After breakneck growth over the last two years that saw everything from real estate prices to hotel bookings explode, life in Northwest Montana appears to be slowing down a bit. Not a lot, but at least a bit.
The most telling sign is the second-quarter real estate data in Flathead County. The number of residential sales dropped substantially during the months of April through June to 470, the lowest since 2016. Land sales fell even more precipitously, to 117, compared to 262 during the same quarter a year prior.
If you talk to local agents, they’ll mostly say the market remains healthy. Prices may be falling, but real estate is still moving. One broker told me the pace is similar to what housing looked like pre-COVID. For now.
Last week, the Federal Reserve once again raised its benchmark interest rate a lofty three-quarters of a point for the second straight time in its most aggressive action in three decades as it continues to make moves to cool inflation. That means it will be more expensive to take out a mortgage or car loan. As rates have soared, pending home sales nationwide plummeted 20% in June compared to a year earlier. It was only a matter of time before prices followed.
Elsewhere, in some of the other hottest real estate markets in the country, the situation is similar. So-called “Zoomtowns” — relatively quiet cities like Boise, Idaho, that saw its housing boom since the beginning of the pandemic — are now experiencing price reductions. While overall demand has ebbed, there are fewer stories about buyers paying tens of thousands of dollars over asking price, and more about the consequences of remote workers being asked to return to the offices in the cities they came from.
“We’re seeing buyer apprehensiveness to engage in the market,” a local realtor said in a recent interview. The great American migration of lockdown-weary city dwellers to more rural areas has, at long last, begun to decelerate.
And that’s not all. While the relatively new tradition of complaining about summer tourists in the Flathead Valley remains as strong as ever, the actual number of tourists may be waning. In late June we reported predictions that tourism could fall this year due to a number of factors, including a cool and rainy spring, high gas prices and overall inflation. Moreover, travel restrictions were lifted in much of the world creating more options for those planning trips.
At the time, local tourism agencies were reporting that hotel occupancy had softened, and short-term rental bookings were looking more like 2019 than last year’s gangbuster numbers. Now boarding statistics from Glacier Park International Airport (GPIA) are providing additional anecdotes to back up the notion that, believe it or not, every single summer may not be busier than the last one.
According to the airport, both departures and arrivals decreased by about 6% in June, despite the fact that a major expansion project at GPIA makes the terminals feel busier than ever.
It’s true, the valley remains far busier than it was three years ago and it’s likely to remain that way. But even small signs of slower, healthier growth in both our housing market and tourism sector are welcomed by many of the locals struggling to keep up. We could all use a breather, even if it’s a small one.