On a Saturday morning in mid-February, real estate broker Wendy Brown went to an open house packed with about 50 people to look at a three-bedroom, 1,600-square-foot home in Evergreen. Built in the 1970s, the home went under contract almost immediately for $435,000.
“I did not expect that,” Brown said. “It has not been the standard recently.”
Brown said she would have expected this scenario before June of last year, before rising interest rates began deterring buyers. But the market has quieted down since the pandemic triggered a housing market boom.
“There is still a whole pile of buyers who are out there still looking, and they are willing to pay above market price if it’s priced correctly,” Brown said. “It’s taking longer for houses to sell – buyers are being more thoughtful. But prices are not falling drastically.”
According to Montana Regional MLS data, the median sale price in 2022 was $605,000 in Flathead County and the average number of days on the market was about 100. In 2021, the median sale price was about $520,000 with an average of 80 days on the market.
Realtors, economists and lenders say the primary issue in Flathead County that is driving high prices is a lack of inventory.
“It leads to the question — are we building enough housing?” said Patrick Barkey, the executive director of the University of Montana’s Bureau of Business and Economic Research at the Economic Outlook Seminar in February.
Construction activity has surged in Flathead County in recent years, with thousands of new housing permits issued in the last few years. The city of Kalispell alone has approved 5,000 housing units since 2018, 3,000 of which were multi-family.
“The big surge is when you compare multi-family housing,” Barkey said. “Compared to what it was pre-recession, it’s a whole different order of magnitude and it’s where the real froth has been in construction.”
At Glacier Bank, President and CEO Mike Smith says lenders are still busy, although things have slowed down. Construction lending is seeing the strongest demand, and he says the company is returning to pre-pandemic activity compared to record years in 2020, 2021 and 2022.
As mortgage rates hover around 7%, Smith says nobody is refinancing their homes right now and many people are likely choosing to stay put on their properties in order to stay locked into low interest rates.
But experts say a less active real estate market means less inventory, which keeps prices high.
“Every healthy, functioning housing market has inventory and vacancies,” Barkey said.
Brown says inventory is still low in the Flathead Valley, and while interest rates are impacting the amount buyers can spend, they also have fewer options. Right now, she’s seeing the highest demand in the $350,000 to $500,000 range but she’s seeing homes of all prices go under contract.
According to MLS data, the median home price in Whitefish last year was $835,000 and the median price in Kalispell was $538,000. There were 1,771 total sales in Flathead County in 2022 compared to 2,769 in 2020.
While Brown still receives some cash offers on homes, she said there are fewer cash buyers than there have been in recent years.
“I’m not seeing a ton of residential cash buyers,” Brown said. “I think people in that realm are looking for a deal, and there aren’t any deals. It’s mostly the investors that have cash and they are holding off until prices come down a little bit.”
Smith said he suspects buyers are being more cautious than they were in recent years and while activity has slowed down in the winter months, he thinks the pace will gain some traction in the summer.
“This is still a desirable place,” Smith said. “We are still optimistic from a real estate perspective, and I think people will continue to migrate from the west.”
Brown shares a similar perspective, and said she remains optimistic about the market.
“We’ve been discovered, and I don’t think that will change … I think the market will continue to chug along,” Brown said.
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