2005 and 2007, was almost twice that; sales prices rose $45,702.

The growth will continue in the vibrant areas, the areas where people want to live. Regardless of the economic shifts, upward growth will continue; it may just be a slower upward pace for awhile. The economy needs to shift and restabilize.

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Taunya Fagan Bozeman Real Estate   406.579.9683   taunya.fagan@prumt.com

Bozeman Montana Real Estate    Big Sky Montana Real Estate

Belgrade Montana Real Estate     Livingston Montana Real Estate

It is very obvious that the pace of growth in the valleys of the western United States has led to redevelopment of just above all that once was fertile farmland. What has happened? Those involved in rural land use are unable to compete in the economic ring with the technologically savy urban developers. This is a high stakes competition between agriculture, which is viewed as a temporary use for land that will be discovered by developers, determined to put the once-rural spaces to their highest and best use.

Below is an article from New West, written by Susan Duncan, discussing the issues between rural agriculture and urban development. The questions always rising to the surface are, "Who should decide the best use for our lands, and what are those 'best' uses?" What do you think?

"...In the beginning, the landscape was "wild". European settlers perceived that Native American culture was not using this land to its greatest potential. The pioneers "tamed" it as farmland. Now, a new wave of settlers - called developers and amenity buyers - believe that farmers are not using land efficiently. They envision farmland as residential, commercial, and high-end recreational property.  And so it goes. Beware! When "new" people see property as "under-performing real estate", your land is subject to a hostile takeover (as with the Native Americans) or a buyout. (Name your price.) That's how cutover Plum Creek timberlands became Yellowstone Club and farmland became Costco and Wal-mart.

Surrounded by open space, rural residents have trouble imagining a need to save "open space." Urban residents have trouble imagining that "all that farmland out there" could one day be under pavement. As one lady told me, "I thought farms would always be there! It never occurred to me that they could be all gone!"

Until agriculture is respected as a legitimate, designated land use, how can it survive? Farmland preserves tax-paying open space, wildlife habitat, local food production, groundwater recharge areas, carbon sequestration and reminders of what it means to live in the West. Is any of that worth keeping?"   Finish the article here.

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Taunya Fagan Bozeman Real Estate   406.579.9683   taunya.fagan@prumt.com

Bozeman Montana Real Estate     Big Sky Montana Real Estate

Belgrade Montana Real Estate     Livingston Montana Real Estate

Monday, February 11, 2008 - Two real estate agents, Paul Castran, managing director of the real estate firm Castran Gilbert, and the company's sales director Mark Forytarz, have filed a defamation claim against Google in the Supreme Court. The two asked Google to remove access to some articles on their website but it was not done; consequently, they are arguing they have been defamed.

This underlines the touchy position web publishers can find themselves in if Google re-publishes content as Google Search Results. Can Google be held legally responsible by the subject of defamatory remarks if it does not remove content from search results, regardless of how the original publisher responds to a request to remove?

Interesting court case. What could the ramifications be if Google were to lose?

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Taunya Fagan Bozeman Real Estate   406.579.9683   taunya.fagan@prumt.com

Bozeman Montana Real Estate     Big Sky Montana Real Estate

Belgrade Montana Real Estate     Livingston Montana Real Estate

The U.S. Department of Agriculture (USDA) says Montana is bucking the national farming trend. According to new calculations, figures show there were more than 28,000 farms in Montana in 2007, an increase of about 200 farms from the 2006 figures.

In addition, farm numbers in the highest economic sales class contained 800 farms in 2007, about 100 farms more than in 2006.

The average Montana farm was more than 2,000 acres in 2007, which is a 4% increase over 2006.

Although Montana has seen growth in farms, the total number in the U.S was down 0.6% in 2007.

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Taunya Fagan Bozeman Real Estate   406.579.9683   taunya.fagan@prumt.com

Bozeman Montana Real Estate     Big Sky Montana Real Estate

Belgrade Montana Real Estate     Livingston Montana Real Estate

"Conflict of Interest? - The Impact of Real Estate Dual Agency on the Price and Speed of Residential Real Estate Transactions"

Vrinda Kadiyali, Jeffrey Prince, and Daniel H. Simon (October 2007) examined the effects of dual agency in real estate transactions because of conflict of interest concerns. They found that dual agency benefits buyers and sellers by "offering transaction efficiencies and expanding the pools of houses and buyers that an agency can try to match with each other."

They assessed dual agency's impact on the prices and speed of transaction, discovering that dual agency has no effect on average sale price, but does tend to reduce by about 7% the time to sale, which is roughly six days; usually a benefit to both sides of the transaction. 

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Taunya Fagan Bozeman Real Estate   406.579.9683   taunya.fagan@prumt.com

According to the Kauffman Index of Enterpreneurial Activity, the five states with the highest rates of entrepreneurial activity in 2006 were

1) Montana (0.60 percent)

2) Mississippi (0.52 percent)

3) Georgia (0.44 percent)

4) Oklahoma (0.43 percent)

5) Maine (0.42 percent)

According to the Kauffman Index, Montanans began more companies per person than residents of any other state, averaging 7 percent of people beginning small businesses each year in Montana.

The five states with the lowest rates of entrepreneurial activity were 1) Michigan (0.16 percent), 2) Pennsylvania (0.17 percent), 3) South Carolina (0.18 percent), 4) Illinois (0.18 percent), 5) Delaware (0.19 percent).

Information for 2007 has yet to be released

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Taunya Fagan Bozeman Real Estate   406.579.9683   taunya.fagan@prumt.com

Indoor skiing and the world's tallest building are just some of the amenities of the Dubai ruler, Sheikh Mohammed bin Rashid al-Maktoum's amazing city project of 300 islands, called "The World." (I believe 60 Minutes had a piece on this development late last year.)

This vice president of the United Arab Emirates has created a real estate boom in the Middle East, with out-of-this-world amenities and property appreciation: real estate purchased for $700,000 in 2002 is now valued at nearly $4 million and basic condos, selling for under $100,000 a few years ago, have tripled in value... 

For more: Dubai Dreams  

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Taunya Fagan Montana Real Estate - US Real Estate    

406.579.9683   taunya.fagan@prumt.com