The number of houses sold so far this year is down 26 percent compared to the same time last year, and has dropped more than 35 percent from the housing market's peak in 2006, according to statistics provided by the Missoula Organization of Realtors.
August sales plummeted more than 40 percent from the same month last year, and the price of homes sold tipped downward compared with figures for the same month last year. Last month, the median price of homes sold in Missoula dropped $13,400 compared with August 2007 - and was down $12,000 compared to July of this year.
“Your sales today will be terrible, but tomorrow they will be double,” he said.
But a 26 percent decline in sales for the year to date is attention-grabbing, he said.
Housing starts - the number of new houses being built in Missoula - are also down this year from last. Through August this year, 146 building permits have been issued by the city for single-family homes, according to the city's Web site. That's down 33 percent from last year, when 219 permits were issued over the same period.
Barkey said Montana's housing market has lagged behind the rest of the country, so the sales decline started late.
“What you find is that the big boom in construction in Montana only came to an end in the spring of last year,” Barkey said. “We kept strong as the rest of the country went flat.”
But then the state's market reached a plateau, he said. “In the last couple of months, we have seen a decline in Montana.”
Barkey said housing markets are essentially local, so different parts of the state have differing fortunes.
Gallatin County started its decline a year before the rest of the state, he said, while in some places where house prices never really ballooned, such as Billings, the market is still growing.
Missoula County as a whole is experiencing the same trends as Missoula city, with a slightly larger trend downward. Home sales have dropped by a little more than 26 percent for this year to date compared with last and about 37 percent compared with 2006.
Missoula is not expected to see the extreme crash experienced by the rest of the country. Montana has a strong economy, which helps to maintain a strong housing market, Barkey said. Any decline in the housing market can really be boiled down to demand, he said, and Montana doesn't have the declines in demand seen in places such as Nevada or Florida.
Ruth Link, public affairs director for the Missoula Organization of Realtors, said essentially the same thing: Missoula's bubble wasn't as big, but what happens in other parts of the country will have an effect on the market here.
She said a lot of retirees who want to move to Missoula and buy a home have to wait to sell their homes in places where the market has nose-dived.
“In Missoula, we didn't have the bubble. We had a little hill,” she said. She also said that although Missoula's market is contracting, it is still right where it should be in the 10-year trend.
“In 2006, 2007, those were record-breaking years,” she said, with “percentages we don't normally see.”
Sales are at a five-year low, according to statistics Link provided, but the median price for houses sold in Missoula is still way up, almost $40,000 above the numbers for 2004.
Lower sales have led to a tighter rental market, Link said, as potential homebuyers' confidence wanes.
“I think people are waiting to get into homes,” she said.
Another factor that bodes well for Montana's future is that the subprime mortgage lending practices were not as prevalent here as in other parts of the country.
Susan Liane, president of the Missoula Organization of Realtors, said that's why Montana ranks 43rd for foreclosure rates.
“We just have better practices,” Liane said. “We have financial institutions and lenders that are basically doing a very good job, a good job advising people.”
Missoulian intern Mark Page can be reached at 523-5259 or at mark.page@missoulian.com.
See for yourself
For the latest statistics on the Missoula housing market go to www.missoularealestate.com and click on “Market Trends.”
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Kasey wrote on Sep 22, 2008 11:31 AM:
" Last week on the Missoulian’s business page was a national map showing how much various housing markets are overvalued. Missoula was in the “moderately overvalued—15-35%.” category. You can go to the Global Insight home page to have to the report emailed to you. It’s free. http://www.globalinsight.com/Highlight/HighlightDetail2350.htm
Here’s the detail for Missoula:
2004 median house price $189K, 13% overvalued
2005 median price $207K, 17% overvalued
2006 median price $227K, 22.% overvalued
2007 median price $243K, 25% overvalued
2008 median price $241K, 20% overvalued
Another part of the report ranks metropolitan areas by overvaluation. Missoula is #26 in the nation. So much for the realtor mantra of “we will not suffer as much as other areas.” We may have a low foreclosure rate now, but in a few months when everyone else is through the downturn, our ranking will probably be higher.
Many of the areas that are more overvalued that Missoula are also “commuter paradises” in the West, like:
Bend, OR—overvalued 47%
St. George, UT—overvalued 36%
Boise, ID—overvalued 25%
Spokane, WA—overvalued 24%
Grand Junction, CO—overvalued 23%
Since Global Insight correctly predicted the first markets to crash, it is probably going to be right about these as well.
These valuations are based on OFHEO data plus interest rates, household incomes, etc. "
Here’s the detail for Missoula:
2004 median house price $189K, 13% overvalued
2005 median price $207K, 17% overvalued
2006 median price $227K, 22.% overvalued
2007 median price $243K, 25% overvalued
2008 median price $241K, 20% overvalued
Another part of the report ranks metropolitan areas by overvaluation. Missoula is #26 in the nation. So much for the realtor mantra of “we will not suffer as much as other areas.” We may have a low foreclosure rate now, but in a few months when everyone else is through the downturn, our ranking will probably be higher.
Many of the areas that are more overvalued that Missoula are also “commuter paradises” in the West, like:
Bend, OR—overvalued 47%
St. George, UT—overvalued 36%
Boise, ID—overvalued 25%
Spokane, WA—overvalued 24%
Grand Junction, CO—overvalued 23%
Since Global Insight correctly predicted the first markets to crash, it is probably going to be right about these as well.
