Five years ago, the real estate market in the Flathead Valley hit an aggressive downturn as the recession took hold. Prices, which had been inflated during the mid-2000s, tanked. Residential sales were at about half the amount they had been three years prior.
“2009 was actually the year we ended up having the lowest number of sales,” Jim Kelley, owner of Jim Kelley Appraisal, said. “There were only 912 residential sales in Flathead County.”
Compared to the 1,804 residential sales in 2006, the numbers from 2009 were dismal. The median home price was $200,000, down $50,000 from 2007, and the average price of a sold home was $277,622, whereas 2007 had boasted an average price of $361,798.
The real estate market would continue its slow and low performance until the end of 2011, when it started to level out. Through 2012, the market seemed to stabilize, and 2013 brought increased sales and higher prices.
Now, three-quarters of the way through 2014 and five years removed from the recession, real estate professionals believe consumer confidence is improving as the economy continues to strengthen and job numbers improve.
“I don’t think people have the confidence they had back then (in the mid-2000s), but I think the confidence is returning,” Kelley said. “I think people are cautiously optimistic.”
As of August, the median house price in Flathead County was $223,000, and the average price was just over $271,500.
In Kalispell, the growing confidence is manifest in the tight in-town market, according to Rob Keller, the president-elect of the Northwest Montana Association of Realtors and a broker at Montana Brokers.
Having six months of inventory is considered a “solid market” in real estate, Keller said, and the residential market in Kalispell has been turning over quicker than that.
“It’s a very, very good market in Kalispell,” he said.
About anything priced under $250,000 has been selling, and August was particularly active, with 20 percent more residential overall sales in the county compared to August 2013.
But there are still areas of the real estate market that need to see increases before they can be considered recovered, Keller said. While he believes the residential market for working class people has hit the bottom and is now recovering, certain submarkets continue to languish.
Vacant lots with five or more acres, the commercial market, and properties on Flathead Lake still have a glut of inventory, he said, and those prices will likely continue to decline.
Keller also sees an optimistic outlook from sellers when it comes to pricing, which isn’t jiving with the pessimistic views from buyers.
“I think that there are still some people that are cautious out there just because they got so burned in the downturn,” he said.
A real estate agent can help bridge the divide, he said, though some sellers have had to come down on price to be able to sell their properties.
Ross Pickert, president of Glacier Sotheby’s International Realty in Whitefish and current president of NMAR, said he’s seen a similar attitude from buyers on high-end properties as well.
While properties at $400,000 and under are typically selling well, some sellers have had to bring down their prices to match buyers’ expectations, he said.
The market is constantly changing, Pickert said, and there is still an abundance of listings in certain submarkets that need to sell before there can be a complete stabilization of the market.
There has also been a reduction of buyers, he said, because in the mid-2000s, people were getting qualified for much larger loans.
“They took away a supply of buyers, and that was people who weren’t qualified to buy in the first place,” he said.
However, Pickert believes there is more optimism in the overall market than there was five years ago.
“The confidence level is definitely increased since five years ago,” he said. “And the market has increased in every sector since 2009.”
With three months to go in 2014, overall residential sales look to be a little lower than 2013’s total of 1,539, but the price points could end up higher than last year, Kelley said.
There has also been a healthy amount of residential construction, Keller said, and those numbers don’t always make it into the overall sale numbers. And as employment in the county strengthens, more people will likely make the leap from renting to owning, he said, which is a key driving factor for real estate.
“Things are looking better,” Keller said.