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Table of Contents Secrets to selling-and-buying in the current market. . . . . . . . . . . . . . . . . . . . . . . . 6 How to get your finances straight. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Easy and eco-friendly home improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Design ideas crafted from reclaimed materials. . . . . . . . . . . . . . . . . . . . . . . . . . . 20 How to find the perfect tree for your yard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Gardening made easy with water-wise native plants . . . . . . . . . . . . . . . . . . . . . . 28 How to live green in an apartment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Ten tips for successfully renting your property . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Things every tenant needs to know . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 2012 Missoula Housing Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Cover design by Kou Moua
Mailing address: P.O. Box 8275 Missoula, MT 59807 Street address: 317 S. Orange St. Missoula, MT 59801 Photo courtesy of Native Ideals Seed Farm
Phone number: 406-543-6609 Fax number: 406-543-4367 E-mail address: independent@missoulanews.com
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Signs of success Secrets to selling–and buying–a home in the current market by Skylar Browning • photos by Chad Harder
Any trepidation about the current housing market from potential buyers and sellers can finally be put to rest, thanks to astrologer Grace K. Morris. The author of the Astro Economics Stock Market Newsletter announced in early March that, according to the motion of the moon’s north and south nodes, and judging from a cyclical trend dating back to the Civil War, home sales are officially “back on track.” “A home purchased now should prove to be an excellent long-term investment,” proclaimed Morris in an actual press 6
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release that went on to detail, at meticulous length, the specific significance of the aforementioned nodes. (Something about the ancient Chaldeans, astrological signs and “the ecliptic.”) It must be true. That said, local real estate agents aren’t sitting back and wishing upon the stars for a healthy housing market. While they do agree with Morris’ overall assessment— recent sales are up—it’s not by some divine intervention. It’s the result of old-fashioned hard work, veteran savvy and
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unprecedented determination. “This is not a market for wimps,” says Mindy Palmer, a Realtor with Prudential Montana and reigning Best of Missoula winner for Best Real Estate Agent. “Honestly, we’re having to work twice as hard to get the same results. We’re having to overcome some psychological hurdles with the buyers and the sellers. But the important thing is, we’re busy. Homes are selling. People are buying. Things are happening. You can be successful, there’s no doubt about that.”
Homesteader spoke with a number of local real estate agents to find out just what the secrets to success are in the current market. All of them said business was back up, and they pointed to a few of the same reasons why.
Be realistic Nobody pretends things haven’t changed. A down economy on the heels of a housing boom left the market in dire straits in recent years, with too much inventory and few looking to buy. Trends may show a promising upswing, but there’s still a need for sellers to understand the market hasn’t necessarily returned to the glory days of 10 years ago. “I spend a lot of time making sure sellers are realistic,” says Anne Jablonski, a Realtor with Portico Properties. “I try to paint a picture that’s not unrealistically hopeful, but hopefully realistic. That means sometimes I need to tell people maybe now is not the right time to sell.” Palmer says expectations are the first thing she discusses with potential sellers. “I’m kind, but forthright,” she says. “The market doesn’t care what you spent on your new countertops.
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last six months and sales of homes comparable in size and features, a seller can get a good sense of what their home could fetch—and whether that’s enough. By doing the same research, buyers can see where the market has settled and what constitutes a “deal.”
Now is the time
The market doesn’t care what you spent on your major remodel. The people who are buying are looking for deals. The people who are selling are the ones pricing their property
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competitively and smartly.” All of the real estate agents we spoke with mentioned the importance of properly pricing a property. By checking neighborhood home sales within the
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Jake Booher, a Realtor with Prudential Montana, says the current market is well defined for sellers. “It’s easy to make an informed decision at this point,” he says about whether now is the time to list a home. He’s more excited about
the prospects for certain buyers. He references a stable inventory of homes for sale and, more importantly, low interest rates. “When I have someone concerned about buying now, hesitating, I ask them to think about what happens if interest rates jump,” says Booher. “People don’t shop by the topdollar amount on a home. They shop for the monthly mortgage price, and what they can afford. With rates where they are, now is the time.” Booher adds that the shoulder season—the time between winter and when most local houses hit the market in spring and summer—also bodes well for buyers. “You have some leverage,”
he says, “because you’re seeing That means there aren’t a the house when it’s not neces- ton of foreclosed properties in sarily at its best, Missoula, and when the yard is a bank-owned mess, the snow’s properties melted and all of “I try to paint a a r e n’ t b e i n g last fall’s dog picture that’s sold for pennies poop is on the on the dollar. not unrealistilawn.” “If anything, He adds: “It b a n k-owned cally hopeful, gives you an honproperties are but hopefully selling for full est look at what you’re buying.” price, if not realistic.” slightly over,” says Palmer. Keep it local —Anne Jablonski, Jablonski Booher hears Portico Properties concurs, and tons of clients ask adds that Missabout the new oula’s housing industr y buzzmarket mirrors Missoula culwords they hear on the net- ture in general. In other words, work news —foreclosures, it’s unique. bank-owned properties, short “There’s way too much sales—and wonder what it attention to other areas,” means for Missoula. The Jablonski says. “For instance, answer: very little. we don’t have a huge glut of “Missoula doesn’t see much foreclosed homes like some of it,” he says. “What happens other markets. Real estate is someplace else doesn’t neces- local. The local dynamics are all sarily translate to here.” that matter.” Homesteader 2012
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Clean, lean & mean Palmer doesn’t sugarcoat her approach in the current market. In addition to saying it’s not for wimps, she describes her focused approach to helping clients sell their home. “Clean, lean and mean— that’s my philosophy,” she says. “If you are serious about selling, then you have to put on your game face and get to work.” Once a seller decides to list their property, the work is far from done. Real estate agents suggest fixing all of the small repairs that have been previously put off, de-cluttering the home and removing all personal items. Palmer refers to her walk-through as “Mindy Boot Camp,” during which she’ll point out everything that needs to be addressed before the house should hit the market. “I assess their house, their layout, and I start to ask whether or not we need to do a deep clean, whether we need to get rid of a third of the furniture they inherited after someone else moved out,” she says. “We cover everything.” 10
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Palmer also recommends clients meet with multiple agents to see how each one evaluates the property. In some cases, Jablonski says a seller should go to additional measures to prepare the home. For instance, consider having an inspector do a presale inspection so maybe you can address some concerns before the house goes on the market. “That’s not common, but sometimes it’s helpful to get that coaching beforehand,” she says. Plus, Jablonski says a seller can save money by having repairs completed before listing a house rather than during negotiations with a buyer. All of these steps—from initial research to deep cleaning— will help set up a seller for success. It’s not as easy as reading a horoscope or as whimsical as charting the stars, but it’s proven to work. “When a house is properly prepared, I find that we have a buyer much faster,” says Jablonski. “Those are the houses that are selling in this market.” B
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Expert Essay:
Know the score
How to get your finances straight before buying or renting by Jennifer Standish and Paul Heihn • photos by Chad Harder
Before picking out your defaulting on a mortgage. If dream home during a Sunday you are looking to rent, most open house or choosing a property management compachoice new pad for rent, it’s nies will review your credit important to make sure your report and score as well. Gain finances are in order. If you’re the upper hand by knowing looking to buy, banks will your credit report prior to always pull a copy of your cred- going to the bank or a property it report and credit score to manager. You can obtain a free determine the risk of you copy of your credit report each 12 Missoula Independent Homesteader 2012
year at annualcreditreport.com. There may be a small fee to access your credit score. Credit scores usually range in number from 300 to 850, according to the Association of Credit and Collection Professionals (ACA). “The higher the score, the b e t t e r, ” s a y s t h e A C A .
