Missoula Residential Real Estate Overview

November 2014

As we have been saying for quite some time now, the Missoula residential real estate market continues to indicate that Missoula is trending toward a more stable market and normalizing at the levels we’ve been experiencing for some time now. While there has been a seasonal decline the number of homes actively listed and homes sold over the last few months, the market is performing better than it did in the same months of the last couple of years; homes are currently staying on the market an average of nearly 4.0 months before being sold. Though sales will continue the seasonal decline we believe there are still plenty of active buyers in the market to absorb any additional homes that may come on the market in the coming months.

By the numbers:

  • November sales were down 6.7% from October
  • Approximately 86% of homes sold in November were under $350,000
  • Average home prices were 1.5% higher than last month and 7.4% higher than in the same month last year
  • Average list-to-sale price has been at 97-98% for well over a year
  • Absorption rates are still favorable for sellers and are running slightly faster than a normal market
  • Total number of homes on the market is 346 with an additional 120 homes under contract

Buyer Recommendation: Despite the slight decrease in homes on the market, there are buyers out in the market looking and sellers whose homes are competitively priced continue to entertain multiple offers and are selling very close to asking price. Prior to beginning or resuming your search, we recommend that you be prepared with a loan pre-approval letter and ready to look at and make an offer on the good homes immediately to avoid possible multiple offer situations. Average lender rates for mortgages have been fluctuating over the last six months; if rates rise too high or too quickly, we anticipate a downward pull on affordability for buyers in the market for a new home. Be prepared to pay 97-98 per cent of asking price, on average.

Seller Recommendation: With inventory starting to decrease a bit we recommend putting/keeping your home on the market, especially since there are currently plenty of buyers in the market to absorb any increase in inventory. However, while it seems it is still a seller’s market and average sold prices could increase a little during this time, it remains very important to list your home with a reasonable and competitive price.

SELECTED HIGHLIGHTS

Supply & Demand
The inventory of homes listed for sale in Missoula decreased from 385 at the end of October to 346 at the end of November and there were 70 homes sold throughout the month; at the end of November there were approximately 120 homes under contract. Despite the fact that active listings at the end of November were lower than in October, sales figures remained relatively consistent between October and November. This indicates to us that there are still plenty of buyers in the market despite the usual seasonal decrease in activity. October sales were down by about 5 sales from last month and from the same month last year.
Despite the seasonal decrease in active listings, there is still plenty of buyer demand and sellers continue to garner between 97 and 98 per cent of asking price.

Price Range
Approximately 22 per cent of inventory turned over this month, with most of the sales activity (roughly 86 per cent) in the under $350,000 price range.

Days on Market (DOM)
DOM has increased slightly; homes sold in November were on the market for an average of 119 days in November compared to 113 days in October and compared to 110 days in the November of last year.

Foreclosure/Bank Owned (REO)
Short sale and REO properties accounted for only about 2 per cent of the active residential listings this month. At the end of November, the MLS was reporting 4 active short sales and 3 bank-owned properties out of a total of 346 single-family listings. We anticipate seeing more of these homes coming on the market in the next few months.

Average Sold Price
Average sold price in November was $268,050, up 1.5 per cent from last month and was up approximately 7.4 per cent from the same month last year. The following graph shows average sold price trends since January 2012.

Missoula Avg Sold Price_Nobember 2014

 

 

 

 

 

5-Year Home Sales by Month

The number of home sales in Missoula decreased slightly this month to a total of 70 and under contract volume decreased from 141 properties at the end of October to 120 properties under contract at the end of November. The following chart provides a monthly snapshot of total homes sold since January 2010. (Green columns represent Under Contract properties for the current year.)
Missoula 5 Yr Home Sales Trend_Nov 2014

 

 

 

 

 

 

 

Overall Short-Term Market Outlook

Based on inventory levels, sales, absorption rates and our own experiences, we believe we have been experiencing a normalizing market in Missoula over the last year or more.

