Kelley’s Market Trends: Residential Sales – First Half of 2016

Numbers have started to slow after record start to the year

By Jim Kelley

After starting 2016 at a record pace for residential sales, the numbers have started to slow as the median home price hits a record high.

In the first two months of this year, the number of residential sales were up nearly 18 percent over the same time period in 2015. From that point on, the volume has been mixed, being down 10 percent in March, up 20 percent in April, down 8 percent in May and down 19 percent in June.

Overall, the numbers are down for the first half of the year by less than one percent from the first half of 2015.

The median sales price for the first six months of this year was $246,637, compared to $235,500 for the same period in 2015. The 2016 median sales price is now higher than it was in the first half of 2007, which was the previous first half record of $241,500. The 2016 average price of $309,130 is still well below the record 2006 average of $349,398, but the 2016 median price is an all-time record high for Flathead County in the first six months.

Mortgage interest rates are now at record lows with the average 15-year rate at around 2.98 percent and the average 30-year rate at around 3.58 percent. These record-low rates increase the effective purchasing power and heavily contribute to increasing home prices.

There were 740 residential sales in Flathead County in the first half of this year, compared to 743 in the first half of 2015. In the first six months, 54.5 percent of residential sales were on small urban or suburban lots, 21.6 percent were on half acre to three-acre lots and 14.7 percent were on three to 20-acre tracts. There were also 24 waterfront home sales, representing 3.2 percent of the market.

The current overall inventory level is lower than what is was a year ago. In 2016 there are 1,254 residential listings on the market, compared to 1,463 residential listings at this same time in 2015. Of the active residential listings in Flathead County, only 172 (13.7 percent) are priced below the median sold price of $246,637.

In the first half of the year there were 46 bank-owned or distressed sales, compared to 76 in 2015. Non-distressed sales represent 94 percent of the market, compared to 90 percent for the same period in 2015.

The declining inventory, increasing prices and the record-low interest rates suggest positives in the local home market. However, the recent decline in the number of sales combined with the announced employment cutback in the local mills and the prospect of future interest rate increases all serve to raise red flags.