“Generally a score of 300-600 is considered poor; 600-700 is considere fair; 700-750 is good; and 750-850 is excellent.” Banks use your credit score to determine the amount they will lend you and the amount you will need for a down payment, as well as the amount of
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interest they will charge you on the loan. Banks may also allow you to pay fees to buy down your interest rate. According to homebuying.com, borrowers with a score above 700 typically have more financing options and are offered better interest rates. Having poor credit doesn’t necessarily mean you won’t be approved for a loan; you may still get the loan but will end up paying much more in interest and costs. Shopping around may cause multiple lenders or property managers to request your credit report. According to myfico.com, the credit score ignores mortgage, auto and student loan inquiries made within 30 days prior to scoring. If you find a loan within 30 days, these inquiries won’t affect your credit score for that loan. In addition, the score
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looks on your credit report for mortgage, auto and student loan inquiries older than 30 days and if there are some that fall within a typical shopping period, the score counts them as just one inquiry. Improving your credit score is often a topic that comes up when contacting a lender for a home loan. To do this, it is important to understand what your credit score is comprised of. The credit score calculation is a proprietary model and each credit reporting company has their own individual score calculator. In general, credit scores are based on five areas: your payment history, amounts you owe, length of your credit history, types of credit used and new credit. Although payment history and amounts owed are the greatest factors, small Homesteader 2012
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Score more help For more information or to obtain a copy of your own credit report and score, consider these services: ACA International/Ask Doctor Debt: askdoctordebt.com Equifax: 1-800-525-6285; equifax.com Disappearing screens for doors, windows and over-sized applications
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Experian: 1-888-397-3742; experian.com TransUnion: 1-800-680-7289; transunion.com AnnualCreditReport.com changes can make a score change dramatically. Author Jennifer Standish has written about her personal experience, noting, “Something as simple as having my credit card company increase my spending limit made my credit score jump 80 points in a matter of months. By increasing my spending limit the credit reporting company considered the amount owed versus the amount available to spend to be a smaller percentage, thus boosting my score. The increase to my score increased the amount a lender was willing to lend me and also decreased the interest rate on my loan.” Conversely, an associate had her credit score drop more than 100 points simply by having one collection account added to her credit report. T h e F e d e r a l Tr a d e Commission (FTC) is a great resource for materials on how to find information about
your credit report and how to improve it. “Newspapers, radio, TV and the internet are filled with ads for companies and services that promise to erase accurate negative information in your credit report in exchange for a fee,” says the FTC. “The scam artists who run these ads not only don’t deliver— they can’t deliver. Only time, a deliberate effort and a plan to repay your bills will improve your credit as it’s detailed in your credit report.” The FTC website details the Fair Credit Reporting Act (FCRA) and explains that the best way to deal with inaccurate information on your credit report is to write to the credit reporting company about what information you believe is inaccurate and provide copies of the statements that prove the inaccuracy. You should also write to the creditor who has placed the item on your credit report and let them know of your dispute. If the information on your credit report is found to be incorrect it will be corrected and if you request it, the credit reporting company must send a notice of the correction to anyone who received your report in the last six months. It is important to note that under the FCRA, “negative information regarding a debt that has been charged off by the creditor can be reported
for seven years and 180 days from the date the debt was charged off. This time period can start all over if you bring the account current and then subsequently default.� When you receive the keys to your new home, it is all worth it. Having the knowledge of your credit score and what banks and property managers are looking for empowers you to get the home of your dreams. B Jennifer Standish and Paul Heihn are active members of the Association of Credit and Collection Professionals, the Montana Collectors Association and the National Association of Residential Property Managers.
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Green means go Eco-friendly home improvements that deliver the most bang for the buck by Independent staff • photos by Chad Harder
The “Go Green” movement has been around for so long that it’s almost passé now, some taken-for-granted thing like high-speed internet or heated car seats. Yet, for whatever reason, many homeowners continue to procrastinate or outright ignore the obvious increased savings of an ecofriendly upgrade. Stop the insanity. The technology is available and the prices are largely affordable. 16
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There’s no reason to wait to make changes any longer. We’ll ensure it’s even easier by providing a list of relatively easy and affordable home-improvement projects that are guaranteed to save homeowners money and reduce their carbon footprint.
Life, programmed We promised to make this easy, and few things are easier than plopping down as little as Homesteader 2012
$45 for a programmable thermostat and installing it in your home. (These can go up in price, but the basic models work just fine for the average home.) This one device can save about 15% on your heating bill, which during Montana’s harsh winters adds up to a nice little chunk of change. Setting one up is also a piece of cake. Most models involve a low voltage wiring installation and connect to the wires of your old
thermostat. (Note: Just be sure to turn off the electricity before jumping in.) Programming entails punching a few buttons. Make sure to set the temperature low whenever you’re at work, and while you sleep, and schedule the heat to kick back on around the time you wake up and when you get back from Happy Hour. As a bonus, if you’re a NorthWestern Energy customer, check the company’s
website for rebates when you purchase a programmable thermostat. In fact, NorthWestern Energy offers rebates on many of the items on this list.
Heating up The programmable thermostat touches just the tip of the iceberg that is dealing with Montana’s winter months. The single largest source of energy consumption is heating your house, and old equipment just doesn’t cut it. At the very least, schedule annual maintenance, just as you would for your car. If your furnace or boiler is more than 15 years old, Energy Star recommends replacing it; newer furnaces can be 15% more efficient, and boilers 5%.
Lock it up There’s another way to stay
warm during winter: Keep the cold air out and the hot air in. Seal all gaps and leaks in walls and around windows with nontoxic caulk or sealant. AFM Caulking Compound contains no formaldehyde or other toxic preservatives, unlike a silicone-
type caulk. Adding attic insulation is another way to improve your home’s energy efficiency. Make sure to check the insulation’s RValue, which measures the insulation’s ability to resist heat. The higher the R-Value,
the better the thermal performance of the insulation. The recommended level for most attics is to insulate to R-38, or about 10 to 14 inches, depending on insulation type. Once you’ve sealed your house, consider strategically
Building Local? Borrow Local. When you’re ready to buy your own piece of Missoula, visit a lender who’s been your neighbor for more than 50 years. We offer a variety of Mortgages and Home Equity loans. Visit our new online mortgage center for rates, online applications with instant approval, and more. More than you expect 523-3300 / www.missoulafcu.org Homesteader 2012
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placed exhaust fans to keep the air circulating. Exhaust fans in the bathroom control moisture and help prevent mold. In the kitchen, these fans help control odor. Locally, visit the vast inventory at Home ReSource for second-hand exhaust fans before shopping for a new one.
“low-E”), argon-filled windows. What does that all mean? Insulated glass features two or more pieces of glass with a dead air space between. Low-E glass works by reflecting heat back to its source by utilizing a thin metallic coating. And argon acts as an additional layer of insulation on low-E windows.
See clearly
Go with the flow
Part of your home’s shell includes the windows. Truth be told, these can be an expensive home upgrade, but reports show you can recoup a lot of the cost when you decide to sell your home. When replacing old, single-pane windows, look for insulating, low-emissivity (or
You’ve seen the children’s book Everyone Poops. But did you know that over the course of your lifetime, you will likely flush the toilet nearly 140,000 times? According to the Environmental Protection Agency, if you replace older existing toilets with low-flush or dual-flush toilets, you can save thousands of gallons per
year. Look for the EPA’s WaterSense label to find these approved water-saving devices, which cost approximately $250. In addition to the commode, bathroom remodels can also include affordable, fashionable and eco-friendly fixtures. Low-flow showerheads usually range from $10 to $50, and sink aerators run less than $10. The EPA claims that if one in every 10 American homes upgrades a full bathroom with WaterSense-labeled fixtures, we could save about 74 billion gallons of water and about $1.6 billion on our utility bills nationwide per year. For you, the EPA says that calculates to saving 7,000 gallons and $80 a year.
