Bank-Owned Properties Sharply Increasing

By Beacon Staff

Four years ago, bank-owned properties were virtually nonexistent in Flathead County. Now, with skyrocketing foreclosures, they’re everywhere, representing more than a quarter of all residential sales.

In 2010, bank-owned – or real-estate-owned (REO) – properties accounted for 28.3 percent of residential sales in the county, according to Jim Kelley of Kelley Appraisal. Short sales made up another 6.7 percent. Kelley compiles widely referenced monthly and annual reports on regional housing data.

“In 2007, that wasn’t even a factor,” Kelley said of bank-owned properties. “That didn’t even really exist.”

According to Kelley, the number of notices for trustee’s sales, or pre-foreclosure recordings, in Flathead County has risen from 158 in 2005 to 1,187 in 2010. While a notice indicates a homeowner is in loan trouble, it doesn’t necessarily mean a full foreclosure will occur.

Many homeowners negotiate with their lenders and are able to solve the issues before the notice’s 120 days are up. Financial institutions may consider options such as refinancing, allowing a skipped payment or a short sale instead of following through with the costly foreclosure process. A short sale is when a house is sold at a price that’s less than what the borrower owes on it.

If the foreclosure process goes through, however, the property is put up for sale. And if it’s not auctioned off, then the financial institution becomes the owner and is responsible for maintenance, taxes, repairs and everything else that’s part of being a homeowner.

There were 125 full foreclosures in the county in 2008, 285 in 2009 and 393 in 2010, according to Kelley. That equals a 214 percent rise in two years. Before 2008, Kelley said foreclosures were a negligible statistic.

Unemployment, Kelley said, is directly tied to these bleak housing trends.

“Assuming we don’t lose any more jobs, I think we’re coming really close to the end on the lower-end properties,” he said. “But we have a long way to go on the higher-end properties.”

The glut of bank-owned properties, among other reasons associated with the housing crash, has helped contribute to sharply declining house prices in the region. The average price of a residential sale in Flathead County was $361,798 in 2007. The median price was $250,000. Three years later in 2010, the average was $272,101 and the median was $197,500.

“It drives down the prices considerably,” Kelley said.

Kelley will be giving a detailed presentation at the ninth annual “Future of the Flathead” summit on Jan. 26 in room 139 of Flathead Valley Community College’s Arts and Technology Building. Breakfast begins at 7 a.m. and speakers are scheduled for 7:30-9:30 a.m.

Kelley will review the trends of 2010 and examine the prospects for 2011, looking at both residential and commercial real estate. Other speakers are Brad Eldredge of FVCC and Kellie Danielson of Montana West Economic Development.

Tickets, which cost $15, can be purchased at For more information, call Kim Morisaki at (406) 257-7711.

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