Housing Market Returning to Pre-Pandemic Trends

After the pandemic triggered a housing boom in the Flathead Valley three years ago, prompting sight-unseen sales along with cash purchases, realtors say the county is following state and nationwide trends of a cooling market.

According to Montana Regional MLS data, the median sales price in Flathead County dropped to $577,550 this May compared to $625,000 a year ago.

“Things were super-heated two years ago,” Northwest Montana Association of Realtors (NMAR) Public Affairs Director Erica Wirtala said. “They calmed down a little bit last year and they are going back to a more traditional market compared to what we saw in 2021 when there was no break in the market.”

During the pandemic-era housing boom in 2021 and 2022, Wirtala said the market was consistently hot year-round instead of the usual summer peak.

This year, buyers are rarely purchasing homes sight-unseen compared to 2020 and 2021 when one out of every three buyers chose that method.

Additionally, there’s been an increase in the average days on the market. In Kalispell, that number has nearly doubled compared to last June when the average days on the market was 63. This May, the average days rose to 122 days.

“What we are seeing now is a return to a more traditional way of selling,” Wirtala said. “A realtor will hold an open house and people will tour and make more calculated, thoughtful choices.”

With mortgage rates hovering around 7%, buyers are less likely to pay over asking price. While some property owners have chosen to stay put in their homes in order to retain their low interest rates that they locked into before the Federal Reserve began increasing rates, Wirtala said realtors are noticing that trend is diminishing as more “For Sale” signs pop up.

“Some people are downsizing or moving out of the area, or they need something bigger,” Wirtala said. “I have not seen interest rates play into sellers, it’s more the buyers.”

Flathead County’s median sales price has dropped but trends in Kalispell, Whitefish and Columbia Falls vary, primarily due to the range of housing inventory in each city.

According to MLS data, Kalispell’s median sales price dropped to $499,000 this May compared to $590,000 in May of 2022.

“Kalispell is doing pretty good and trying to provide a lower priced product,” Wirtala said. “They aren’t doing lots of big subdivisions with fancy homes. Whitefish is always difficult to do a development in and they are doing smaller subdivisions here and there and trying to squeeze stuff in where they can.”

Whitefish’s median sales price has spiked to $933,000 in May compared to $640,000 in May 2022.

Meanwhile in Columbia Falls, the May median sales price of $625,000 has not dropped significantly from its $700,500 peak in May 2022, which Wirtala links to a lack of inventory.

“Columbia Falls is still holding its own,” Wirtala said. “Their median price is high because it’s the hip place to live. They have not dropped too much – they just don’t sell the volume. They only sold 12 houses in May.”

According to a University of Montana Bureau of Business and Economic Research (BBER) study released this year, Flathead County has faced a housing shortage since construction slowed down during the Great Recession.

In 2011, there was a surplus of 3,000 housing units but began steadily declining. In 2022, there was shortage of 3,000 units.

From 2012 to 2022, 3,161 units were needed in Flathead County, according to BBER data. Economists estimate that 14,803 units will be needed from 2023 to 2032, based on housing inventory and population growth.

According to the study, the growth in home prices has pushed many residents beyond the limits, and housing market price pressures will likely continue.