Keep it simple Listen, we get it: Finding the time and money for home improvement projects can be a pain. Too often, your to-do list meets an early end when your tool belt turns out to be bigger than your budget, or your ambitions outweigh your free time. If you’re struggling to wrap your brain around some of the
bigger fixes, start small. You may be surprised by how small projects reap big rewards down the line—both in your standard of living and the ultimate resale value of your home. Start in your bathrooms or kitchen with simple upgrades like new hardware or fresh coats of paint. These don’t break the budget, but do bring a new flare to the room. You could recoup, for instance, nearly 80 percent of the money spent on a minor kitchen remodel when you eventually sell your house. Plus, you can make these upgrades green by tapping local resources. Find the hardware fixtures at Home ReSource, and shop for “zero VOC” paint at any number of local stores. The “zero VOC” tag means the paints don’t release harmful gases into the atmosphere or cause pounding headaches while you wait for the walls to dry. In other words, it makes indoor painting during Missoula’s crazier weather cycles much more palatable. B
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Photo by Chad Harder
Old is new
Simple design ideas crafted from repurposed or reclaimed materials by Independent staff
Sometimes the simplest solution to sprucing up a room comes from an item otherwise overlooked or forgotten. We’re talking about recycled, repurposed or reclaimed materials that make for affordable and creative changes that are also eco-friendly.
Rich history Why not make the centerpiece of a newly designed 20
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room a striking piece of the past? Heritage Timber specializes in providing old-growth wood and vintage metal pieces—from mills, barns, railroad buildings, etc.—that can give an instantly classic look to the most contemporary upgrade. You’ve seen the company’s work around town, at businesses like James Bar, Oz Architects or Tagliare Delicatessen. For your home, Homesteader 2012
consider their reclaimed wood products for new flooring, posts, beams or stairways. In one case, a customer used old barn wood and hardware to give an attic room some historic texture and class.
Little change, big impact Sometimes a redesign can be as simple as changing the focus of the room with a single
purchase. Upcycled is a Hip Strip boutique (517 S. Higgins Ave.) chock-full of chic items that just so happen to come from reclaimed materials. The selection is vast, creative and one-ofa-kind cool. Check out the line from Little Green Things for easy accents to any space, like the clocks made from vintage books and “constructed in the most low-impact way possible,” or the light switch covers.
Home ReSource
A bit of everything, on a budget The easiest way to kill a home improvement or redesign project is biting off more than you can chew. We’ve all seen friends with that unfinished bathroom that they’ve been “working on” for three straight summers, or a bonus room filled with more dust and wood scraps than furniture. Time and procrastination can surely be reason for the delays, but more often than not it’s financial. Home ReSource (1515 Wyoming St.) takes the monetary burden off of your projects, and brings the added satisfaction of incorporating
Photo by Chad Harder
reused materials. If you’ve never visited the nonprofit, it’s a treasure trove of inspiration. You’ll find tile and grout for your bathroom remodel, along with rows of vanities, sinks and tubs. Heck, there are even bins of toothbrush holders, towel bars and toilet paper racks, all for $1 each. Some of the best finds are hidden in the sprawling lighting section, where you can have a retro wood-andbronze chandelier featuring decorative glass bulb covers the size of fishbowls for just $10. If the prospect of tackling a hands-on redesign is daunting, Home ReSource offers more than just raw materials. On a Homesteader 2012
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recent visit we found benches made from beetle-kill pine ($200-$300) and a traditional Tappan Deluxe natural gas range in perfect working order ($1,495). The latter would’ve made June Cleaver jealous.
Up to you There are countless ways to incorporate reused everyday items in the design of your house—all it takes is a little creativity. We’ve seen old keys turned into wind chimes, Mason jars transformed into votive candleholders and broken or old plates reimagined as decorative mosaic tiles. One of the more inventive examples seen around town is the Rattlesnake home that has a garden wall of recycled bottles, arranged in such a way to look like a Montana mountain range. Anything is possible if you’re up for a little eco-friendly experimentation. B
Heritage Timber
Photo courtesy of Heritage Timber
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Out on a limb
How to shop for, plant and care for your yard’s center of attention by Skylar Browning • photos by Chad Harder
If you ask Bill Caras about the best-sell- droppings, under a glimmering amur ing trees at his family-owned nursery, he’ll chokecherry and into the front yard of his rattle off multiple options and then point home, located right next to the nursery. to a general area of the property where “Let’s look at these. They’ll give you a betrows of potted, bagged and bare-root trees ter sense of how the tree looks when it’s for sale are located. If you ask Caras to fully mature.” Caras Nursery has been in operation maybe show you some of the dozens of trees he just rattled off, he walks in the since 1896 and Bill Caras counts more than 35 years of experience, so he takes some opposite direction. “Follow me and watch your step,” he personal pride in showing what thrives in says, and the next thing you know you’re Missoula’s climate. The good news: It’s a walking around a fence, past fresh deer long list. The bad news: Sorting through 24 Missoula Independent Homesteader 2012
the ins and outs of planting the right tree can take some time. We spoke with Caras and other local experts to find out the lay of the land.
First things first Gary Howe works as the city of Missoula’s urban forester, which means the care and maintenance of local trees is his business. Although Howe is relatively new to the area—he started a few months ago,
after moving from Fayetteville, Ark.—he’s already well versed in common pitfalls. The most common, he says, is not having a firm understanding of the first step in planting a tree: knowing the soil. “Most people pick a tree they like without considering what they’re putting it in,” says Howe. “We don’t spend enough time understanding the soil.” A do-it-yourself kit runs less than $10, but the Missoula County Extension Office can also help. The Extension Office loans out soil probes that can be shoved into the ground and provide a composite look at your soil. The office also has a list of recommended labs that will test soil samples as well as describe in detail what nutrients your soil may be lacking. The tests run anywhere from $15 to $60. The Extension Office, in turn, can make recommendations about what fertilizers may best help once your receive the lab results. If you’re interested, contact Sandy Perrin at 258-4213.
Prepare to pick Caras says the most important thing prospective tree buyers need to know is answers, because he’ll have plenty of questions: Are you looking for shade or something that will let in light? Can it grow tall or is there an overhang? Do you want it to bear fruit or produce vibrant fall foliage? “There are lots of different things we
need to know to help recommend the best tree,” he says. “There’s no shortage of options, so the more you know about what you want, the more we can help.” Caras generally breaks trees down into three categories: shade, fruit and ornamental. Depending on the size and maturity of the tree on his lot, prices can range from $40 to $250.
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Both Caras and Howe get excited talking about their favorite trees for this area. With no shortage of options, it’s hard to narrow down a few prime selections. Yet, after paying homage to a few local standards, each reveals some hidden gems that thrive in Missoula. The University District is home to tons of Norway maples, a hardy, attractive and nonnative shade tree that is beginning to cause trouble by dominating the landscape. Instead, Howe recommends a thornless honeylocust, which is known for its fast growth, fragrant spring flowers and an open silhouette
duce a lush white or pink bloom. Washington Hawthorns also do well, and are known for their white flowers in the summer and their orange, scarlet or purple fall foliage. The aforementioned amur chokecherry tends to get overlooked, but is one of Caras’ favorites. He has two planted in front of windows in his house because their delicate branching habit, white flowers and bird-attracting fruits add to, and don’t obstruct, the view. More than anything, though, the tree stands out for its striking bronze bark, which retains its color even in winter. Howe recommends another lesser-known ornamental for the area: the Kentucky coffee-
The amur chokecherry tends to get overlooked, but features a delicate branching habit, white flowers and bird-attracting fruits. More than anything, the tree stands out for its striking bronze bark, which retains its color even in winter.
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The fun part
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that invites grass growth underneath. He’s also high on the bur oak and three new elms that are resistant to Dutch elm disease: New Harmony, Princeton and Valley Forge. Caras says fruit trees are easy to select because certain types grow particularly well in Missoula. His top sellers include apple, pear, cherry, plum and apricot. Peach trees, he says, can be more challenging, but still work. Ornamental trees come down to personal preference. Caras says he sells a ton of flowering crabapple trees because they thrive in the area and pro-
tree. The tree’s branches typically form a narrow crown, and its leaflets change from pink in late spring to a dark, almost blue-green. “It’s underused here,” Howe says, “and it’s such a beautiful tree, it shouldn’t be.”
