|Montana Real Estate Market Update||16 October, 2014|
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SEELEY-SWAN AND BLACKFOOT VALLEY REAL ESTATE SHOWS STRONG SALES
BY KEVIN WETHERELL
Broker/Owner with Clearwater Montana Properties, Inc.
Read More About Kevin
REAL ESTATE TODAY
The real estate market in the Seeley Swan and Blackfoot valleys continues to improve in both strength and value. Real estate in the valley saw more buyer activity thus far in 2014 than we have seen in any year since the boom years ending in 2008. Despite very strong buyer activity in the number of property inquiries, property showings and sales, many buyers today lack the extreme confidence that they had in 2005. Some sellers have been frustrated by the ways of the buyers in the “new market”, as many buyers have become much more calculating and deliberate in the purchase process, rather than running with the emotional real estate euphoria that existed in the boom years. For those buyers, sellers or agents who were active in the market at that time, many can tell stories worthy of a chapter in a book someday. It is not likely that we will ever see the rapid real estate appreciation and the buying euphoria that was happening in the boom. The current market feels very healthy and represents a more stable market environment that is better positioned to maintain your investment in the longer term, creating a more reasonable and stable appreciation rate of real estate today.
There are five real estate brokerages and fourteen licensed real estate agents in the valley today.
With one quarter of the year to go in 2014, they have combined for nearly $35 million dollars of sold real estate volume in the Seeley Swan and Blackfoot Valleys. That is on pace to equal the nearly $50 million dollars of sold real estate volume in 2013, which was considered a great year.
This summer, local agents were very busy with buyers. The market is currently seeing some very healthy signs, such as properties that received multiple offers from buyers on a property at the same time, multiple showings of the same property in one day, full price offers, and even some sales closing over the asking price.
Many buyers are regaining confidence in the overall economy, real estate and their personal finances. They are investing in the market with cash, or are able to borrow money at extremely low interest rates. This has resulted in a large reduction in available existing homes as we head into the selling season of 2014. Currently there are 105 homes on deeded land on the market, plus 2 homes that are currently under contract to be sold. The median listing price is $321,950 with average current days on the market of 292. This means there is about 23 months of inventory based upon the 56 homes sold in 2013, and 40 homes sold through the first 3 quarters of 2014. This is the lowest inventory number we have experienced since the real estate boom in 2006. At one point in 2009, there was 5 years of home inventory on the market! The market has seen consistent growth in the number of sales, but value appreciation has just began to occur as inventory continues to shrink and homes under $300,000 continue to sell well.
SEELEY-SWAN HOME SALES
YEAR NUMBER SOLD MEDIAN SALES PRICE DAYS ON THE MARKET
2010 40 $215,500 172
2011 34 $235,000 178
2012 47 $193,000 178
2013 56 $246,250 170
2014 YTD 40 $225,000 228
The average 228 days on market for homes sold in 2014, represents the fact that many homes are selling that have been on the market for several years. Once again, this is a good trend.
Homes have become affordable for more people because interest rates are near their lowest point in 30 years. Interest rates are currently around 4% for a 30 year fixed rate mortgage and 3.375% for a 15 year fixed mortgage. These rates are the lowest many have seen in their lifetime. Because of this, the possibility for home ownership has become a reality for many local families who are now able to purchase homes. Many buyers can still qualify to purchase homes for very little down payments under government and private loan guaranty programs such as Rural Development, Montana Board of Housing, HUD, and Neighborworks. With credit approval, it remains possible to obtain a $180,000 loan with payments that are under $875 a month plus taxes and insurance. There are currently 11 great homes available under $200,000 that can be conventionally financed.
It is also a great time to consider refinancing. For example, if you were to refinance your existing mortgage of $200,000 at 5% interest and get it reduced down to current interest rates, your payment would be reduced by $120 per month.
WHO IS BUYING REAL ESTATE AND WHY
Well over half of the property sales this year have been to Montanans. They are coming here from many parts of the state including Billings, Butte, Helena, Great Falls, and Missoula. Buyers are buying here as we enjoy and offer many qualities of life that can’t be found anywhere else in Montana or the world. Our many lakes, streams, trees, wilderness accesses, wildlife, and huge holdings of public land all provide recreation beyond compare. The quality of life in the valley beyond the recreation is noticed by many. Our residents are caring and kind and are quick to help those in need. We have a first class, nationally recognized public school system offering a fantastic curriculum including a focus on outdoor activities and education. We have cultural organizations and events that attract attendees from all over the world.
I was showing property on a cold day last winter to a couple from the Seattle area, and as we pulled into Cory’s Valley Market, there were seven vehicles parked unattended with their motors running. They could not believe that we had such a trusting community. They were even more amazed when they closed on the purchase of a home and new locks had to be placed on the home because the prior owners hadn’t locked the home very often in twenty years of living there, so they didn’t know where the keys were. Many appreciate that one of the daily social events is to go to the post office at 10:30 each morning and visit with your friends and neighbors.
Vacant land sales will finish 2014 slightly above 2013. There are currently 148 land parcels for sale. The listed parcels have a median listing price of $109,000 and an average of 464 days on the market. This means there is currently 88 months of land inventory at the current sales pace. It is anticipated that the pace of land sales will continue to increase, perhaps even very dramatically as available home inventories are reduced and prices continue to rise. The land inventory situation can change quickly and dramatically in an improving market. As an example 73 vacant land parcels were sold in 2006. Should sales like that occur in the coming years, rapid appreciation could take place as inventory is reduced to very low levels.
SEELEY-SWAN LAND SALES
YEAR NUMBER SOLD MEDIAN SALES PRICE DAYS ON THE MARKET
2010 11 $444,500 785
2011 8 $ 87,500 312
2012 11 $140,500 273
2013 20 $ 72,225 186
2014 YTD 20 $ 66,950 176
The land sales data is difficult to analyze and establish trends as there have not been enough sales to establish valuable trending information. What is important to understand is that the number of land sales is on a dramatic rise, and appears to be gaining substantial strength.
New home construction has been increasing throughout the valley. Many new homes are in the planning stages and several new homes are being built presently, including two on Rainbow Court on the Double Arrow Ranch. There have been several beautiful, architecturally interesting homes built by local contractors on the south shore of Placid Lake in the past few years. Increased new home construction has many of the local contractors scrambling as their businesses have increased dramatically over past years.
Demand for rentals has been increasing. Available housing for people working locally is a growing concern as many people moving here for work are faced with little or no available rentals. The rule for people looking for rentals has at times become – when the Seeley Swan Pathfinder comes out on Wednesday afternoon, call the first “For Rent” ad and tell them you will take it. The underlying problem requires more discussion, as many people working in the valley can afford to pay between $400 and $900 per month rent. With the average home price being $225,000 it is not a good return on investment for a landlord to rent. The construction of multi- family housing units would increase rental availability and perhaps offer housing for less rent. However, multi-family construction most likely won’t happen in the near future because current Missoula County septic system restrictions or the underlying cost of land to facilitate the larger septic system that would be required, would make the project cost prohibitive.
If you have any questions regarding the local real estate market or the purchase or listing of property, please contact your local real estate professional.