As bad news pounds the national real estate market, Montana, while taking some punches, has proven to have a tough chin.
The pace of second-quarter existing home sales fell in 44 states – including by 7.1 percent in Montana – compared to the same time in 2006, according to numbers released last week by the National Association of Realtors. But NAR spokesperson Walter Molony put the Big Sky state’s apparent woes in perspective:
“You’re in pretty good shape.” He pointed to places like Florida, where sales have slowed by more than 40 percent, and Nevada, which is not far behind, when studying the Montana market. He said areas that have seen population and job growth accompanied by a steady increase in housing prices – rather than several years of 20 percent gains – are faring better than much of the country.
Montana, and the Flathead Valley, fits that criteria. The first quarter of 2007, when markets slowed elsewhere, the pace of home sales in Montana was the best ever. And the lag this quarter perhaps looks worse than it should because it’s being compared to the second-best quarter ever. In Northwest Montana, the number of homes sold in July was down slightly from last year, but the median price of homes still ballooned from $200,000 to $246,500, according to the Northwest Montana Association of Realtors.
“We’ve had certain areas that had hot markets cool down,” Ed Hudson, president of the Montana Association of Realtors, said. “But even when it cools down it’s still better than the norm. We haven’t really cooled.”
Affordable housing, or homes priced under $200,000, are still selling at a fast clip, he said. And buyers have more to choose from.
“For sale” signs are propping up all around Flathead Valley, but Ted Dykstra, president of the Northwest Montana Association of Realtors, attributed that to an excessive number of homes on the market, not slow sales. He said many people, after watching their homes appreciate rapidly for a few years, are cashing in – while the number of homes sold has remained the same. Another issue, Dykstra said, is that the market can appear to be softening due to the sheer number of real estate agents in Northwest Montana.
“Go back east and in metro areas the market is certainly on a downward slope,” Dykstra said. “We’re not seeing that. If we get into a situation where we have four or five years of inventory then we have a problem.” Right now, he estimated, the area has between 23 and 27 months of inventory.
While Montana’s market has managed to slog through the national housing slowdown, some of its neighbors are faring even better. North Dakota and Wyoming were two of just six states that actually saw the pace of home sales increase over a year ago: North Dakota by 2.9 percent and Wyoming by 10.8 percent. Hudson attributed the growth to the booming mineral exploration industry in those states.
Despite a steady market, some Montana buyers and sellers are still rattled. Nationally, housing starts are at a 10-year low. Concern over real estate and mortgage markets has Wall Street on edge. Yet Hudson said Montana sidestepped much of the credit lending problems. “We didn’t have a lot of people taking out second and third mortgages in Montana,” he said.