Gettin’ dirty When planting a tree, there are a few common-sense rules to follow. First, spring and fall tend to be the best times to put them into the ground. The moderate temperatures and rainfall allow the tree to root. Second, make sure to handle
the tree carefully, especially the trunk. Any damage can affect the tree’s growth. The type of hole you dig for the tree will depend on the tree and whether it’s balled and burlapped, in a container, or bare-root. Consult with the nursery. Watering is critical during a tree’s first year. If a tree is properly watered in those first 12 months, it will become a lot more resilient over the long haul. Finally, pay attention to the tree’s growth and prune it regularly. Caras offers pruning seminars throughout the spring and summer. Contact the nursery (543-3333) for more information.
Troubleshooting Sometimes, despite your best efforts, a tree develops
problems. These problems can be caused by issues with the soil, a lack of water, something (like construction) disrupting the root system or old age, and result in secondary issues like aphids or beetles. “It’s important to identify the causal effect,” says Howe. If your tree is experiencing problems like aphids or beetles, it’s usually because something else has already weakened the tree’s immune system.” Treating these problems can be expensive, but there are options. Local arborists, such as
Able Tree Service (549-9310), specialize in things like deep root and soil therapy, slow release fertilizer and “cambistat” treatment, which helps increase the tree's durability.
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Howe recommends soil injections, if necessary. But if people follow the advice above, especially with new trees, that shouldn’t be needed for many years to come. B
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Photo courtesy of Native Ideals Seed Farm
Expert Essay:
Wild by nature
Gardening made easy with water-wise native plants by Bryce Christiaens and Rebecca Shoemaker
In the last decade, freshwater use for keeping lawns green in the arid West has exceeded water use for food production. An alternative to a green lawn and an important way you can cut down on your water footprint is to have water-wise landscaping with drought-tolerant native plants. If you live in the valleys of western Montana, look no further than the North Hills ridge trail for inspiration in your own yard. Its masses of fuzzy-tongued penstemon, Missoula phlox, houndstooth groundsel, cushion buckwheats, shooting stars, bitterroots and bunchgrasses not 28
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only look amazing, but they also don’t require any extra water, fertilizers, pesticides or other soil amendments to keep them happy. That’s because many of our native wildflower species spend the first year of their life growing a root system that allows them to flourish in the dry valleys of western Montana and show off their colors for years to come. What we’re saying is, you can have a yard that looks like a prairie wildflower field and you don’t have to water, fertilize or mow. So is it really that easy? Short answer: Yes, but you do have to start looking at
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your yard a little differently. The best thing you can do is follow nature’s lead. Native plants have adapted to the harsh conditions nature throws at them, so don’t try to baby them too much or you will just end up smothering them to death. For native seeds, that means spreading them onto the surface of the soil in the fall without covering them. This works so well because it is exactly how seed germination and recruitment happens in the wild. Seeds drop from plants in late summer or early fall, then germinate the following spring and sometimes as early as
February. Many native species actually require cold temperatures to break down the seed coat and trigger germination. This adaptation increases establishment and survival by allowing seeds to make use of late-winter and early-spring moisture. Most of our native wildflowers also have seeds that are too small to be easily “planted” by burying them, and will simply go dormant in the seed bank waiting to be brought back up to the surface before they can germinate. Another way to follow nature’s lead is to take note of the places you see your favorite plants growing in the wild. One large rock or log can provide sufficient shade and/or water retention to allow you to grow water-loving plants with little to no extra water. Many of these “niche” spaces may already exist in your yard, like areas shaded by your house or garage that are cooler than other places in full sunlight. By paying attention to these details and working with shade that already exists, you will be able to choose the plant species that will be the happiest in different parts of your
Photo by Chad Harder
landscaping without any additional inputs. Finally, it’s always good to start with a small plot rather than try to redo your entire yard in one season. A small, 10-by-10 garden that you can expand on each year is a great way to learn what plants work well for you and which plants you enjoy the most. We never fail to learn something new each year in our native plant garden that makes the next phase a little easier and a little more successful.
We can’t say that’s all you need to know, but it’s more than enough to have fun and get your hands dirty. B Bryce and Rebecca are the owners of Native Ideals Seed Farm which provides the northern Rocky Mountains with native wildflower seed for restoration and water-wise landscaping. Find them online (nativeideals.com), at their farm in Arlee, or every Saturday at the Clark Fork River Market.
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Baking soda and vinegar are efficient cleansers.
Expert Essay:
Eco-renters How to live green in an apartment by Martin Knight • photos by Chad Harder
Living green doesn’t have to mean spending a lot of green—it should actually save you money. You might be surprised to hear that going green can mean just starting out with one simple step and building from that. It doesn’t have to be hard: Small changes can go a long way. In making such decisions, apartment dwellers can often feel more helpless than homeowners. While you may not be 32
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able to choose your appliances or install major energy conservation measures, there are many things that you can do to be greener. Here are some simple ideas that will both empower you toward greener, healthier living and may even save you some dough. 1. First and foremost, communicate to your landlord how important living green and reducing your carbon footprint Homesteader 2012
is to you. In addition to requesting energy-efficient appliances, share eco-friendly tips with your landlord and suggest that it is shared among the entire apartment community. 2. Use green products. Baking soda and vinegar, both non-toxic and biodegradable, can be as efficient a cleaner as your typical toxic, petro-chemical based products. For example, baking soda and warm water can safely clean
and deodorize any kitchen or bathroom surface. Or Borax, a naturally occurring mineral, can be used to remove harsher stains. There are tons of resources out there for simple cleaning solutions that utilize green products. Women’s Voices for the Earth, located in Missoula, offers green cleaning recipes online at womensvoices.org. Compact Lights (CFLs) are another green option. While
they cost more initially, these bulbs last up to 10 times longer and use about 75% less energy than standard bulbs. For instance, a 14-watt CFL will produce the same luminance as a 60-watt standard bulb. For an average usage, that could equate to an annual energy savings of $6 per year for each bulb. Check out the Energy Star website (energystar.gov/cfls) to find the right bulb for your needs. Lastly, consider a PVC-free or nylon shower liner. Recent studies have found that polyvinyl chloride (PVC) shower curtains release toxic materials into the air in your home. 3. Buy environmentally safe, biodegradable cleaning and hygiene products. If you’re
selecting a more conventional cleaning product (from the cleaning products aisle) at the store, look for products that are labeled as non-toxic, low VOC, zero VOC or biodegradable, and products with recyclable packaging. Avoid products containing bleach and that are labeled as “poison,” “toxic,” “corrosive” or “irritating.” 4. Change out your furnace filter on a regular basis. According to the U.S. Environmental Protection Agency, indoor air is two- to five-times more polluted than outdoor air. While you may not have access to your furnace filter, asking your property manager how often the filter is changed could be beneficial. It should be done at least once every six months.
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CFLs use 75% less energy. Homesteader 2012
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5. Use power strips in order For example, one 75-watt lightto reduce phantom loads. bulb left on for only 10 hours Phantom loads are the power per month could cost you an drawn from an electronic device additional $20 a year. when it is turned off—think dig7. Recycle whenever possiital clocks, timers, AC adapters ble. If your apartment communiand stand-by lights. A govern- ty does not participate in a recyment study cling program, found that in make this a the average Baking soda and p r i o r i t y f o r American your landlord vinegar, both home, more or managethan 50 perment company non-toxic and cent of the suggesting biodegradable, can by electricity it. A variety of used to power recycling servbe as efficient a electronics is ices are availcleaner as your consumed able throughwhile the out Missoula. typical toxic, 8 . Tu r n devices are petro-chemicaldown your therturned off. mostat by two This equates based products. degrees in the to costing winter and consumers more than $3 billion a year! increase it by two degrees in the sumPower strips allow you to shut mer. By doing this, you can reduce off these loads, potentially the amount of carbon dioxide reducing your power bill signifi- released by 2,000 pounds annually. 9. Utilize alternative transcantly. 6. Conserve. If you have a portation. Nearly 85% of all washer in your apartment, using transportation costs in the U.S. cold-water washing can save as are related to private automomuch as 80% in energy used on biles. Missoula residents can laundry. In addition, only run buck that trend by utilizing a full loads of laundry in order to variety of community transbe the most efficient. According portation options. Mountain to an EPA study, not leaving the Line (mountainline.com) prowater running when brushing vides an extensive bus system. A teeth or washing dishes could network of bike lanes and trails save upwards of 10 gallons of offers vital connections through the community; the City of water a day. Turning off lights is another Missoula provides a great map key way to conserve. A study of these at ci.missoula.mt.us/ found that nearly a quarter of index.aspx?NID=407. In addiAmerican household energy tion, Missoula in Motion’s consumption could be avoided Guaranteed Ride Home proby simple energy savings meas- gram provides commuters a safe ures such as turning off lights. and free transportation option 34
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in times of emergency. Check out Missoula in Motion at missoulainmotion.com for more info. B
Martin Knight is the Energy Conservation Coordinator for Homeword. The organization is committed to providing safe,
healthy, affordable housing using sustainable methods and promoting strong communities through housing counseling and educa-
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tion for those most in need. For more info on affordable, sustainable apartment communities, go to homeword.org.
