The number of homes sold in the Missoula area in the first six months of 2014 is down from the same period last year, but the median sale price is up, according to a report recently issued by the Missoula Organization of Realtors.
The second quarter accounted for more than 68 percent of the sales so far this year, indicating that the intense winter weather hampered sales.
However, according to MOR president Brint Wahlberg, compared to the first half of the previous three years, 2014 sales numbers reveal a slow and steady recovery from the recession.
“The long winter kept buyers on the slopes and homes off the market,” he said. “Lack of inventory in affordable price ranges and slightly higher interest rates have also slowed the pace of sales compared to the first half of 2013, when Missoula saw an unexpected spike due to record-low interest rates.”
During the first six months of 2014, 454 homes sold compared to 557 in the first half of 2013. The median sale price rose to $220,500 from $214,000 during the same period in 2013. Single-family homes accounted for the majority of sales during the past six months, with 371 sold at a median price of $237,300. Homes sat on the market for an average of 120 days this year.
There are three main reasons why 2013 was a banner year for home sales in Missoula, according to Wahlberg.
“The first and biggest one is interest rates,” he said. “Interest rates are three-quarters to 1 percent higher than they were, especially from April and May of 2013. At that point, interest rates were at the very bottom, so there was a big push to hurry up and buy. There is a big difference in the amount of people buying this year because there is no big incentive to hurry up and buy to get amazing rates.”
The second factor contributing to less sales this year is a lack of supply.
“We’re dealing with a lack of supply for listings in our affordable price ranges,” Wahlberg explained. “We track activity in certain price breaks. So what we notice in the $150K to $275K price range, which is a wide range, is that the supply is so tight that it slows the pace and creates a little bit of a bottleneck. There is not enough listed inventory to meet current buyer demand. It’s interesting.”
The supply of homes for sale has gotten tighter and tighter every spring and summer since 2011, Wahlberg said, creating a “seller’s market.”
“Last week, we had 2.5 months of listed inventory in the $200k-$275k range, which indicates a seller’s market,” he said. “We haven’t seen that since pre-real estate bubble. There are not enough listings to meet the current activity. Lack of supply can also mean a lack of activity.”
The total market supply is about five months of inventory, Wahlberg said.
The third reason 2014 is slower than 2013 is because of the huge snowstorms that hit Missoula in January and February.
“February crushed us getting out of the gate,” Wahlberg said. “We had two blizzards. February was incredibly slow. Usually in February it’s still winter but usually people are starting to get ready. This February led to a slow March and it had a trickle-down effect.”
When you take out the boom year of 2013, there has been a slow and steady growth in overall sales, Wahlberg said.
“There has been a slow, steady pace up in volume since 2011,” he said. “2013 saw a spike, but 2014 is higher than 2012. 2014 just got back to the slow and steady pace that ’13 ignored. June was really nice. We had more residential sales than June 2013. It maybe indicates that we are picking our pace back up.”
Wahlberg said he would encourage people who are thinking about waiting to list their home in 2015 to really consider the advantages of getting on the market this year.
“There are a lot of people who are thinking that they should probably get ready to list for next year,” he said. “But for people that have houses under $275K in attractive areas in the valley, there’s a big need. More people could take advantage of that and they are probably going to see good returns. Usually people put plans off until next spring. I don’t think our volume is going to finish higher than ’13, but we are going to do better than ’12 if we continue the steady pace.”
Interest rates have stayed between 4 percent and 4.5 percent this year.
“We haven’t seen them grow, which has helped maintain activity,” Wahlberg said. “I bet we post around 1,000 total residential sales this year. That would be our second best year since the real estate bubble burst. 2013 is looking like the anomaly rather than the normal.”
The organization also reported that distressed sales are down and homes in desirable neighborhoods and affordable price points are selling quickly with multiple offers. There is an increase in buyers looking for second homes re-enter the market and interest in high-end condominiums is increasing.
The Montana Association of Realtors reported that 4,190 single-family homes sold in the eight major markets in Montana — Billings, the Bitterroot, Butte, Gallatin, Great Falls, Helena, Missoula and the Northwest region — in the first six months of 2014 compared to 4,456 during the same period in 2013, a decrease of 6 percent. However, the second quarter has been much more active than the first quarter of the year, when sales were down 12 percent.