With low inventory in the beginning of the year buyers had 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. Over the summer inventory increased and, despite the typical seasonal decrease in homes for sale, remained healthy as fall settled in. Inventory has decreased a bit further since fall, however, based on the absorption rates it is clear there are plenty of buyers in the market and homes are selling quickly and sellers are still getting very close to asking price. That being said, buyers still have limited options compared to years past, thus creating the possibility of a seller getting an offer close to asking price.

Qualified buyers that are prepared to buy are looking to purchase a reasonably priced home. Sellers whose homes are competitively priced continue to entertaining 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 97 per cent of asking price.

Full PDF Copy: Nov 2014 Market Report

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Missoula Residential Real Estate Market

Market Overview – October 2014

The Missoula residential real estate market has been on the rise over the last several months, providing significant clues that Missoula has been trending toward a more stable market. While there has been a seasonal decline the number of homes actively listed and homes sold over the last few months, the market is performing better this year than in the same months of the last couple of years. With a steady stream of buyers actively looking for homes to purchase, homes are staying on the market an average of 3.5 months before being sold. Though sales will continue the seasonal decline, we believe if additional homes become available there are still buyers out there to absorb them.

By the numbers:

  • October sales were down 6.3% from September
  • Approximately 84% of homes sold in October were under $350,000
  • Average home prices were 2.4% higher than in the same month last year
  • Average list-to-sale price has been at 97-98% for well over a year
  • Absorption rates are still favorable for sellers and are running slightly faster than a normal market
  • Total number of homes on the market is 385 with an additional 141 homes under contract

Buyer Recommendation: Despite the slight decrease in homes on the market, there are buyers out in the market looking and sellers whose homes are competitively priced continue to entertain multiple offers and are selling very close to asking price. Prior to beginning or resuming your search, we recommend that you be prepared with a loan pre-approval letter and ready to look at and make an offer on the good homes immediately to avoid possible multiple offer situations. Average lender rates for mortgages have been increasing steadily and, if rates continue to rise, we anticipate a downward pull on affordability for buyers in the market for a new home. Be prepared to pay 97-98 per cent of asking price, on average.

Seller Recommendation: With inventory starting to decrease a bit we recommend putting/keeping your home on the market, especially since there are currently plenty of buyers in the market to absorb any increase in inventory. However, while it seems it is still a seller’s market and average sold prices could increase a little during this time, it is still very important to list your home with a reasonable and competitive price.

Absorption Rate
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.

The Missoula market continued to perform at a slightly faster pace than a normal market, producing an overall absorption rate of 4.5 months in October, compared to 4.6 months in September. While sales have slowed since August, homes are still selling faster than in a normal market where it takes approximately 6 months to sell a home. Overall absorption rate history for the last four years is presented in the following graph.
Missoula Active Homes Inventory_October 2014

 

 

 

 

 

A low absorption rate in your price range may indicate an opportunity to list your home at a higher price and, conversely, a higher absorption rate in your price range may put downward pressure on your market value. The following graph demonstrates absorption rate by price range. Absorption rates in the yellow range show which homes are selling faster than a normal 6-month market and rates in the red range are selling slower. Absorption rates falling within the green range show homes that are selling very near the “normal” 6-month timeframe.

With absorption rates ranging between 2.0 and 5.0 months, on average, homes in Missoula priced at or below $350,000 are being absorbed at a much faster rate than 6 months.
Missoula Absorption Rate by Price Range_October 2014

 

 

 

 

 

Average List-to-Sale Price
List-to-sales price, the ratio of the price at which a home sells to the price at which it was listed, signifies pricing trends in the market. (For example, if you sold a home for $100,000, sellers are, on average, accepting offers of $96,000 – $98,000, or between 2 and 4 per cent less than asking price.) When inventory increases, average list-to-sales prices generally decrease due to added competition in the market. When lower list to sales prices are seen, usually in the summer months, it can be attributed to high absorption rates, primarily because during these months there are more homes on the market, meaning more competition. In that scenario, motivated sellers might have to take less for their home in order to beat out the competition.

