Market Report November 8, 2022

October 2022 Western Montana Market Report

I’m watching the snow come down as Western Montana made the very fast transition from late summer sun to two perfect weeks of fall then a winter storm. I love the beginning of winter here, and joked with a client recently that the mountains get all dressed up for us this time of year.

Trends

The biggest story in real estate continues to be interest rates. As I write this the average conventional 30 yr loan is around 7.5%, compared to 3.5% one year ago. Money is just much more expensive to borrow, and demand for home mortgages has declined.

Across the region, both mortgages and closed home sales were down this October vs October 2021. In Missoula County, home sales were down 13.6% from one year ago, while the number was -16% in Ravalli County, and -25.6% in Lake county. Seasonally things slow down this time of year, so we should expect the number of closed sales to continue to decline through February.

Based on the data we have now, It is looking like prices peaked in June and July, with deals that went under contract when interest rates were under 5.5%. Median home prices are down since July, but up double digits since one year ago.

While demand is down, there is still not enough supply of affordable homes. In Missoula county, move in ready homes that are priced in the low to mid price points are still being sold in a few days with competing offers. As of the end of October, there were 271 homes for sale. To compare, Ravalli County, with less than half of the population of Missoula, had 248 active listings. This is why Missoula has 2.5 months supply on the market, and Ravalli county has 4 months supply. (Months supply is the length of time it would take to sell the number of homes currently on the market.) Of the homes that are available, more than 40% are priced over $800,000. That is hardly what most Montanan’s would consider affordable.

Looking to sell?

It is a good time to talk to a real estate agent to find out what is happening in your neighborhood. Your home might have 20 people at the open house and be under contract two days later, or it may sit on the market for 81 days or more. It varies widely, and pricing really matters. If you are thinking about selling in the spring I think it is worth planning to put new paint on the walls or do that partial kitchen remodel. Millennials are the largest generation in history and they want to buy. What they don’t want (or can’t afford) is a home that needs a lot of fixes and updating. There is a much larger demand for turnkey properties than for fixer uppers.

Looking to buy?

There is a saying in real estate that you marry your house, and date your interest rate. There will likely be opportunities to refinance at some point in the future, and most lenders can do a refi at no out of pocket costs to borrowers if you have at least 20% equity in the home. Get familiar with the following routes to make monthly payments more affordable right now.

The Numbers!

Missoula County

-Missoula County residential media home prices are down 9.6% from the peak of $575,000 in July. Median prices are still up 10.3% year over year.

-Absorption rate: Missoula county has a 2.5 month supply of all homes. There is less than 1 months inventory for homes priced under $500k.

-Sellers are receiving 99.9% of asking price, on average.

-Median days on market before going under contract is averaging 55, but is 47 days for homes priced under $650K

-Closed sales are down 13.6% year over year, for a total of 127 homes in October 2022

-Homes available for sale are fairly flat over the last 4 months. Inventory is up 64% over this time last year.

-There were 271 homes for sale at the end of October. Of those, 116 (42%) were listed for over $800,000. 28% of all homes were listed for over $1 million. 9 homes worth over $800 closed in October.

Ravalli County

-There are currently 248 homes for sale in Ravalli County, population 45,000, compared to 271 in Missoula County, population 119,000. Of the 248 homes for sale in Ravalli County, 46% (116) of them are priced over $800,000. In the month of October, 13 homes sold for more than $800K.

-The median sales price was $600K, down 11% from July, but up 32% year over year.

-Closed sales are down 16% year over year.

-There were 44% more homes on the market in October than one year ago, and at the rate homes are selling, it would take 4 months to sell the number of homes that are currently on the market (months supply).

Lake County

-Median residential home prices were $635K in October, down 15% from their peak in July, but still up 47.7% year over year.

-New listings were down 28% from this time last year.

-51% of all available home listings in October were listed for over $800,000.

-Closed sales were down 25.6%.

-There is currently 3.9 months supply, with only 2 months supply of homes listed under $499,000

-Sellers in Lake county received a median percent of list price received of 97%. Down 3% from one year ago.

Mineral County

-Median sales price for closed sales was $449,900 in October, up 41% from one year ago.