These valuations are based on OFHEO data plus interest rates, household incomes, etc. "
kasey wrote on Sep 22, 2008 11:44 AM:
" I forgot to say that Missoula's 26th most overvalued ranking is of 330 metro areas (!) and places us ahead of Seattle, which is 19% overvalued. "
John Mills wrote on Sep 22, 2008 3:52 PM:
" Regardless of all the statistics, when the average working person can no longer afford an "over-priced" home, guess what happens? Let us keep this simple macro-economics and in Montana's case, micro-economics... "
Brint Wahlberg wrote on Sep 23, 2008 8:28 AM:
" Kasey, Those median values you're posting are way off. Missoula's median sales price value is not that high. That's more like average sales price data. Data in the state of Montana is limited b/c we're a non-disclosure state, so sales data is not public record. Those websites are simply guessing.
The median sales price in the Missoula valley according to what I pulled up in the MLS for 2007 was $215,000.
The YTD median sales price for 2008, again according to our MLS is again, $215,000. "
The median sales price in the Missoula valley according to what I pulled up in the MLS for 2007 was $215,000.
The YTD median sales price for 2008, again according to our MLS is again, $215,000. "
Shannon Hilliard wrote on Sep 23, 2008 2:41 PM:
" Kasey,
Yes, the YTD median home price is down for the year according to the MOR statistics. However, when you say that "each month since last April, MOR has shown declines in the median price" you may be overlooking July.
The median price of a home sold in July of this year was $10,500 higher than the median price of homes sold in July of 2007. Another example of why month by month comparisons aren't a great statistic to use for establishing trends. John makes a great point regarding the overall picture. Interesting discussion. It is also interesting to note that the paper chose to highlight the more dramatic difference in median price from August of last year to August of this year, rather than looking at the MOR report that shows the median price is down $700 YTD over last year. Fear sells newspapers, and that figure just isn't scary enough. "
Yes, the YTD median home price is down for the year according to the MOR statistics. However, when you say that "each month since last April, MOR has shown declines in the median price" you may be overlooking July.
The median price of a home sold in July of this year was $10,500 higher than the median price of homes sold in July of 2007. Another example of why month by month comparisons aren't a great statistic to use for establishing trends. John makes a great point regarding the overall picture. Interesting discussion. It is also interesting to note that the paper chose to highlight the more dramatic difference in median price from August of last year to August of this year, rather than looking at the MOR report that shows the median price is down $700 YTD over last year. Fear sells newspapers, and that figure just isn't scary enough. "
Kasey wrote on Sep 23, 2008 8:36 PM:
" John, you are so right about those basic affordability issues.
Brian, the data is from the Office of Federal Housing Enterprise Oversight. It includes only single family homes and covers all of Missoula County. In addition, it is based on "conforming, conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac." This information must be turned over to OFHEO, regardless of state law. The same data has accurately predicted market trends all over the US. You can read more about the data here. http://www.ofheo.gov/hpi.aspx?Nav=60
Shannon, I think the Missoulian was right to print the info about the August price decline. Sure, it could have printed the info about the whole year, too. The more info the better. That was my point. The fact that median prices have declined for several months is significant and shows that Missoula is being affected by the national downturn.
Another great statistic to think about is inventory. According to the Missoula Org of Realtors, on 9/5/08, there were 1018 houses and condos on the market in Missoula City. In August, just 90 houses and condos sold in Missoula. 1018 divided by 90 = 11 months of inventory, which is pretty standard nationally at this point. The normal is 3-6 months of inventory. 11 months is twice the norm. No wonder prices are falling. "
Brian, the data is from the Office of Federal Housing Enterprise Oversight. It includes only single family homes and covers all of Missoula County. In addition, it is based on "conforming, conventional mortgages purchased or securitized by Fannie Mae or Freddie Mac." This information must be turned over to OFHEO, regardless of state law. The same data has accurately predicted market trends all over the US. You can read more about the data here. http://www.ofheo.gov/hpi.aspx?Nav=60
Shannon, I think the Missoulian was right to print the info about the August price decline. Sure, it could have printed the info about the whole year, too. The more info the better. That was my point. The fact that median prices have declined for several months is significant and shows that Missoula is being affected by the national downturn.
Another great statistic to think about is inventory. According to the Missoula Org of Realtors, on 9/5/08, there were 1018 houses and condos on the market in Missoula City. In August, just 90 houses and condos sold in Missoula. 1018 divided by 90 = 11 months of inventory, which is pretty standard nationally at this point. The normal is 3-6 months of inventory. 11 months is twice the norm. No wonder prices are falling. "
justin wrote on Sep 29, 2008 11:48 PM:
" Missoula needs new jobs, not new homes. Do something of value with the Stimson Lumber mill site. Bring in high-paying jobs, in manufacturing or new green-tech. That site brought prosperity to the area, it's time to do it again. It's time for area planners to consult knowledgeable economic experts for long-term growth. Stop selling out Montana for a quick buck in real estate. "
Kasey wrote on Oct 7, 2008 11:44 AM:
" Last month in Missoula, there were 11 months of inventory (residential + condos). As of October 6, there were 13 months -- and that's after a purge of the MLS listings at the end of September. http://www.missoularealestate.com/index.php/fuseaction/market.main/ID/0d95f240
Don't miss the terrific new video on the Billings and Southern Montana housing market (including Big Sky) at http://www.topoimagery.com/billings/ "
Don't miss the terrific new video on the Billings and Southern Montana housing market (including Big Sky) at http://www.topoimagery.com/billings/ "
Kasey wrote on Sep 22, 2008 10:45 AM:
The article also implies that the housing crisis is completely due to subprime loans. In fact, people with prime loans all over the US are in trouble now because they can't afford their payments. This is going to be especially problematic in Missoula, because house prices are so out of line with incomes (see the State of Missoula Housing Report, posted on the MOR site).
As prices fall elsewhere in the US, no one is going to want to pay 2006 prices for a house in Missoula. Why do that when you can pay 2002 or 2003 prices for a house in Sonoma or Miami or Portland -- especially when it takes so much gas to get here and when there are so few good-paying jobs? "