But the longtime real estate agent with Hamilton's Exit Realty couldn't have predicted then just how far it would fall.
At that time, there was no way to foretell the collapse of the country's credit market, or all the foreclosures, or the general downturn of the economy. His hunch focused on the simple fact that escalating property prices had outpaced the earning power of valley folk.
The harbinger in Siphers' mind occurred between 2006 and 2007, when sales of residential property on acreage in the Bitterroot Valley dropped by about $20 million.
“Sales in 2007 were definitely way down,” he said. “There were a lot of people who didn't want to talk about it.”
That trend has continued.
Siphers' monthly newsletter said the market has been down roughly 50 percent in dollar volume and units in 2008 from the previous year.
Sales of residential properties with acreage fell from 379 units in 2007 to 221 units in 2008. During the same period, the dollar volume of real estate sales fell from $144.6 million to about $75 million, according to the newsletter.
Year-end figures tallied by Lambros Real Estate show a similar trend.
“We were about 44 percent down overall,” said Cheryl Smith of the Lambros office in Hamilton.
In 2007, there were 1,038 sales recorded in the Bitterroot Multiple Listing Service. In 2008, that number dropped to 583.
“I think we all had to see it on paper to believe it,” she said. “It's quite a change. We've had 10 to 12, maybe even 15 years of appreciation on real estate here. ... There are some agents who have not even seen a declining market before.”
Smith's family has seen it all. A fifth-generation Bitterrooter, Smith's grandfather opened one of the first real estate businesses in the valley back in 1947.
“Back then, you couldn't make your living just in real estate,” she said. “He did a multitude of different things. He ran an auction, sold horses, whatever it took.”
Selling real estate has been lucrative over the past decade or so, and quite a few people jumped on board.
Smith said there are about 300 licensed Realtors in the Bitterroot.
“Essentially, the pie is split pretty thin right now,” she said. “Ten percent of Realtors sell 90 percent of the property.”
Over the past decade, Smith said, it was common for Bitterroot real estate to appreciate 3 percent to 4 percent in a year. In the best years, prices increased by as much as 8 percent.
“What really happened was land prices tripled in value,” she said. “Sure, building and lumber prices increased some, but the largest increases came with land prices. ... There was a scarcity of land here and that drove prices up.”
Those days appear to be over - at least for a while.
The market for bare land has dropped dramatically, Smith said.
“Right now there's not that many people out there willing to buy bare land,” she said. “As a result, that market has seriously slowed down.”
As additional subdivisions complete the permitting process, Smith said, new inventory could drive prices down even more.
“It's a matter of supply and demand,” she said. “Increasing supply will affect those values.”
The recent drop in interest rates could lead to even more homes on market. After some homeowners learn they don't qualify for refinancing, some will opt to sell, said Merle Unruh, broker and owner of Montana Westgate Realty.
“A refinancing cycle is often followed by a selling cycle,” he said.
Right now, Unruh said potential buyers are being cautious.
“Across the board, it seems that people are waiting and watching,” Unruh said. “Some are not quite sure for what.”
The majority of the home sales last year occurred in what Smith likes to call the “Two-and-a-Quarter Club.”
“The largest number of sales occurred in that $225,000 or less category,” she said.
Smith thinks that's a trend that will continue as people look to downsize both for convenience and energy savings.
“Green things are cool,” she said. “I think we'll continue to see a tendency for people to look for something smaller.”
That's quite a change from just a few years back.
“It wasn't that long ago that people wouldn't bat an eye at spending a half-million (dollars) on a home,” she said. “They'd sold their home somewhere else and thought we were a smoking deal.”
As real estate markets in other areas of the country slow, that's not happening as much now.
“Other places in the country fuel our market,” Smith said. “If people can't sell their home, then they can't move here.”
So far, the current low interest rates haven't resulted in a new rush on real estate.
“People are scared,” she said. “You can't buy a house if you don't have a job. ... Some people are thinking the market may go down even a little bit more and they're waiting to see what will happen.
Smith said it's taken some time for people to fully appreciate the change in the market.