-Housing inventory is up 20% from a year ago.

-Closed sales are down 30% from October of 2022.

-Mineral county ended October with 5 months supply of homes on the market.

If you would like to know what is happening in your neighborhood, I would be happy to give you a more specific snapshot. Feel free to drop me an email, or give me a call at 406-404-6241. You can even register yourself to receive monthly updates of your neighborhood here https://sashavermel.com/neighborhood-news

Market Report August 25, 2022

July 2022 Northwestern Montana Market Reports

The Big Picture

After two years of steep home value appreciation, and mortgage rates doubling in the last 6 months, the July median sales prices for homes dropped across Western Montana. This is the story I expected to tell in June, but instead we had the highest ever median home prices recorded in Missoula, Ravalli, Mineral and Flathead counties. In Missoula County the median residential home sales price fell from $575,000 in June to $525,000 in July, a 9% drop in one month. In Mineral County, the median home price fell 34%. Is this a blip, or is this the beginning of a downward trend? Will we level out into a new normal? These are the big questions. Sometimes the median price drops from one month to the next, it’s the overall trend that matters and the trend has been up and up and up.

July Missoula Median Sales Price

The “price falling” narrative feels right because we are seeing so many price reductions on active listings. It seems intuitive that higher interest rates mean fewer qualified buyers, and two years in a row with 23% annual price growth (most homes doubled their value since 2019) mean that many people have a lot less purchase power than they used to, or have been priced out of the market all together.

One other trend I’m seeing across Western Montana is that the number of new residential listings is down a little from previous years, but the number of closed sales is down a lot. The combination of high prices, higher interest rates, and not enough desirable property to choose from is driving down the number of closed sales. Closed land sales are lagging new land listings even more than residential- this may be a combination of pessimism about home values in the future and a reaction to the high building and materials costs of the moment. 

From reading this, you might jump to the conclusion that “offer dates” and multiple offers are a thing of the past. You would be wrong about that. It really varies listing to listing. Homes that are priced a little under market value, and newer or updated homes in desirable areas can still draw 8 offers within days of being listed.

Advice for Buyers

Buyers should be extremely conscious of listing price right now. Make sure to look at a CMA before making any kind of offer. Some homes are priced low to drive interest, some home are priced high just in case the seller can get the top dollar. Initial list prices are all over the place right now as agents try to find the magic number to bring in offers. If you like a home, but the price seems high it may be worth waiting to see if the price goes down later or even make an under asking offer to see how the seller responds.

Advice for Sellers

Are you wondering if you should replace the flooring, update the kitchen or refresh the paint? At this moment there is such a strong demand for move-in ready homes that I think you either need to do the updates, or be prepared to sell your home for less and for it to take longer to get an offer. For people selling luxury homes- there is less demand at the moment and more inventory than there used to be. Luxury sellers can expect their homes to stay on the market longer. 

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Find the charts and numbers for your county below!

Missoula County Residential

There were more homes on the market this July than at any time since August of 2020. New listings are down two months in a row, and down from this month the last 3 years. The average percent of asking price received on closed sales is down 3% from this time last month.

Median sales price fell 8.6% from last month.

Median days on market before going under contract seems to be settling into a new normal.

Ravalli County Residential

Year to date new listings are up slightly, but closed sales are down 15%. Median sales prices for Ravalli County was at $600,000 in July. And that’s down from $675,000 in June. Everyone wants the story that prices are coming down, but the trend line continues up. Even $600k is the second highest ever monthly median price in the county. Average % of list price is down to 97% for both the month of July and year to date in the county.

Ravalli County had 3.8 months of supply as of July, the most since June of 2020. That breaks down to 9 months of inventory for homes priced over $800k, and 2.2 months of supply of homes listed for under $600k.

Lake County Residential

New listings are down 11% year to date, but closed sales are down 27% year to date.

Average % of original list price on closed sales is all the way down at 93%.

Breaking the trend of most of the region, Median Sales price hit a new high in Lake County in July, topping out at $750k, with an average sales price of $880.9K. Lake county currently has 4.3 months of housing supply, more than any county in the region except Flathead.