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Expert Essay:
Management material Ten tips for successfully renting your home or property by Kyle Graybeal • photos by Chad Harder
The decision to become a landlord can be daunting. There are several questions you should ask yourself before you jump into the rental business: Do I have the time to manage tenants? Do I know the laws required to be a property manager? Am I able to maintain the property? Once you start asking yourself these questions, you may decide it’s best to hire a property manager to help you with your endeavor. If you’re still considering going it alone, here are a few tips to consider. 1. Prospective tenants have many options to choose from in today’s market; Make sure your home is the one they want. 36
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Repair any holes or scuffs on walls, repair all appliances and update if necessary. Check plumbing fixtures for leaks. Maintain your furnace and air conditioner, and double check that everything is working properly. Have your carpets professionally cleaned. 2. Create advertising with specifics and adjectives that will appeal to renters, such as “vaulted ceilings,” “wood floors” and “granite.” Post your advertisement on reputable websites and in trusted publications. 3. Provide a property condition report listing all rooms and the condition they are in. Have your new resident sign off, accept-
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ing the condition and informing them they will be held accountable to return the home in the same condition, less normal wear and tear. 4. Inspect your property regularly. It is a good idea to schedule an initial inspection one month into the rental agreement. This way, you can determine if the tenant or tenants are truly taking care of the property and address any issues at this time. At the very least, schedule an inspection every six months to maintain appliances, determine repairs needed and assess the property to ensure you are not deferring maintenance. 5. When deciding on a rental price, determine what utilities are going to be
included. Are tenants responsible to pay forms that would be needed. Do your in establishing understanding between additionally for utilities? Are you going to forms follow current landlord/tenant laws tenants. charge additional deposit and rent for pets? and fair housing laws? Have you changed 8. Hire reputable vendors to perform If accepting pets, are you going to provide your insurance policy to include invest- maintenance on your property. Have vena separate pet lease? How many and what ment property? dors provide you with their license and type and size of pets will you insurance information. Ask for allow? Accepting pets will references. Always acquire at increase your rental applications, three bids for work to be You don’t want to price your property least but can also add more wear and completed; the lowest bid is not tear to your property. Your too low or too high, so look at current always the best way to go. If you deposit should be large enough are performing your own mainteto cover minor damages and at rental rates in the area and determine nance, all emergency items need least one month of rent, but not to be addressed within three how your property compares. so large that it deters prospective days, all non-emergency items renters. You don’t want to price within 14 days. Do you have the your property too low or too high, so look 7. Screen prospective applicants thor- time, expertise and tools to complete the at current rental rates in the area and deter- oughly. Ask about roommates and pets. Do maintenance needed? mine how your property compares. they have the ability to pay? Should they 9. Review your accounting proce6. Make sure you are in compliance. have a co-signer? Do they have past rental dures. Are you following the proper guideMeet with an attorney to review or help history and is it verifiable? Creating a room- lines and laws in place to hold and disburse you in creating your lease and additional mate agreement can be a useful tool security deposits? Do you have the ability
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to accept credit cards? Are you properly reporting your rental income to qualify for tax deductions? Remember to budget for maintenance and advertising. 10. Lastly, when purchasing properties for the purpose of making them rentals, make sure you know your area. Are you able to inspect on a regular basis? Are there other rentals in the area? What nearby amenities are available, like parks, laundry and shopping? The more attractive the area, the better chance you have of keeping it rented. It’s important to follow the law and develop a process that
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works. Many owners, after trying to be a landlord on their own, decide to work with a property manager due to the amount of work that is actually involved. Property managers have their systems in place and have access to legal, collection and payment services. They provide and execute all documents and diligently keep track of your property through inspections, tenant correspondence, maintenance and accounting records. Some owners feel hiring a property manager is too expensive. In reality, property managers typically can make up for their service fees by
following best practices, making sure the property owner is not incurring additional expenses due to deferred
maintenance and maximizing the owner’s financial profitability and personal time. B
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Expert Essay:
Renting 101
From rights to resources, 28 things every tenant needs to know by Beki Hartmann • photos by Chad Harder
The Missoula rental market can be competitive. Half the local population—or some 30,000 people—rent their home, with 10,000 of those being students attending the University of Montana. On average, Missoula has a rental vacancy rate between 3 and 5 percent; the national average is 10 percent. In such a limited market, it’s important for renters to understand their rights, their responsibilities and what it takes to enter into a positive lease agreement. Consider the following list a solid starting point to protecting you in your new Missoula home.
Leases • Read it and keep a copy. • Do not rely on verbal agreements, they can be misunderstood or denied. 40
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• Before you sign, tell the landlord what you don’t agree with. Items can be crossed out and changed. • In order to end your lease, you must give 30 days notice, even if you are on a 12-month lease. If you don’t do this, you may have to pay for an extra month at the end of your lease or suffer an automatic renewal.
Deposits • Pet deposits can only be withheld for pet damages. • If you move out of the rental and other lease holders stay, getting your pet deposit back can be difficult. • To help ensure you get your deposit back, take pictures of dirt or damage before you move in and then take pictures after.
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• Clean! Even for a small studio, it can take as many as four hours to clean. • The landlord can’t withhold a deposit for normal wear and tear. • The landlord can’t withhold a deposit for cyclical cleaning. For example, if the landlord paints the walls every year, he can’t charge you for the paint and labor. • Your landlord has 10 days to return your deposit if there are no deductions. If there are deductions, your landlord has 30 days to return the deposit.
Rent Payments • Always get a receipt! • Avoid paying in cash. If the landlord insists, offer a cashier check or get a receipt!
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Roommates • If there is more than one person on the lease, you are individually responsible for the entire rent. The landlord doesn’t care if you pay $1 and your roommate pays the rest. He wants his money on time and in full.
tenants’ responsibility to keep charged batteries.
Your landlord is selling Your written lease is valid, even if the property changes hands. • If the owner asks you to open your home for more than three viewings per month, it may be unreasonable. • You have a lease with the landlord, not the real estate agent. All communication should be conducted through the landlord.
• Protect yourself by signing a roommate agreement, specifying the agreement on rent and utilities payments.
•
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• Think it over. It is already difficult to find a rental in Missoula, let alone one that accepts pets. • You must notify your landlord if you have a pet, and have it put on the lease. If you don’t, you could be kicked out in just 3 days.
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• The landlord must give 24hours notice before entering your rental, unless it is an emergency. • The landlord must give you notice of repairs that will be performed at your rental. For example, if he is going to service the furnace or inspect the premises, he must give you fair warning.
Repairs and Maintenance • The landlord is responsible for providing a safe rental. • The city of Missoula provides a low-cost residential inspection if you believe your rental is unsafe. • The landlord must provide a smoke detector, but it is the
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Evictions •
If you are on a month-tomonth lease, your landlord can give you 30 days notice to vacate without having to provide a reason. • The landlord may give three days notice for the following: non-payment of rent, gang activity, unauthorized pets, an unauthorized roommate, destruction or removal of property on premises, potential to destroy property or if neighboring tenants may be injured.