“Everyone has been taking it for granted that real estate would continue to appreciate here,” she said. “It's been a slow market to figure out that it's slow. ... All markets are cyclical. All bubbles burst. The Bitterroot is still going to be a destination. People will save their entire lives to move here.”
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letitdrop wrote on Jan 12, 2009 9:44 AM:
" After the financial beating the industry and sellers have been inflicting on the first time low end buyers for the last 15 years, I really have no sympathy if they all go broke.
In Missoula people continue to ask outragous prices for what are entry level first time buyer homes especially in and around the university areas, so greed lives on, even if in desperation.
Nothing will fix the housing market faster than simply having the prices dropped down to match what people can comfortably afford, there's your 'affordable housing'. Missoula housing is still over priced by two to three times when considering personal incomes...dah no wonder there're not selling.
I for one would buy a house tomorrow,
but not at the current prices, I'd just be giving someone else 100k-150 dollars ON TOP of a fair price just for their profit - sorry find another sucker. "
In Missoula people continue to ask outragous prices for what are entry level first time buyer homes especially in and around the university areas, so greed lives on, even if in desperation.
Nothing will fix the housing market faster than simply having the prices dropped down to match what people can comfortably afford, there's your 'affordable housing'. Missoula housing is still over priced by two to three times when considering personal incomes...dah no wonder there're not selling.
I for one would buy a house tomorrow,
but not at the current prices, I'd just be giving someone else 100k-150 dollars ON TOP of a fair price just for their profit - sorry find another sucker. "
Rio wrote on Jan 12, 2009 9:50 AM:
" What took you Realators so long to wake up and smell the cows ? Locals cant buy a thing here - you priced the whole valley right out of their reach. Did you really expect any different? My neighbors are both for sale at prices double what they are really worth. I mean, come ON. A 1500 sqft house on 10 ac IN a flood zone for $600K and the other at $460K (same size) - out of your minds. I hold you directly responsible for ruining this valley with your subdivisions and over pricing. My kids will never be able to buy a home here. I may have to will them my farmsted...which i have put into a conservation easement so you people cant get your greedy hands on it and chop it up into one acre parcels. Go away and let the valley recover. Who needs 300 of you in one valley. Rio C. "
Brint wrote on Jan 12, 2009 12:51 PM:
" Rio,
Realtors provide pricing opionions and suggestions to sellers, but it's the seller who sets the price. And in all instances of previous sales a buyer was willing to pay a price both agreed upon. If you have two willing parties who want to complete a sales transaction, I fail to see how this entirely Realtor's fault. Blame cannot simply fall on one persons/groups shoulders. "
Realtors provide pricing opionions and suggestions to sellers, but it's the seller who sets the price. And in all instances of previous sales a buyer was willing to pay a price both agreed upon. If you have two willing parties who want to complete a sales transaction, I fail to see how this entirely Realtor's fault. Blame cannot simply fall on one persons/groups shoulders. "
eyesOpen wrote on Jan 12, 2009 1:00 PM:
" If you do a quick off-the-cuff calculation ($ volume to number of units) you should find the "average" price is about 11% less. That is, 11% off of over-inflated prices--still not much of a bargain for a buyer, but quite an incentive to a landowner.
Kudos to Rio for using a conservation easement. "
Kudos to Rio for using a conservation easement. "
eyesOpen wrote on Jan 12, 2009 1:10 PM:
" If you do a quick off-the-cuff calculation ($ volume to number of units) you should find the "average" price is about 11% less. That is, 11% off of over-inflated prices--inflated by realtors to obscure the true value of the properties and buyers trying to "keep up with the Jones'" by overextending their credit lines.
Kudos to Rio for using a conservation easement. "
Kudos to Rio for using a conservation easement. "
inthetank wrote on Jan 12, 2009 1:33 PM:
" "Realtors provide pricing opionions and suggestions to sellers" - Brint you have a point there. So you better start telling sellers that unless they don't start dropping their prices by at least half, that's right "half", and quit being so greedy, they probably won't sell their place and furturemore the housing market and your personal career will stay in the tank.