Flathead County Residential

New listings year to date are down a little- 5%, but closed sales are down a lot- 28% year to date. With fewer closings there were 4.7 months supply on the market.

Median sales price went from $697,000 in June, While the July median sales price went down to $560,000.

Missoula County Land

For the month of July, average % of list price was only 95% despite being 99% ytd in both 2021 and 2022.

The July Median sales price was $185K, and $168k year to date a 34% increase from this time last year.

Average days on market was 174 days in the month of July.

Ravalli County Land

New listings are down a little in Ravalli County, but new closed sales year to date are down 46%. Compare 234 closed sales year to date in 2021, vs 132 closed sales ytd in 2022. Like Missoula County, average % of list price was 95%. The July Median sales price of Ravalli County land sales was $342k, up 49% from a year ago. Average days on market until selling was down to 96 days in July, and 116 days year to date.

Lake County Land

New listings are down 38% year to date for 2022 compared to 2021 in Lake County. With only 12 sales in the month of July, the median sales price was $157k, and the average was 292.4k. Average % of list price was 99% in July, and 98% ytd.

 

Market Report June 24, 2022

Missoula County Market Report May 2022

Welcome to your May 2022 Market Report

It’s summer! Interest rates are averaging over 6%! One thing that everyone knows about Montana weather is that if you don’t like what is happening, just give it 5 minutes. Well, if you didn’t like what the real estate market has been doing for the last 2 years here is your chance for something different.

On the ground I feel the shift in the Missoula housing market. Last year, for 8 months in a row the average home got under contract within 7 days of being listed in Missoula county, and in May of 2022 that number has shifted to 19 days. A few months ago there would only be a handful of price reductions per week, and now I’m seeing almost 1 price reduction per 2 new homes listed. The fed is raising interest rates to cool inflation, and housing cost inflation has been rampant in the last few years. 23% annual increases in median home prices is not sustainable. Home prices are adjusting accordingly. This isn’t an accident, it is the point of interest rate increase. Take a look at the median days on market in Missoula County in the chart below.

Good News for Buyers

For people trying to buy real estate, the good news is that sellers don’t get to just have their way with you. Where there used to be 15-20 offers on a median priced home, there may only be 3 or 4 today. Or only 1 offer. Or the price gets reduced because they only had 2 showings the first week. Sure, there are still unicorns that get multiple offers, but be on the look out for opportunity. With less competition, you are more likely to get an offer accepted with an inspection, at asking price, or even for under asking price again. Sellers are also more motivated to offer concessions if something comes up during inspections. The downside for buyers right now is that money is more expensive to borrow, and anyone that got pre approved 2 months ago needs to talk to their lender to find out what they can qualify for today. Buyers also need to be prepared to pull down payment money out of the stock market or money market accounts well before closing so they don’t find themselves coming up short when closing arrives.

Sellers will have to adjust

For people thinking about selling, answering the question, “but where will I go?” got a little easier. With less competition it is easier to get under contract for the next home contingent on the sale of you existing home. We are at the top of the market, and you can still get a great price for you home. It’s just less likely that you will get the $50k over asking or the big bidding war that you have been hearing about. If you are selling, you also don’t have to feel like you are leaving money on the table by waiting 6 months. The downside for sellers is that they may have to do the updates to the flooring or walls to make the house move-in ready. Homes may not go under contract within 5 days of listing. Sellers are going to have to be more patient, and more flexible, especially when negotiating contracts and inspections.

It’s not time to freak out or panic. For most of the last 100 years, interest rates have been over 5%. People still need somewhere to live, Western Montana is still a great place, and remote work is going to continue to be available for a certain percentage of the workforce. If you are trying to buy or sell it is important to stay current with the latest numbers and trends and to be ready to adapt as the market conditions change.

Now for the May numbers!

New listings were up in the Missoula housing market in May by 14% over last year. We saw 222 new listings, and 111 closed sales, so 2x as many listings as closings. Closed sales were down this year compared to last year, but I attribute that to the lack of new listings in February and March of 2022. When average days on market is 65, that means we can only close on what got listed two months ago. The median sales price for residential property in missoula county is up by 25% the first five months of 2022, compared to 2021.

If you want to learn more about what is happening in your neighborhood, please reach out to me at sashavermel@eralambros.com

For numbers focusing on Ravalli County look here: https://sashavermel.com/2022/06/24/may-2022-market-report-ravalli-county

Market Report June 24, 2022

May 2022 Market Report [Ravalli County]

It’s summer! Interest rates are averaging over 6%! One thing that everyone knows about Montana weather is that if you don’t like what is happening, just give it 5 minutes. Well, if you didn’t like what the real estate market has been doing for the last 2 years here is your chance for something different.

On the ground I can tell you that I feel the shift. Last year in Ravalli County for 5 months homes averaged less than 20 days on the market before going under contract, and in May of 2022 that number has shifted to 31 days. A few months ago there would only be a handful of price reductions per week, and now I’m seeing almost 1 price reduction per 2 new homes listed. The fed is raising interest rates to cool inflation, and housing cost inflation has been rampant in the last few years. 23% annual increases in median home prices is not sustainable. Home prices are adjusting accordingly.

For people trying to buy real estate, the good news is that sellers don’t get to just have their way with you. Where there used to be 15-20 offers, there may only be 3 or 4. Or only 1 offer. Or the price gets reduced because they only had 2 showings the first week. Sure, there are still unicorns that are priced to generate lots of interest, but be on the look out for opportunity. With less competition, you are more likely to get an offer accepted with an inspection, at asking price, or even for under asking price again. Sellers are also more motivated to offer concessions if something comes up during inspections. The downside for buyers right now is that money is more expensive to borrow, and anyone that got pre approved 2 months ago needs to talk to their lender to find out what they can qualify for today. Buyers also need to be prepared to pull down payment money out of the stock market or money market accounts well before closing so they don’t find themselves coming up short when closing arrives.

For people thinking about selling, answering the question, “but where will I go?” got a little easier. With less competition it is easier to get under contract for the next home contingent on the sale of you existing home. We are at the top of the market, and you can still get a great price for you home. It’s just less likely that you will get the $50k over asking or a big bidding war. If you are selling you also don’t have to feel like you are leaving money on the table if you could wait to sell in 6 months. The downside for sellers is that they may have to do the updates to the flooring or walls to make the house move-in ready.  Homes may not go under contract within 5 days of listing. Sellers are going to have to be more patient, and more flexible.

It’s not time to freak out or panic. For most of the last 100 years, interest rates have been over 5%. People still need somewhere to live, Western Montana is still a great place, and remote work is going to continue to be available for a certain percentage of the workforce. If you are trying to buy or sell it is important to stay current with the latest numbers and trends and to be ready to adapt as the market conditions change.

Now for the May numbers!

New listings were at their highest monthly total for the last 2.5 years last month. There were 136 new listings to 65 closed sales, so twice as many listings as closings. It is listings season here, but that is still a substantial jump over anything we have seen in a while. Median home prices year to day are still up 24%. I would expect to see the growth in sales prices we have seen in the past two years start to taper off.

 

If you’d like more information about your neighborhood, feel free to reach out to me at sashavermel@eralambros.com and I’ll be happy to answer any questions you might have!

Buyer tips February 28, 2022

8 Steps to buying a home: First step is Financial Planning

It’s winter in Montana, and the bears aren’t the only ones hibernating.

As is typical, new listings are few and far between right now. However, if your new year’s resolution involves buying a new home, this is a great time of year to get your financial house in order.

  • Save up for a down payment. While VA loans can require no down payment, most loans will require at least 3-5%. The gold standard is a 20% down payment, which means you can avoid paying for mortgage insurance and expect a better mortgage rate. Loans for commercial property and mobile homes comes can require 25-30% down.
  • Build your credit score. Increasing your credit score, paying down credit cards, and making all payments on time will help you qualify for a loan, and get you a lower interest rate
  • If you know you want to apply for a home loan in the near future, it is a good idea to wait to apply for a new credit card or car loan until after you have closed on the house. Accounts that have been open for a long time count in your favor, while new accounts and credit checks count against you.

    Happy house hunting!

    #realtorlife #financialplanning #buildyourcredit #montanarealestate #realestategoals #missoularealestate #newhomebuyer #realestate #buyyourdreamhome