For the last year, list-to-sales price has been better than in prior years – hovering between 97 and 98 per cent. The lowest list-to-sales ratio in the last year was in May 2013, when sellers averaged 96 per cent of asking price. In the summer months following, the percentage moved up to 98 per cent and has remained relatively consistent. List-to-sale price this October averaged 97 per cent.
The following graph provides the average list-to-sale price, by month, for the last three years:
Missoula Average List-to-Sale Price_October 2014

 

 

 

 

 

Overall Short-Term Market Outlook
With more active listings on the market and under contract numbers remaining steadily high, it is evident there are buyers actively looking for homes to purchase. Based on inventory levels, sales, absorption rates, and our own experiences, we believe we have been experiencing a normalizing market in Missoula.
With low inventory in the beginning of the year buyers had 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. Over the summer inventory increased and, despite the typical seasonal decrease in homes for sale, remains healthy as fall settles in. Based on the absorption rates it is clear there are plenty of buyers in the market and homes are selling quickly and sellers are still getting very close to asking price. That being said, buyers still have limited options compared to years past, thus creating the possibility of a seller getting an offer close to asking price.

Qualified buyers that are prepared to buy are looking to purchase a reasonably priced home. Sellers whose homes are competitively priced continue to entertaining 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 97 per cent of asking price.

Full PDF Copy: October 2014 Missoula Residential Market Report

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Missoula Residential Real Estate Market – August 2014

Market Overview

Missoula real estate activity has been on the rise over the summer, giving the appearance of trending toward a more stable market. Active listings, under contract numbers, and sales are all on the rise. With a steady stream of buyers actively looking for homes to purchase, we believe if additional homes become available over the next month, there are buyers out there to absorb them.

By the numbers:

  • August sales are down 16.7% from July
  • Approximately 80% of homes sold in August were under $350,000
  • Average home prices are up 10.5% from the same month last year
  • Average list-to-sale price has been at 97-98% for a little more than a year
  • Absorption rates are still favorable for sellers and are running slightly faster than a normal market after starting the year as a buyer’s market
  • Total number of homes on the market is 484 with an additional 159 homes under contract

Buyer Recommendation: Despite the increase in homes on the market, with buyers out looking, sellers whose homes are competitively priced have been and still are entertaining multiple offers and getting very close to asking price. Prior to beginning or resuming your search, we recommend that you be prepared with a loan pre-approval letter and ready to look at and make an offer on the good homes immediately to avoid possible multiple offer situations. Average lender rates for mortgages have been increasing steadily and, if rates continue to rise, we anticipate a downward pull on affordability for buyers in the market for a new home. Be prepared to pay 97-98 percent of asking price, on average.

Seller Recommendation: With inventory increasing over the last couple of months, and despite the increase in buyer activity, we still recommend putting/keeping your home on the market, especially since there are currently more buyers in the market than we have seen in the last several months. However, while it seems it is still a seller’s market and average sold prices could increase a little during this time, it is still very important to list your home with a reasonable and competitive price.

 

Absorption Rate

Overall, the Missoula market performed at a slightly faster pace than a normal market, producing an overall absorption rate of 4.2 months in August, compared to 4.7 months in July. This means homes sold faster than in a normal market where it takes approximately 6 months to sell a home. Overall absorption rate history for the last four years is presented in the following graph.

Msla Absorption Rate History_Aug 2014

 

 

 

 

 

Inventory of Homes Listed for Sale

Over the last year Missoula had been experiencing a significant shortage of homes on the market, however, in the last few months, inventory picked up significantly through late spring and throughout the summer. At the end of August, there were 484 homes actively listed for sale. Inventory levels are still behind the levels of 2010, 2011 and 2012, however, based on our evaluation of the absorption rate we believe Missoula has been moving more toward a normal market.