Let's face it, there is one and one thing only that has caused the market to crash, and not it's not your credit rating or even interest rates, it's...say it all together now........"PRICE"
As a realestate agent you know all to well the agents routinely tell sellers that they can get them more, more, more for their place for the soul purpose of get the the seller to sign with them. So let's not kid ourselves about what is going on and who's to blame, blame the seller for being greedy, blame the buyer being stupid, blame the agent, blame the loose mortgage industry and let's not for Alan Greenspam for sucking up to Wall St and dropping interest rates to absurd low rates which in turn help blowup our whole economy. Greed, borrow and spend, have all contributed American's current mess. So what's to feel sorry for ? We've don't to ourselves what only terrorist could have imagine to do to destroy of economy. "
Let's face it, there is one and one thing only that has caused the market to crash, and not it's not your credit rating or even interest rates, it's...say it all together now........"PRICE"
As a realestate agent you know all to well the agents routinely tell sellers that they can get them more, more, more for their place for the soul purpose of get the the seller to sign with them. So let's not kid ourselves about what is going on and who's to blame, blame the seller for being greedy, blame the buyer being stupid, blame the agent, blame the loose mortgage industry and let's not for Alan Greenspam for sucking up to Wall St and dropping interest rates to absurd low rates which in turn help blowup our whole economy. Greed, borrow and spend, have all contributed American's current mess. So what's to feel sorry for ? We've don't to ourselves what only terrorist could have imagine to do to destroy of economy. "
Doug Shulund wrote on Jan 12, 2009 2:33 PM:
" I have to be honest here and say it pleases me greatly that out of staters are not moving here, and hope they never come here. We have way to many now ruining our way of life, causing ever increasing prices beyond reason, putting up their no trespassing signs, attitudes that suck, traffic congestion, stupid drivers, along with their punk kids that do not fit in and list goes on much more. 300 realestate people is way over a reasonable limit, but so is the number of contractors that moved here as well.I can only hope many more outsiders leave and not return. The Bitterroot Curse is alive and well, and only us natives understand what that is. Realtors refuse to take the fault here, but they and they alone set this outragous pricing because the damn unwelcome californians were coming and they will be happy to pay outragous prices, don't you see. Money for everybody, but it has now come back to bite you greedy realtors and bankers. Oh how sweet it is. Missoula realtors are just as much to blame, and now you see many of them bartending and working other menial jobs to get by.People may save all their lives to come here, but now the retirement funds have gone south for a long time, they will just have to make other plans, for shame, for shame. Hopefully, manby of you outsiders will leave as well. "
Coonskin wrote on Jan 12, 2009 6:55 PM:
" "People will save their entire lives to move here". That is doubtfull. Most people will never have enough savings to buy property in the Bitterroot. I for one would not be interested in saving my entire life for the dubious priviledge of living under a mountain of debt in the Bitterroot Valley. Lifetime savers are the exact people who would not be interested in becoming indentured debt slaves. "
lessons wrote on Jan 12, 2009 8:04 PM:
" I agree with the previous posters.
The Bitterroot Valley as well as most other areas in western Montana have done themselves all a great disservice over the last so many years by transforming our economy into a GROWTH economy, vitualy ruining the way of life we knew, packing our roads with traffic, pastures into McMansion Estates, crime and the list goes on. We've done this to such a point that even people who moved here 10 years ago to 'get away from it all", are looking around and saying. "Gee what happened, I didn't move here for this".
Even the toursist are saying...."I didn't come here to float the Bitterroot in a traffic jam of boats and view all the McMansion Estates, I think this'll be my last trip up here"
I can't state it any more forcefully than to simply say GROWTH is not an industry to build a sane economy on here in Montana, it's like eating your young to make it thru another day. No good can come of it and infact it hasn't. All it's done is left us with more and new problems to fix.
If it wasn't hard enough for the local children growing up here to find a decent job, now they have a bunch of new unemployed transplants to compete with, not to mention how the heck they'll ever be able to afford a home of their own. That's what GROWTH get's you. "
The Bitterroot Valley as well as most other areas in western Montana have done themselves all a great disservice over the last so many years by transforming our economy into a GROWTH economy, vitualy ruining the way of life we knew, packing our roads with traffic, pastures into McMansion Estates, crime and the list goes on. We've done this to such a point that even people who moved here 10 years ago to 'get away from it all", are looking around and saying. "Gee what happened, I didn't move here for this".
