The Missoula residential real estate market closed out the month of March with a total of 65 sales, bringing the total number of homes sold in the first quarter to 142 compared to 115 in the first quarter of last year. Approximately 82 per cent of homes sold in the first quarter of this year were sold for $349,000 or lower and the overall average sold price was $276,891. Homes that closed in the first quarter were on the market for an average of 126 days before the sale was finalized. At the end of the March there were 163 homes under contract and 331 homes actively listed for sale.
By the numbers:
- March home sales were up 85.7% from the prior month
- First quarter 2015 sales were up 23.5% from the first quarter of 2014
- Approximately 78% of homes sold in the first quarter of 2015 were under $350,000
- Average home prices were an average of 11.4% higher in the first quarter of this year than in the first quarter of last year
- Average list-to-sale price has been at 96-98% for well over a year, March list-to-sale price was 98%
- Absorption rates are still favorable for sellers and are running slightly faster than a normal market
- Total number of homes on the market at the end of March were 331 with an additional 163 homes under contract
Despite the fact that current active listings are slightly behind last year’s volume, sales figures have increased each month since January. Even with the usual seasonal decrease in activity, there are still plenty of buyers in the market; March sales were up by about 85 percent (30 sales) from last month and up by 20 per cent (13 sales) from the same month last year. Despite the seasonal decrease in active listings, there was still plenty of buyer demand.
The Missoula market continues to perform within the range of a normal market, producing an overall absorption rate of 7.0 months in March, compared to 6.1 months in February. While sales have slowed over the last couple of months, homes are still selling well within the range of a normal market where it takes approximately 6 months to sell a home.
The health of any real estate market can be recorded by absorption rates, which is the correlation between the number of active homes on the market and the number that sell per month, on average. According to the National Association of Realtors, a normal market is six months of inventory – whereas anything over 6 months indicates a buyer’s market and anything under 6 months indicates a seller’s market. For the purposes of this discussion we are utilizing a 3-month average for sales.
Missoula’s overall absorption rate history for the last four years is presented in the following graph.
Absorption Rate by Price Range
Inventory and absorption rates are an indicator for how fast our market is turning over. If the number of homes coming on the market is proportional to the number sold, our market will continue to strengthen. If there is a substantial increase in homes that are not absorbed by the number of buyers in the market, expect our market to soften until they are absorbed by the buyers.
The following table calculates absorption rate by price range, based on the last three months of sales.
5 Year Home Sales Trend
The number of home sales in Missoula increased to a total of 65 and under contract volume increased from 129 properties at the end of February to 163 properties under contract at the end of the quarter. The following chart provides a monthly snapshot of total homes sold since January 2011. (Green columns represent Under Contract properties for the current year.)
Residential Real Estate Sales by Neighborhood
Overall Short Term Market Outlook
As has been the case for the last year, lower inventory in the beginning of the year provided buyers little to choose from, so when a good home that was priced well was listed, sellers were entertaining multiple offers and signing contracts with buyers at near asking price. We have been seeing the trend continue through the first quarter. Over the coming months we will see the seasonal increase in listings inventory and, based on what we have seen thus far in 2015, we anticipate a busy summer in terms of sales. Qualified buyers that are prepared to buy are looking to purchase a reasonably priced home; sellers whose homes are competitively priced continue to entertain multiple offers and are getting very close to asking price or more than asking price. Sellers are currently closing the sale at an average of 96/98 per cent of asking price.
Inventory may increase but we do believe, based on absorption rates, there are buyers out there to absorb it.
Full PDF Copy: March 2015 Market Report