Missoula Active Homes Inventory_Aug 2014

 

 

 

 

 

5-Year Home Sales by Month

Missoula home sales decreased slightly this month to a total of 100 and under contract volume increased slightly from 150 properties at the end of July to 159 properties under contract in August. The following chart provides a monthly snapshot of total homes sold since January 2010. (Green columns represent Under Contract properties for the current year.)

Missoula 5-year Sales Trends_Aug 2014

 

 

 

 

 

 

 

Overall Short-Term Market Outlook

With more active listings on the market and under contract numbers remaining steadily high, it is evident there are currently buyers actively looking for homes to purchase and we believe we have been experiencing a normalizing market.

With low inventory in the beginning of the year buyers had little to choose from, so when a good home that was priced well would be listed, sellers were entertaining multiple offers and garnering near asking price. Over the last few months inventory has begun to increase. Now that Sellers have put more homes on the market in the last two months and since there are currently more buyers in the market than we have seen in the last several months, sellers are still getting very close to asking price. Buyers still have limited options compared to years past, thus creating the possibility of a seller getting an offer close to asking price.

Qualified buyers that are prepared to buy are looking to purchase a reasonably priced home. Sellers whose homes are competitively priced continue to entertaining 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 98 percent of asking price.

Full PDF Version: Aug 2014 Market Report

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Missoula Residential Real Estate Market Update – June 2014

MARKET OVERVIEW
Over the last few months, Missoula real estate activity has been on the rise after having been incredibly slow over the winter months, giving the appearance of trending toward a more stable market. Active listings, under contract numbers, and sales figures are all on the rise.

By the Numbers:
• Sales are up 52.0% over last month
• 83% of homes sold are under $350,000
• Average home prices are up 1.9% over the same month last year
• Sales for the last twelve months are down 19.9% from the same time last year but catching up quickly
• Average list to sales price is hovering around 98%
• Absorption rates back to a normal market after starting the year as a buyers’ market
• Total number of homes on the market is 487 and an additional 189 homes are under contract

Buyer Recommendation: Despite the increase in homes on the market, with buyers out looking, sellers whose homes are competitively priced have been and still are entertaining multiple offers and getting very close to asking price. Prior to beginning or resuming your search, we recommend that you be prepared with a loan pre-approval letter and ready to look at and make an offer on the good homes immediately to avoid possible multiple offer situations. Average lender rates for mortgages have been increasing steadily and, if rates continue to rise, we anticipate a downward pull on affordability for buyers in the market for a new home. Be prepared to pay 97-98 percent of asking price, on average.
Seller Recommendation: With inventory increasing over the last couple of months, and despite the increase in buyer activity, we still recommend putting/keeping your home on the market, especially since there are currently more buyers in the market than we have seen in the last several months. However, while it seems average sold prices should increase a little during this time, it is still very important to list your home with a reasonable and competitive price.

Absorption Rate

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.

Overall, the Missoula market performed at a normal market level this month, producing an overall absorption rate of 5.6 months in June, compared to 6.8 months in May. Under contract figures decreased a bit from last month, indicating that some of the homes that were under contract in the last two months have finally closed.
2014-0701_Absorption Rate History_Missoula

 

 

 

 

 

Inventory of Homes Listed for Sale

Over the last year Missoula experienced a significant shortage of homes on the market and, even with seasonal increases in inventory, inventory levels were constantly running behind prior year levels. However, in the last three months, inventory has picked up significantly and at the end of June, there were 487 homes actively listed for sale – the most number of homes listed for sale in any given month since August 2012. Inventory levels are still behind the levels of 2010, 2011, and 2012, however, based on our evaluation of the absorption rate we believe Missoula is moving more toward a normal market.
2014-0701_Active Homes Inventory_Missoula

 

 

 

 

 

5-Year Home Sales by Month

Missoula home sales increased this month to a total of 114 and under contract volume decreased from 203 properties at the end of May to 189 properties under contract in June. The following chart provides a monthly snapshot of total homes sold since January 2010. (Green columns represent Under Contract properties for the current year.)
2014-0701_5 Year Sales Trend_Missoula