Even the toursist are saying...."I didn't come here to float the Bitterroot in a traffic jam of boats and view all the McMansion Estates, I think this'll be my last trip up here"
I can't state it any more forcefully than to simply say GROWTH is not an industry to build a sane economy on here in Montana, it's like eating your young to make it thru another day. No good can come of it and infact it hasn't. All it's done is left us with more and new problems to fix.
If it wasn't hard enough for the local children growing up here to find a decent job, now they have a bunch of new unemployed transplants to compete with, not to mention how the heck they'll ever be able to afford a home of their own. That's what GROWTH get's you. "
noproblem wrote on Jan 12, 2009 10:50 PM:
" What real estate problem - check out the article link below. And this article isn't all that untypical of what a lot of 'expert' people have been say....these people are either massively ignorant beyond beleif or downright dishonest. In either case their oppinion has no place in a public forum, not to mention their credability is pretty much less than worthless.
Perhaps the Missoulian can keep a blacklist of these people that get it SO wrong so as to prevent them from polluting the air of truth any further.
Or then again, in light of the disaster taking place in the real estate market, maybe we can just chauk it all up to...desperate people say desperate things.
http://www.mtinbusiness.com/inbiz-0901/bus03.php "
Perhaps the Missoulian can keep a blacklist of these people that get it SO wrong so as to prevent them from polluting the air of truth any further.
Or then again, in light of the disaster taking place in the real estate market, maybe we can just chauk it all up to...desperate people say desperate things.
http://www.mtinbusiness.com/inbiz-0901/bus03.php "
Karl wrote on Jan 13, 2009 10:27 AM:
" Rio, Check your facts. Less than 5% of the subdivisions in the Valley to date were done by licensed real estate agents. The majority were done by ranchers and native Montanans like myself that, over the years have not been adequately compensated for the livestock and crops we produced, therefore had to find an additional way to feed our families. Splitting off and subdividing 50 acres from my 2,000, into a beautiful place for folks to raise their families was the perfect solution. Thank God we live in country where we can do, with appropriate planning limitations , what we want with our land. "
karl wrote on Jan 13, 2009 11:12 AM:
" Rio, you need to get your facts straight. In the history of subdivision in the Bitterroot Valley, less than 10% of those developments were done by real estate agents. The majority were done by long-time ranchers and native Montanans like myself that rely on the proceeds from our livestock and crops to survive and feed our families. The only part the real estate agents were involved in was doing a fine job of selling the lots; a job I hired them to do. Since over the last several years, we are getting less in our pockets for the sale of our livestock and crops, and the cost to produce same is rising, many of us have had to sell off some of our land to make ends meet. Subdividing 50 acres of our 1,500 acre ranch was the best possible option for my family. The result was a beautiful well laid out subdivision that provided homes for many families. Not to mention providing food, a home, clothing, and college for my family. Just about every penny in proceeds from the sale of those lots in the subdivision stayed in state and most in the Valley. Thank God we live in a country where we can do, within appropriate planning limitations, what we want with our land. "
Luv2Fish wrote on Jan 13, 2009 12:48 PM:
" Cry me a river people! My husband and I on two incomes make so much we can't buy a house. We are both professionals.
You make housing affordable and watch what people can do for the market. Just like gas prices. Oh look, gas is lower and people are shopping again.
As for Exit Reality? I thought you guys were into the big Stock Farm type money. hmmmm "
You make housing affordable and watch what people can do for the market. Just like gas prices. Oh look, gas is lower and people are shopping again.
As for Exit Reality? I thought you guys were into the big Stock Farm type money. hmmmm "
kasey wrote on Jan 13, 2009 1:14 PM:
" Great story, and great comments. It's about time the truth came out. But even now, it's just part of the story. As Rick notes, this article talks about volumne and revenue, but not about price.
Since we live in a non-disclosure state, sales prices are not public info. This makes it possible for realtors to keep a lid on the bad news. That's why the realtors knew the bottom was falling out in the Bitterroot as early as 2006, but the Missoulian just found out in 2009. Meanwhile, the Missoulian has been printing the realtors' press releases about how God isn't making new land and Montana is different.
