Northwest Montana Real Estate Market, Businesses Booming

Forget what the rest of the country’s housing market is doing.

In Flathead County, Montana, home mortgage demand and real estate sales are alive and well, representing the nearly one fifth of the total new-home market in Big Sky Country.

That was just a part of what Kalispell appraiser Jim Kelley and Flathead Valley Community College economist Gregg Davis offered at the fifth annual Flathead Valley Economic Forecast this week, according to the Daily Inter Lake.

Montana West Economic Development invited the two to present a snapshot of the regional economy. First was Kelley’s view from the housing sector.

Tax records from 2005 show that 19.2 percent of all new homes in Montana were built in Flathead County. Of the state’s 8,423 new homes that year, 1,615 were in the Flathead alone.

Powered by low mortgage loan costs and a robust local economy, that far outpaced Missoula County, with 859 homes (10.2 percent of the market), Yellowstone County (Billings) with 993 homes (11.8 percent), and even Gallatin County (Bozeman) with 1,420 homes (16.9 percent).

A quick tour of the area suggests the vigor continues today. But Kelley put some hard numbers to that roadside tour.

Since the mid-1980s the number of homes sold annually has quadrupled, from 454 in 1984 to 1,870 in 2006. However, the average selling price increased nearly seven-fold, from $54,657 to last year’s $356,683.

While outright numbers of homes sold rode a roller coaster that peaked in 1992, dropped and then rose again until it surpassed the former high by 2001, prices never flagged in their steady escalation.

Kelley keyed in on recent trends.

The Montana housing market saw a startling price jump from 2002 to 2003. The average selling price in that period rose from $184,054 to $225,547, representing a 22.5 percent growth. The median price grew by 15.9 percent.

Both were a big switch from single-digit growth. But the exaggerated acceleration was short-lived. Rate of growth for average Montana home prices rose by about a point in 2004, then dropped to just 11.2 percent a year later. Average home prices in 2006 grew by four points.

Median prices, on the other hand, continued their rise through 2005, when rate of growth was 18 percent over the previous year. In 2006 — when the county’s median price was $245,000 — rate of growth was 11.4 percent.

Kelley was quick to silence the naysayers who fear a housing crash.

“Although the rate of increase last year is lower than the previous three,” he said, “it’s still higher than it historically was … The number of sales has continued to increase, too.”

Certainly much of that is due to simple population growth, and that number of people in 2006 was asking for considerably more money when they sold a home than they actually received on closing — nearly as much, in fact.

Although the number is somewhat distorted by a few high-end homes on the market that Kelly said probably never will sell, the average listing price was $699,439. But the average sale price, after the buy-sell was negotiated, came in at $356,683.

“Expectations always have been higher than actual sales,” Kelley said. “This points out the discrepancy in the market.”

Just over 60 percent of all homes sold in 2006 were in the $100,000 to $300,000 range. Listings were in that range, too, Kelley said.

Out-of-area home ownership — something that does not depend as much on where home loan rates stand - is creeping upward. In 2005, 14.7 percent of single-family homes were owned by people who did not live in the Flathead. In 2006, it was 15.5 percent.

“Those could be second homes,” Kelley said. “It will be interesting to track that in the future. I suspect the trend will continue … In the national economy, as baby boomers age they buy second homes that could become primary homes in the future.”