 

 

 

 

 

 

 

Overall Short-Term Market Outlook

With more active listings on the market and under contract numbers remaining steadily high, it is evident there are currently buyers actively looking for homes to purchase and we believe we have been experiencing a normalizing market.
Since inventory was so low in the beginning of the year, buyers had little to choose from, so when a good home that was priced well would be listed, sellers were entertaining multiple offers and garnering near asking price. Over the last two months inventory has begun to increase. Now that Sellers have put more homes on the market in the last two months and since there are currently more buyers in the market than we have seen in the last several months, sellers are still getting very close to asking price. Buyers still have limited options compared to years past, thus creating the possibility of a seller getting an offer close to asking price.
While it seems average sold prices could continue to increase over the coming months, qualified buyers that are prepared to buy are also looking to purchase a reasonably priced home. Sellers whose homes are competitively priced continue to entertaining 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 98 percent of asking price.

Full PDF Version: June 2014 Market Report

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MISSOULA RESIDENTIAL REAL ESTATE

February 2014 Market Trends

Feb 2014 Market Report

The first two months of the year have resulted in a slow start to the year in Missoula residential real estate, causing us to consider whether this is simply a seasonal slowdown or the beginning of a stabilizing market for Missoula. However, with under contract numbers on the rise and a recent influx of buyers actively looking for homes to purchase, we believe we are experiencing a winter market rather than a stabilizing market. We believe if more homes become available as we move into spring, there are buyers out there to absorb it.

The Missoula residential real estate market closed out the second month of 2014 with a total of 26 sales, with nearly three-quarters of the homes sold priced under $350,000. The overall average sold price was $253,947 and homes that closed in February were on the market for approximately 192 days before the sale was finalized. At the end of the month there were 110 homes under contract and 322 homes actively listed for sale.

Buyer Recommendation: With continued low inventory and more buyers out looking, sellers whose homes are competitively priced have been entertaining multiple offers and getting very close to asking price or more. Prior to beginning or resuming your search, we recommend that you be prepared with a loan pre-approval letter and ready to look at and make an offer on the good homes immediately to avoid possible multiple offer situations. Average lender rates for mortgages have been increasing steadily and, if rates continue to rise, we anticipate a downward pull on affordability for buyers in the market for a new home. Be prepared to pay 97-98 percent of asking price, on average.

Seller Recommendation: With inventory at such low levels for the last several months, we recommend putting/keeping your home on the market, especially since there are currently more buyers in the market than we have seen in the last several months. Until more homes are listed for sale buyers will have increasingly limited options, thus creating the possibility of a seller getting an offer close to asking price because supply is not quite meeting demand. While it seems average sold prices could increase a little during this time, it is still very important to price your home reasonably and competitively.

Highlights

Supply & Demand

The inventory of homes listed for sale in Missoula decreased to 322 at the end of February, coupled with 110 homes under contract. There were a total of 26 residential sales for the month, continuing the trend of the lowest number of sales in any given month since January 2011.

The Missoula market is still suffering from a lack of inventory and decreased again in February. Despite the gradual rise in mortgage rates, the lack of inventory is helping sellers garner between 97 and 98 percent of asking price.

Price Range

Approximately 11.4 percent of inventory turned over this month, compared to 15.8 percent last month and 20.8 percent in December. Most of the activity (roughly 73 percent) occurred in the under $350,000 price range.

Days on Market (DOM)

Homes sold in February were on the market for an average of 192 days, compared to 113 days last month and 132 days in February of last year.

Foreclosure/Bank Owned (REO)

Short sale and REO properties accounted for approximately 6 percent of the active residential listings this month. At the end of February, the MLS was reporting 12 active short sales and 6 bank-owned properties out of a total of 322 single-family listings.

