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Economic Forecast: Challenging Year Ahead

By Beacon Staff

Though they wanted to give a lighter forecast, the presenters at the eighth annual Economic Future of the Flathead breakfast delivered a grim outlook for the valley this year.

The event, sponsored by Montana West Economic Development and Flathead Valley Community College, sought to summarize the changes in the 2009 real estate market and economy.

Jim Kelley of Kelley Appraisal wasted no time getting to the point of his real estate analysis.

“The long and short of it is obviously last year we had a really tough year and in all likelihood next year is going to be a really tough year,” Kelley told a packed house at the FVCC Arts and Technology building.

The Flathead hit a 30-year low in construction in 2009 with fewer than 400 starts, Kelley said. But even with fewer construction starts, there is still a large supply of houses on the market, especially in the highest price ranges, he added.

One way more houses could be sold would be a population increase, Kelley said, but he predicted April’s population numbers from the state would not bode well.

“I suspect we’ll end up seeing a decrease in population,” Kelley said.

There was an increase in home sales in the last four months of 2009, largely in homes costing less than $300,000, Kelley said. He credited the surge to federal tax credits and stimulus.

Foreclosures were also up in 2009, and accounted for 132 of the 932 property sales in Flathead County last year, Kelley noted. In total, there were 285 foreclosures in 2009, compared to 125 in 2008. And according to the number of Notice of Trustee filings, Kelley suspects there will be “a bunch more foreclosures coming up” this year.

Median housing prices also took a hit throughout the valley, but the biggest decrease came in Whitefish. The median price came down about 21 percent to $349,950. In Kalispell, the median price within city limits dropped 8.2 percent to $189,950 and Columbia Falls fell 15 percent to $160,500.

Bigfork and Lakeside properties saw a slight 3 percent median value increase, and Kelley reported more Flathead Lake property sales as a result of “bargain hunters” taking advantage of lowered prices. In total, only 8.7 percent of the new land listings in Flathead County sold in 2009, Kelley said.

The labor forecast didn’t fare much better. Brad Eldgredge, the director of institutional research for FVCC, said the Flathead lost 9.5 percent of its jobs in 2009. Over 1,200 construction jobs disappeared last year, along with close to 900 manufacturing jobs.

And despite a forecasted 3.3 percent increase in Montana’s employment from national economic research groups, Eldredge said it most likely would not be enough to battle the state’s unemployment rates.

“I don’t see the unemployment numbers coming down significantly this year,” Eldredge said.

The only areas of increased employment in the Flathead were government, education and health care, which improved minimally compared to large losses in other industries.

Eldredge also cited a forecast from the state Department of Labor and Industry for Northwest Montana, which predicted that total employment numbers would not recover this year to the levels seen in 2008, and it would probably take to 2011 to get back to those numbers.

He also noted that employment in the valley is shifting from blue-collar jobs to knowledge-based positions. Any job requiring large amounts of transportation probably won’t fare well because of the Flathead’s remote location, Eldredge said. Entrepreneurship, Internet-based jobs and tourism should help the Flathead’s employment in the future, he said.

“We’ll get through this, it will just take adjustments,” Eldredge said.

One bright spot in the two-hour program came from Marney McCleary of the Community Action Partnership of Northwest Montana, who said the foreclosure rates have allowed CAP and the city of Kalispell to aggressively pursue the Neighborhood Stabilization Program and Community Land Trust.

Putting foreclosed properties into a land trust will allow for permanent affordable housing in Kalispell, McCleary said. The trust has a goal of acquiring 22 houses.