Additional resources For additional information on rental rights, visit the OffCampus Renter Center (umt.edu/rentercenter), ASUM Legal Services (for students only umt.edu/asum/l e g a l services), or Montana Legal Services Association (mtlsa.org). B Beki Hartmann is the director of the ASUM Off-Campus Renter Center. The information provided here is for educational use only and should not be used to replace legal advice.
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Housing 2012 by Missoula Organization of REALTORS • photos by Chad Harder
Introduction
would like to thank the Missoula Independent for their efforts in making that happen. Our overall purpose in devoting the many hours required to produce this report is to provide a comprehensive, credible, and neutral picture of Missoula housing that can be used as a tool by community members and policy makers as they seek to serve Missoula’s needs. “Neutral” indicates our intent to provide accurate and unbiased data related to housing. Neutrality is important, because issues of housing, land use, and growth may be unsurpassed in their ability to elicit
The “Missoula Housing Report” was started in 2006 by the Missoula Organization of REALTORS® and has developed further each year. This year we are again excited to partner with the Missoula Independent to create and distribute the condensed version of the full housing report (which is available at missoularealestate.com under “market trends”). We see this as a great opportunity given the current economic position of our country to provide as much information as possible regarding the local market, and 44 Missoula Independent Homesteader 2012
argument and emotion. While we recognize that there is nothing wrong with argument and emotion, we strongly believe that they require a founding in fact and reason. That’s what this report attempts to provide. With great respect for the land we all call home, and for the entire Missoula community that shares that land, we invite you to read this report and get involved in meeting the housing needs of our community. We hope that by providing this report, we will trigger discussions and actions that will further contribute to a shared community vision and leave a positive legacy for future generations of Missoulians.
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2011 marks the first uptick in median sales price since 2007.
Housing Sales and Prices Sales of existing homes in the Missoula area in 2011 declined in number sold and increased in median sales price. Homes sold in Missoula decreased by 3%, with 877 sales in 2011, down from 903 in 2010. The median price of the homes sold in 2011 increased by 2%. The median sales price gain reversed three consecutive years of decline, a period in which prices dropped by a cumulative 9%. Quarterly sales of homes show same-quarter declines in the first two quarters of 2011 and increases in the final two quarters, perhaps indicating a strengthening of the local housing market. Importantly, however, median sales price in 2011’s fourth quarter was significantly lower than 2010’s fourth quarter, even while sales prices increased from quarter to quarter throughout 2011.
Housing Supply: Development and Occupancy The complex dynamics of the housing market begin literally at ground level: with land. Sales of empty lots in 2011 were higher in number of sales but down by 23% in median sale price, compared with prior year sales. Price of sales can be misleading, however, because lot sizes are not reported. Average lot size is thought to be declining in recent years, owing to purchases of land for new subdivisions that offer smaller lots than those of 2006 and earlier. Building permits issued by the City of Missoula in 2011 increased by 65% over the 2010 number. This gain was entirely accounted for in multi-family construction, as singlefamily permits declined for the sixth consecutive year. Single-family permits for 2011 stood 82% below their high year of 2005. In contrast, multi-family permits increased to their highest level in eight years; many of which were issued for lowincome housing projects. Homesteader 2012
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A Student Renters' Advocacy Organization Providing • Counseling for students experiencing issues with their landlord • The new Neighborhood Ambassador program • The online Housing Finder • Educational programming on rights and responsibilities
LOOKING FOR HOUSING? LOOKING TO POST YOUR RENTAL?
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Missoula County building permits in 2011 decreased sharply across all housing types. Single-family housing permits have decreased every year since 2007, standing in 2011 at 85% below the 2007 level. The State of the Nation’s Housing 2011, a yearly release from the Joint Center for Housing Studies of Harvard University, reported a small increase in single-family permits from 2009 to 2010 (the most recent data available) “and substantially larger 10.9% gain in multi-family permits,” consistent with recent activity in the Missoula housing market. The national increase, however, was from a level of permit issuance from 2009 that was the lowest ever recorded.
Rental Occupancy Rentals are an important segment of any housing market, but are especially vital in a university town such as Missoula, where a significant number of students create greater demand for rental housing. Surveys show that Missoula’s rental market share is larger (vs. the owner-occu-
pied housing market) than the rental market share in Montana or the U.S. About half of rental units in the Missoula market area are owner managed. While comprehensive statistics on all rental units are not routinely gathered, the Western Montana Chapter of the National Association of Residential Property Managers (NARPM) gathers monthly information from its member property management firms regarding vacancy rate and rental rates for the units they manage. A normal vacancy rate for a healthy rental market in the U.S. is in the range of 4% to 6%. (Vacant units are defined as currently unoccupied and ready to rent.) Missoula often has a lower rate, probably because our university population exerts continuing product demand. Recently, however, the national vacancy rate has dropped closer to Missoula’s rate, likely owing to households losing their owned homes or failing to meet toughened standards for mortgage loan qualification. Harvard’s State of the Nation’s Housing 2011 noted that the national
Missoula home sales declined in number in 2011, but registered a small increase in median price. 46
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rental vacancy rate at year-end 2010 stood at 9.4% — “the lowest quarterly posting since early 2003.�
Housing Demand: Population, Income and Poverty Of the various factors that influence demand for housing, population change often exerts the greatest impact. Population in Missoula County grew 14% between 2000 and 2010. It passed 100,000 persons in 2004. Neighborhoods registering growth were Frenchtown and Clinton, due to boundary changes as well as real growth. Population can increase or decrease by two mechanisms: natural (the net of births and deaths) and migration (the net of people moving in and moving out).
The number of homes sold in 2011 was down 45% from the decade-high year of 2006.
From these data, we can see that in most years, of the approximately 6,000 persons who moved to Missoula County each year, two-thirds moved from another state and onethird from other Montana counties. About 5,500 people
annually have moved out of the county in recent years, with just under two-thirds relocating out of state and more than onethird settling in another Montana county. Subtracting out-migration from in-migration yields net
migration; for many years Missoula County gained population annually through net migration. Net migration of out-of-state migrants was strongly positive between 1992 and 1996. A change in migration trends occurred in 2007,
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when more people moved to Missoula County from Ravalli County than the other direction for the first time in two decades. In recent years, corresponding to the national recession and its aftermath, net migration has usually been less than 500, with a noticeable upturn in the four years through 2009, but a substantial decline in 2010. The types and prices of houses demanded by consumers are determined largely by whether would-be buyers are employed and, if they are, how much they earn in their jobs. Housing affordability for a population in any jurisdiction—city, county, state, or 48
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country—is principally a function of only four numbers: income, wealth, mortgage rates, and home prices. Harvard’s State of the Nation’s Housing 2011 observes, “Income and wealth influence household formation decisions, the quality and size of homes demanded, and the share of income allocated to housing.” Average working families can only afford the monthly mortgage cost of homes if their incomes are sufficient. Median household income in Missoula County is about the same level as the state number. Median income of Missoula County households that live in their own home is higher than
Montana but renters’ median income is lower, reflecting the county’s substantial college student population. The Census Bureau computes so-called “poverty thresholds” each year—thresholds commonly known as the Federal Poverty Level. Poverty thresholds vary by The number of homes sold in various price ranges has demonstrated no discernible pattern over the past three years. the number of persons in the household and (for Comparative Trends than half the 700,000-per-year one and two-person houserate that economists equate in Home Prices holds) by age. The U.S. Department of with healthy markets. But a Almost 20% of Missoula Commerce reported that only pickup in sales at the end of households live under the Federal Poverty Level, compared with 15% 304,000 new homes were sold 2011 prompted some expert of Montana households. in 2011, the fewest on record forecasts that the housing mardating back to 1963, and less ket is starting to revive.
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According to the National Association of REALTORS® (NAR), existing-home sales in 2011 numbered 4.26 million, a decline of 13% from 4.91 million existing homes sold in 2010. Median sales price of existing homes in 2011, NAR reported, was $166,000, a decline of 3% from 2010’s median of $172,000. The decline in home prices has been much steeper nationwide than in Missoula. While prices nationally have fallen by about 33% since their peak in 2006, Missoula median prices dropped by 7% from their peak in 2007 through 2011.