Average Sold Price

Average sold price in February was $253,947, down approximately $3,200 from last month which had the highest average sold price for the month of January for the last couple of years. Prior to January, average sold price had been declining for several months. We believe this increase to be partially attributable to low inventory. However, after a year of increasing average sale prices we do anticipate a levelling out over the next several months as the fed releases its control on the interest rates interest rates begin to rise/fluctuate on their own.

The following graph shows average sold price trends since January 2012.

AvgSoldPrice_Feb14

Absorption Rate

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. For the purposes of this discussion we are utilizing a 3-month average for sales.

Overall, the Missoula market performed just below a normal market this month, producing an overall absorption rate of 8.8 months in February, compared to 6.3 months in January. Under contract figures increased significantly from January, some of which may be homes that were under contract in January but did not actually close in January. The area experienced extreme weather in February which, we know in some cases, caused some closings to be delayed.

The increase in the number of under contract properties, reduced number of sales in February, and a slight decrease in inventory likely nudged up the absorption rate. We have been speculating that low inventory over the last several months could be an indication of the Missoula market’s new “normal”. We have also considered that buyers are likely doing one of three things: cancelling transactions because they unable to lock in an affordable rate before it rises; holding off buying and staying in their current homes; or, they waiting for more homes to come on the market (more choices). Whatever it is they are doing, it is clear there are not many home purchases being made. With warmer weather just around the corner, we have noticed buyers beginning showing interest in looking at homes again however, if inventory levels remain low, the absorption rate should not increase much further unless there is a continued decline in sales.

AbsorptionRateHist_Feb14A low absorption rate in your price range may indicate an opportunity to list at a higher price and, conversely, a higher absorption rate in your price range may put downward pressure on your market value.

Inventory and absorption rates are an indicator for how fast our market is recovering.  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.

AbsorptionPriceRange_Feb14This graph demonstrates absorption rate by price range. As can be expected, absorption rates rise at each price-change increase – with one exception – homes priced from $250,000 to $299,000. It is our belief that this price-range is skewed a bit due to homes which are actively listed but not yet built.

Inventory of Homes Listed for Sale

Active HomesInv_Feb14Over the last year Missoula has had a significant shortage of homes on the market. Even with seasonal increases in inventory, inventory levels have remained below that of the last few years. At the end of February there were 322 homes listed for sale.

5-Year Home Sales by Month

Missoula home sales decreased to a total of 26 for the month of February, the lowest number of sales in three years. Under Contract volume increased from 85 properties at the end of January to 110 properties under contract in February. Based on the low number of sales in February, we believe there may have been some properties that were under contract at the end of January that did not end up closing in February.

The following chart provides a monthly snapshot of total homes sold since January 2010. (Green columns represent Under Contract properties for the current year.)

5YrTrend_Feb14

Average List-to-Sale Price

List-to-sales price, the ratio of the price at which a home sells to the price at which it was listed, signifies pricing trends in the market. (For example, if you sold a home for $100,000, sellers are, on average, accepting offers of $96,000 – $98,000, or between 2 and 4 percent less than asking price.)  When inventory increases, average list-to-sales prices generally decrease due to added competition in the market. When lower list to sales prices are seen, usually in the summer months, it can be attributed to high absorption rates, primarily because during these months there are more homes on the market, meaning more competition. In that scenario, motivated sellers might have to take less for their home in order to beat out the competition.

The following graph provides the average list-to-sale price, by month, for the last three years:

AvgList-Sale_Feb14For the last couple of years homes have been selling at 95 percent to 96 percent of list price and, for the last several months, list-to-sales price has been better than in prior years – hovering between 97 and 98 percent. The lowest list-to-sales ratio in the last year was in March 2013, when sellers averaged 95 percent of asking price. In the summer months following, this percentage moved up to 98 percent. List-to-sale price this February averaged 97 percent.

Overall Short-Term Market Outlook

With under contract numbers on the rise and a recent influx of buyers actively looking for homes to purchase, we are hopeful we have been experiencing a winter market rather than a slowing market.

However, with inventory at such low levels we need to see sellers putting/keeping their homes on the market. Since there are currently more buyers in the market than we have seen in the last several months, buyers have limited options, thus creating the possibility of a seller getting an offer close to asking price. While it seems average sold prices could increase over the coming months, qualified buyers that are prepared to buy are also looking to purchase a reasonably priced home. Sellers whose homes are competitively priced have been entertaining multiple offers and getting very close to asking price or more than asking price. Sellers are currently closing the sale at an average of 97 to 98 percent of asking price.

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Full PDFof the Missoula Market Report:  Feb 2014 Market Report

Missoula Residential Real Estate Trends – January 2014

The Missoula residential real estate market closed out the first full month of 2014 with a total of 35 sales at an average price of approximately $256,709, with the majority of homes sold priced under $350,000. Homes that closed in January were on the market for approximately 113 days before the sale was finalized. At the end of the month there were 85 homes under contract and 333 homes actively listed for sale.

HIGHLIGHTS:

Supply & Demand The inventory of homes listed for sale in Missoula increased to 333 at the end of January, coupled with 85 homes under contract. The market realized 35 residential sales for the month, the lowest number of sales in any given month since January 2011. While inventory did increase from last month, the Missoula market is still suffering from a lack of inventory. It appears that, despite the gradual increase in mortgage rates, the lack of inventory is helping to keep prices up, with sellers garnering between 96 and 97 percent of asking price.

Price Range: Approximately 15.8 percent of inventory turned over this month, compared to 20.8 percent last month and 20.6 percent in November. Most of the activity (roughly 86 percent) occurred in the under $350,000 price range.

Days on Market (DOM): Homes sold in January were on the market for an average of 113 days, compared to 146 days last month and 121 days in January of last year.

Foreclosure/Bank Owned (REO): Short sale and REO properties accounted for approximately 7 percent of the active residential listings this month. At the end of January, the MLS was reporting 15 active short sales and 9 bank-owned properties out of a total of 333 single-family listings.

Average Sold Price: Average sold price in January was $256,709. This is the highest average sold price in the month of January for the last couple of years. Until this month, average sold price had been declining for several months prior. We believe this increase to be partially attributable to low inventory combined with improved buying power due to low interest rates. However, after a year of increasing average sale prices we do anticipate a levelling out over the next several months as the fed releases its control on the interest rates interest rates begin to rise/fluctuate on their own.

Absorption Rate: 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.
Absorption Rate Hist
Overall, the Missoula residential real estate market continues to perform at or better than a normal market, producing an overall absorption rate of 6.3 months in January, up from 4.8 months in December. This increase is likely attributable to a reduced number of sales in January and a slight increase in inventory. Further, this could also be indicating that the low levels of inventory we have been experiencing for several months may be, in all actuality, the Missoula market’s new “normal”. Buyers are likely doing one of three things: cancelling transactions because they unable to lock in an affordable rate before it rises; waiting for more homes to come on the market (more choices); or, holding off buying at all and staying in their current homes. Whatever it is they are doing, it is clear there are not many buyers putting homes under contract right now. The introduction of more homes for sale in the market would raise the absorption rate further. However, if inventory levels remain low we don’t anticipate seeing the absorption rate increase much further unless there is a continued decline in sales.

Inventory of Homes Listed for Sale:
Over the last year Missoula has had a significant shortage of homes on the market. Even with seasonal increases in inventory, inventory levels have remained below that of the last few years. At the end of January there were 333 homes listed for sale.
The following chart presents the total inventory of homes listed for sale at the end of each month since January 2010.
Active Homes Inventory
5-Year Home Sales by Month:
Missoula home sales decreased to a total of 35 for the month of January, the lowest number of sales in three years. Under Contract volume increased from 76 properties at the end of December to 85 properties under contract in January. Based on the low number of sales in January, we believe there may have been several properties that were under contract at the end of December that did not end up closing in January.
The following chart provides a monthly snapshot of total homes sold since January 2010. (Green columns represent Under Contract properties for the current year.)
5YrHomeSales
Buyer Recommendation: Take advantage of interest rates before they rise and be prepared to pay 97-98 percent of asking price, on average. With low inventory, sellers whose homes are competitively priced have been entertaining multiple offers and getting very close to asking price or more than asking price. Prior to beginning or resuming your search, we recommend that you be prepared with a loan pre-approval letter and ready to look at and make an offer on the good homes immediately to avoid possible multiple offer situations. Average lender rates for mortgages have been increasing steadily and, if rates continue to rise, we anticipate it having a downward pull on affordability for buyers in the market for a new home.