Folks, it's time to contact your legislator to tell them to change the law and make sales prices public, like they are in most other states. Until that happens, we have a rigged market and only fools will buy. "
Since we live in a non-disclosure state, sales prices are not public info. This makes it possible for realtors to keep a lid on the bad news. That's why the realtors knew the bottom was falling out in the Bitterroot as early as 2006, but the Missoulian just found out in 2009. Meanwhile, the Missoulian has been printing the realtors' press releases about how God isn't making new land and Montana is different.
Folks, it's time to contact your legislator to tell them to change the law and make sales prices public, like they are in most other states. Until that happens, we have a rigged market and only fools will buy. "
Sean wrote on Jan 14, 2009 12:03 PM:
" I think there's a lot of naive animosity on this board... blame real estate agents, blame sellers, I can't buy a house, cry, cry for me... But what you don't seem to see is that a lot of people bought first time homes when they moved here, or after getting their first job, and saw their home as an investment. Those people have lost their home. So I hope you're happy when you can afford your first home, but GOD forbid you should feel some sympathy for the family being foreclosed out the back door as you move in the front. "
forecloser wrote on Jan 14, 2009 7:22 PM:
" Yea Sean, families are getting foreclosed on and that is very sad....but that's becuause their mortgage is so high they can't afford it - because they had to pay ridiculously inflated prices. And inflated prices is another way of saying - the seller, realestate, mortgage broker, developer and everyone else involved got their inflated profit out of these people, ie. these buyers may have been foolish but they were also feed on by the vultures in the business.
And to the folks who say they helped create all these beautiful developements and homes, well I guess you also helped create all the foreclosers by charging to much to line your own pockets. And it's ok to tell yourself you really didn't make that much and you deserve it if it make your feel better. "
And to the folks who say they helped create all these beautiful developements and homes, well I guess you also helped create all the foreclosers by charging to much to line your own pockets. And it's ok to tell yourself you really didn't make that much and you deserve it if it make your feel better. "
kluebke wrote on Jan 17, 2009 9:57 PM:
" Wow! Great comments!! I hope sellers and realtors finally get the hint. We are not buying your overinflated crap! I suggest a buyers boycott - until they finally get the drift! "
letemrot wrote on Jan 19, 2009 12:53 PM:
" kluekbe - No I don't think the sellers will ever get the hint - blinded by greed.
All they need is for one sucker to buy just one of those inflated prices and then they(sellers) all have reason to beleive they can catch a big one too.
I continue to see homes come up for sale at ridculous prices, with little rhyme or reason to their price. And low and behold every so often one will sell, attribute that to "one born every minute" - "a fool and his money are soon parted"
I think the other big thing you can attribute to this phenomina to is the vast majority of people paying this silly prices are people with wind falls, ie. inheritance, student with rich dad, racked in a huge profit on their old home sale, etc. Working people simply can't afford these houses, even on a doctor's salary, it's a stretch to buy a 500k house. I can't beleive that small houses built orginaly for first time home buyers on the eastern end of town are selling in the range of 250(piece of junk) to 500k and 600k, add 50k if you stuff in a marble counter top, unbelivable.
So at those inflated prices, for all I care they can sit there and rot. "
All they need is for one sucker to buy just one of those inflated prices and then they(sellers) all have reason to beleive they can catch a big one too.
I continue to see homes come up for sale at ridculous prices, with little rhyme or reason to their price. And low and behold every so often one will sell, attribute that to "one born every minute" - "a fool and his money are soon parted"
I think the other big thing you can attribute to this phenomina to is the vast majority of people paying this silly prices are people with wind falls, ie. inheritance, student with rich dad, racked in a huge profit on their old home sale, etc. Working people simply can't afford these houses, even on a doctor's salary, it's a stretch to buy a 500k house. I can't beleive that small houses built orginaly for first time home buyers on the eastern end of town are selling in the range of 250(piece of junk) to 500k and 600k, add 50k if you stuff in a marble counter top, unbelivable.
So at those inflated prices, for all I care they can sit there and rot. "
Rick Langlotz wrote on Jan 12, 2009 8:56 AM: