In Montana, Real Estate Market’s Best Days Are in the Future, Not the Past

Bobby Young looks at the headlines and TV talk about a significant slowdown in the real estate market and shakes his head. Is it happening in Great Falls? No way, he tells the Great Falls Tribune.

In the real estate broker’s opinion, the local housing market’s best days are likely in the future, not the past.

“Our market, in my opinion, is not slowing down like it is nationally,” Young said.

Still, the national market has been an attention-grabber. The median sales price of new homes in September was 9.7 percent below year-ago levels, the biggest drop in 35 years. In the same period, existing home sales fell by 14.2 percent from September 2005 throughout the U.S.

But sales data and price comparisons from June 1-November 1 show no sign of big changes in the Montana housing market.

There were 429 sales of single-family homes in the five-month period this year, up slightly from 414 in the same period a year ago.The median price in the same period of 2006 was $140,000. The median last year? $129,000.

The numbers paint a picture of a healthy, sustainable housing market, said David Munroe, president of the Great Falls Association of Realtors.

“While real estate activity often slows as the holidays and winter approach, I don’t expect any real slowdown. We didn’t get a big rise like everybody else did. We don’t get any crashes,” Munroe said. “I don’t see any kind of a bubble, any kind of a dip at all.”

The numbers for Great Falls and Cascade County also look solid in terms of home construction as many potential buyers can still qualify for a mortgage. Montana builders reports that housing starts are almost exactly on pace with where they were a year ago.

But what does the future hold? Opinions vary.

Paul Polzin, director of the Bureau of Business and Economic Research at the University of Montana, says the market statewide is slowing. Polzin notes that increases in real estate prices in Missoula and Bozeman, along with parts of the Flathead Valley, kept pace with a national run-up in recent years — and are hence vulnerable.

“I don’t see any reason why we shouldn’t be part of what’s going on in the rest of the nation. I think there was some kind of bubble in Montana,” Polzin said.

In recent years, Bozeman has enjoyed a red-hot real estate market, driven by parents buying homes for students at Montana State University, retirees looking for a relaxed lifestyle and former residents returning to their home state, according to Donna Kostelecky, president of the Gallatin Valley Association of Realtors.

“With the Internet, people can live anywhere, and places with great scenery and outdoor recreational opportunities provide plenty of appeal,” she said. “Things have slowed down in comparison with a year ago,” Kostelecky said. “But the market is still very good. Buyers have a larger selection today than they had a year ago.”

What happens with mortgage interest rates, which have creeped up a little bit from historic lows in recent years, could have significant impact in the real estate market across Montana.

As is the case anywhere else, when the bargaining power of potential buyers is threatened by higher home mortgage loan expenses, demand for homes is likely to decline.

“As long as we can keep interest rates down, we will be in good shape,” said Kostelecky.

Young agrees. Rates last week ranged from about 5.9 to 6.25 on 30-year Montana mortgages, with rates on 15-year loans slightly lower.

“The mortgage rates are still phenomenal,” Young said.