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Pace of Home Sales One of two common measures of housing market vitality is days on market (DOM). After a decline in DOM from 2009 to 2010, DOM in 2011 increased to about their level of 2009. A second housing vitality indicator is the absorption rate. It is measured by dividing the total number of sales for the year by 12, then dividing that resulting number into the number of active listings, which yields the number of months that will likely be required to work through the listed inventory. A result greater than six months is generally defined as a buyer’s market. The national absorption rate exceeded six months through-
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Median prices increased for the first time in three years in 2011.
out 2011 and the rate for Missoula, as in the past, consistently exceeds the national rate. The month-to-month absorption rate for Missoula in 2011 shows a typical pattern for our market: lengthiest absorption in the year’s early months, shortest in summer and early fall months, and lengthening again at yearend.
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Housing Finance Looking back at the outlook for 2011 many factors that are important to the mortgage market came into play. Although mortgage rates have been at record lows, high levels of unemployment and weak income prospects are likely precluding many households from purchasing homes.
Economic conditions have, and will continue to have, an impact on the housing market. Consumer confidence and lending conditions gradually began to improve in 2011, but not to levels that significantly boosted the housing market. Many households have been unable to buy homes because mortgage credit conditions are tighter than they were before the recession. Some tightening was appropriate, but today’s extraordinarily tight standards partly reflect new obstacles that inhibit lending even to creditworthy borrowers. The tightening in mortgage credit can be seen in the increase of credit scores associated with newly originated conventional and Federal Housing
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NATE SANDERS, Agent
In 2011, days on market increased to the approximate level of 2009.
Administration (FHA) mortgage originations, which suggest that borrowers who likely had access to mortgage credit a few years ago are now essentially excluded from the mortgage market. Mortgage fraud continues to be at the top of list of concerns for all segments of the housing industry. Mortgage fraud dates back several years, but the current cycle actually began in the mid-1990s. Identity theft, appraisal fraud, income and employment misrepresentations, occupancy fraud, and flipping are among the most common. Not since the early 1950s or before have mortgage rates been at the low levels of 2011. These rates continued to provide strong support for the housing market, while other forces prevented a housing recovery that one would expect with mortgage rates under 4%.
Impacts of Mortgage Insurance Mortgage insurance premiums, whether upfront, financed, or paid monthly, are required on all conventional loans when the first mortgage balance exceeds 80%. The premiums that are required are determined by the initial loan
825 W Spruce Street Ste A Missoula, MT 59802 406-721-5050 nate.sanders.ujms@statefarm.com
to value, the borrower’s credit scores, and occupancy. If a borrower is required to pay PMI (Private Mortgage Insurance), it can affect the affordability of home ownership. FHA charges an upfront mortgage insurance premium, which is typically financed, and a monthly premium as well. Rural Development (RD) charges an upfront guarantee fee and a monthly premium. Although Veterans Affairs (VA) does not charge a monthly premium they do charge a VA funding fee, which is typically financed like the FHA Upfront Premium and the RD Guarantee Fee.
Down Payments Down payments are similar with most loan program types, including FHA and conventional loan products, as they have been in the past. FHA remains at a minimum requirement of 3.5% down, while some conventional products are being offered with 3% down. But the typical down payment would be a minimum of 5% or more. Some government programs designed to help save homeowners from foreclosure were only moderately successful. With the economy gaining strength, the number of new entrants into modifications of
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existing mortgages decreased. New modification programs are being introduced in early 2012. The impact of the Consumer Finance Protection Bureau (CFPB) was an overhaul of mortgage products, processes, and disclosures. The CFPB’s main purpose is to simplify forms that consumers review and sign in the home purchase process. In 2009 the Home Valuation Code of Conduct was put into place, barring loan originators from selecting appraisers. Under the DoddFrank Act, appraisal standards were created to further address appraiser independence and to prohibit lenders from directly or indirectly exerting influence over appraisals. Reverse mortgages that were introduced in the 1980s and 1990s to help seniors stay in their homes have been on a steady decline since September 2008 when the housing meltdown began. It is not likely that they will completely disappear, but in the past year several of the large mortgage lenders have discontinued offering reverse mortgages.
VA home loans have been and will continue to become more popular as service men and women return from active duty. VA has similar credit score requirements that mirror other products, but also considers residual or disposable income of a potential borrower. It’s popular because it’s one program that still allows 100% financing. The Montana Board of Housing (MBOH) introduced a Montana veterans’ home loan program with a belowmarket interest rate for a 30year fixed-rate loan. Specific qualifications are required by the new program.
Foreclosures and Short Sales Net foreclosures in 2011 reached their lowest level in three years. While foreclosures are still at levels that are high for the Missoula market, they have declined by 46% over the past two years—giving some evidence that the long awaited “clearing” of foreclosures may be underway. Historically, foreclosures
Notices of foreclosure and net foreclosures dropped significantly in 2011. 52
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have been relatively rare in the Missoula market, amounting to well below 0.5% of the total owner-occupied stock. In contrast, according to the NAR, more than one-third of all U.S. existing home sales in 2009— about 1.8 million units—were short sales or foreclosures. Montana has one of the lowest foreclosure and mortgage delinquency rates in the U.S. Only Nebraska, Alaska, Wyoming, and the Dakotas reported rates as low or lower than Montana, with exact rankings depending on how foreclosure and delinquency are measured. Nationally, according to online foreclosure marketer
Days on market in Missoula’s neighborhoods showed as many increases as decreases, with Grant Creek experiencing the greatest change.
RealtyTrac, a total of 2.7 million foreclosure filings — default notices, scheduled auctions and bank repossessions—were reported on 1.9 million U.S. properties in 2011, a decrease
of 34% from 2010. Total 2011 foreclosure filings represent about one in 69 U.S. properties—the lowest foreclosure rate since 2007. December 2011 foreclosure activity,
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according to RealtyTrac, stood at its lowest level in 49 months. Short sales, in which the mortgage lender accepts proceeds from a sale for less than the total amount due on a
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Days on market and median sale price for short sales typically exceed those measures for bank-owned foreclosure, as most homeowners are generally more willing to wait for higher buyer offers.
home, are not a common device in our market. In 2011, Missoula’s short sales numbered 32, just one more short sale for the entire year than were recorded in only the last half of 2010. Banks control foreclosures and they proceed much faster. The reason short sales stay on the market and sell for more than foreclosures is that short sales are still owned by the individual homeowner who is negotiating with the lien holder to sell for less than is owed. This is an extremely cumbersome, difficult, and broken system, with the lien holder trying to maximize the sales price. In a foreclosure sale the lien holder owns the property and is more interested in a quick and easy sale than a maximum price and is not encumbered by the short sale system.
Home Ownership Programs Fannie Mae and Freddie Mac—the so-called Government-Sponsored Enterprises (GSEs)—were and continue to be on the top of the list. We have often asked: Where would the mortgage market be without them? They continue to be 54
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a key support for many homebuyers and homeowners. In a fragile market, making substantial changes could have unwelcome challenges and consequences. The ultimate fates of Fannie Mae and Freddie Mac remain to be seen. The FHA increased the Annual Mortgage Insurance Premiums for all loans after April 18, 2011. The premium for 2011 Upfront Mortgage Insurance Premium (UFMIP) is 1% and 1.15% for Annual Insurance premium for mortgages that have a 95% or higher loan to value. On December 23, 2011, President Obama signed into law the Temporary Payroll Tax Cut Confirmation Act of 2011. Among its provisions, this new law directs the Federal Housing Finance Agency (FHFA) to increase guarantee fees charged by Fannie and Freddie by no less than 1% from the average guarantee fees charged by these companies in 2011 on single-family mortgage-backed securities. Fannie and Freddie announced to their seller-servicers that, effective April 1, 2012, the guarantee fee on all single-family residential mort-
gages shall increase by 1%. This could have a negative effect on interest rates available for mortgage loans in the future. RD loans have been popular in the past to promote home ownership outside the City of Missoula in the county and areas specifically targeted by RD. RD announced in March 2011 that it was decreasing the up-front guarantee fee for purchase loans from 3.5% to 2% of the loan amount. Effective on or after October 1, 2011, RD also implemented a new 0.3% annual fee on all loans.
Housing Affordability and Its Determinants The Housing Affordability Index (HAI) is a comparison of the median price of a home and the median income of households in the community (as discussed earlier in this report) and how these factors are affected by mortgage interest rates. The HAI also includes estimation of taxes and homeowners insurance. The HAI is a way to indicate what the housing numbers mean to consumers who want to purchase in the local market. It reflects the fact that housing prices, interest rates, terms of loans, and amounts of down payments all affect a homeowner’s ability to purchase a home. An affordability index of 100% indicates that, given all the factors that affect ability to purchase, a family with a median income has the income necessary to purchase a median priced home.
The NAR uses the HAI to quantify housing affordability. To figure the affordability of the payment, it’s assumed that 25% of monthly income would go toward the mortgage payment. In 2011, the income needed for a HAI of 100% in Missoula is $54,384, which means a family whose income is at that level could afford a median priced home (or any home priced lower than the median). The HAI shows that a oneperson household has approximately 76% of the amount of income needed to purchase a home priced at the 2011 median sale price. The HAI shows that increases in median home prices significantly outstripped increases in median family incomes from 2002 through 2007. Then, consistent with bursting of the housing bubble, home prices lost value for three years. For home-buying households of less than four persons, the 2011 increase in home prices was slightly more than offset by lower mortgage interest rates, thus making homes slightly more affordable than in 2010. But “more” affordable doesn’t entail widespread affordability. Those families and individuals who were at the cusp of affordability two or more years ago may since have been able to buy at today’s moderated prices. But for far more of those who wish to buy a first or move-up home, incomes remain below thresholds of affordability. For example, a four-person family at the median Missoula Homesteader 2012
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income ($59,100) had 101% of the income required to qualify to purchase a median priced home (at $205,000). But families of this size at the median income are the only ones for whom the purchase of a median-priced home would be affordable in 2011. Families of one, two, or three persons with median incomes would still be unable, as in every year of the past decade, to qualify for purchase of a median-priced home. Nationally, according to State of the Nation’s Housing 2011, homebuyer affordability improved markedly in 2010, “as the median home price fell to about 3.4 times the median household income, the lowest level since 1995.â€? According to the NAR affordability index, home price affordability was at an all-time high in the fourth quarter of 2010. However, State of the Nation’s Housing 2011 cautions that improved affordability can be acted on “only for those households well-positioned enough to obtain mortgages‌Recent buyers are thus limited to households with high enough wealth and income to qualify for loans or pay cash.â€?
Share of Income Spent on Housing Experts and professionals in real estate and financial planning generally agree that no more than 30% (and, more safely, 25%) of a family’s gross monthly income should be spent on housing. Data shows
that a significant percentage of households, divided into four age groups, spend more than the recommended maximum 30% of income on housing. About one in three homeowners in Missoula County pay more than 30% of their gross income for housing. The problem is especially acute for homeowners between the ages of 14 and 24: More than 40% exceed the affordability threshold. Renters in general pay an even greater share of their gross incomes on housing. Half of renters spend more the 30% of their income on housing. More than 70% of younger renters, many of whom are students, pay more than 30% of their income in rent. Fewer homeowners in the upper two age groups are burdened with excessive payments. This is attributable in part to members of the older generations having purchased their homes before prices began their steep advance in the 1990s and 2000s, with many of them having paid down most or all of their mortgages. Harvard’s State of the Nation’s Housing 2011 notes that, “while lowest-income households are most likely to have severe housing cost burdens, the problem has moved up the income scale. Among households with real incomes under $15,000, 66.4% were severely burdened in 2009—an increase of 4.8 percentage points from 2001. But shares among households with incomes in the $15,000 to $30,000 range were also up 6.6 percentage points
over the decade, to 27.7%. Households with incomes of $30,000 to $45,000 saw a 4.2 percentage point increase, bringing the severely cost-burdened share to 11.5%.” State of the Nation’s Housing 2011 adds, “With their generally lower incomes, renters are more than twice as likely as owners to pay more than half their incomes for housing, but shares of both groups rose substantially between 2001 and 2009.”
Conclusion and Outlook Today, both a pessimist and an optimist could find persuasive indicators to satisfy their outlooks for the Missoula housing market.
In all age categories but one, Missoula County homeowners and renters spend more than 30% of income on housing. Only homeowners age 65 and over spend less.
The pessimist might cite data indicating a continuation of the downturn, such as the stilldeclining annual number of existing home sales, the now six-
year slide in the number of building permits issued by the City of Missoula, the persistently high county unemployment rate, and continuing declines in
inflation-adjusted income. The optimist might counter by pointing to data giving hints that a meaningful recovery in the local housing market and the
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overall economy may at last take hold, such as the year-long 2011 increase in median sale prices of existing homes, an all-time historic low in mortgage interest rates, signs of a clearing from the home sales market of foreclosures and short sales, and late2011 plus early-2012 declines in unemployment at all levels— local, state, and national. Clearly, the data send mixed signals. But that, in itself, is a hopeful sign, as the past three of our annual reports to the community, for 2009 through 2011, contained very little data supporting an optimist’s perspective on the near-term future. Today, for example, much more so than in recent years, we can have greater confidence that our housing market, as well as our overall economy, is likely to escape a ruinous “double-dip” downturn. Which is not to say that we are free of grave concerns—perhaps most prominently, affordability of decent housing. While our local housing market, like the national market, has seen several years of increasing affordability, the impact of those gains in Missoula has been much weaker than in the U.S. as a whole. In this regard, the local rental market is especially worrisome. Rental prices, both in our region and nationally, have firmed considerably over the past year. Though the increase is moderate, it exceeds the inflation rate, while income gains have lagged the inflation rate. And in this time of severely strained government budgets, prospects for increased assistance from public pro58
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grams—locally, statewide, or nationally—are at best dim and at worst nil. Harvard’s State of the Nation’s Housing 2011 observes that “income gains have lagged housing costs for decades for an increasing share of renter households, and affordability pressures are making their way up the income scale. Rising demand is already pushing rents higher while stubbornly high unemployment is keeping the lid on wage increases. If these trends continue, affordability problems will worsen as the economy recovers.” Concerning that economic recovery, one of the few certainties the data provide is that it is the weakest ever experienced—in no small measure owing to the absence of a pronounced turnaround in housing. For most Americans, the Great Recession’s officially declared end-date of June 2009 seems ludicrous. Experts at the national and local levels have been confounded by the feebleness of recovery. Billionaire investment guru Warren Buffett admitted in February 2012 that he was “dead wrong” in his 2011 forecast that the U.S. housing market would begin to recover by now. In the same month, Patrick M. Barkey, director of the Bureau of Business and Economic Research (BBER) at the University of Montana, said that Montana's economic recovery “remains stuck at the starting gate,” citing data showing that the state's economy actually slowed down in 2011 after having grown in 2010.
Nonetheless, our consensus opinion remains, as in the past, that the Missoula market has telling advantages that help us cope better in these difficult times. One of these is the lesser severity of decline locally versus nationally, in the overall economy generally and in the housing market specifically. Another advantage is that Missoulians are resilient and pragmatic people: When confronted with challenges such as those of recent years, we collectively roll up our sleeves and say, “Let’s make things better.” In 2011, particularly its final months, and early 2012, we began to see signs of success in that effort. With your help, those signs will proliferate this year and beyond.
Coordinating Committee and Contributing Resources
• Collin Bangs • Sheila Lund • Tom Chapman • Jim Sylvester • Jim McGrath • Ruth Link • Amy Jo Fisher • Bureau of Business and Economic Research UM • First Security Bank • Missoula Housing Authority • Missoula Organization of REALTORS® • Western Montana Chapter of National Association of Residential Property Managers
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