Seller Recommendation: With inventory at such low levels for the last several months, we recommend putting/keeping your home on the market. Buyers currently have limited options, creating the possibility of getting an offer close to asking price because supply is not quite meeting demand. However, while it seems that average sold prices could increase a little during this time, it is still very important to price your home reasonably and competitively.
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What Happened in the Missoula Real Estate Market Last Year?

A Year in Review – 2013

Over the last two years, Realtors and analysts across the country have repeatedly emphasized the recovery of the housing market – with many agreeing that it was one of the stronger points of the economy last year, increasing household wealth and spurring new home construction. Low interest rates played a huge role, giving buyers more buying power than in years past, however, interest rates have been on the rise since early summer causing some to wonder if sales will be hampered. We believe that while increasing interest rates are important to consider, and they HAVE been edging up over the last couple of years, rates are still hovering near 30-year lows. While rising rates will impact home sales, we anticipate sales will decline only modestly due to this, if at all. Missoula continues to experience very low inventory levels, which we believe will be the primary driver behind any decrease in sales.

The following table provides sales results for the Missoula real estate market, by area, for the year ended December 31, 2013. YE 2013s2

HIGHLIGHTS

Residential home sales in the Missoula area have been on the rise over the last two years. This is especially impressive for 2013 when low inventories and an escalating interest rate are considered. For the year ended December 31, 2013, there were a total of 968 residential home sales in the Missoula market, reflecting the most number of homes sold for the year since 2007 when more than 1,000 homes sold during the course of the year. The majority of home sales in 2013 occurred in the Mullan Rd. West area with 131 sales, followed by Central Missoula with 121 sales and the South Hills area with 96 sales for the year.

Overall, homes were on the market for an average of 99 days. Homes in the South Hills sold the fastest, with an average of 13 days on market (DOM) followed by the Rose Park/Slant Street area with an average of 70 DOM and the University District with 73 DOM. Homes in the Upper Miller Creek area took the longest to sell, at an average of 175 DOM, followed by homes in Big Flat area which averaged 165 DOM.

Average and Median home prices have been increasing steadily over the last two years. Sold price in the Missoula residential market for 2013 averaged $256,647, with a median sold price of $233,500.

Throughout the course of the last twelve months, sellers have been averaging 96-98 percent of asking price. When looking at the year as a whole, on average, sellers garnered approximately 95.2 percent of asking price, with the largest disparity between asking and selling prices being in the Blue Mountain and Big Flat areas. Sellers in the Expressway-N of Broadway/S of I90 area saw the smallest difference between asking and selling price, averaging 99.7 percent of asking price for the year.

Bank owned (REO) and short sale properties accounted for fewer listings in the Missoula market than in the last couple of years. Earlier in the year, anywhere from 7-10 percent of active listings were either an REO or short sale and, after April, accounted for no more than 4-5 percent of active listings. In terms of sales, there were a total of 42 short sales and 66 REOs sold throughout the year. The majority of REO homes sold were in the Mullan Rd West, Central Missoula, and South Hills areas. Short sales tended to be spread around the market area a little more evenly, with the South Hills/Linda Vista areas having just a couple more short sales than in other areas in town.

Over the last twelve months, the Missoula residential home market has experienced one of the slowest years in terms of active listings. By this we mean that fewer sellers put their homes up for sale in the last year, causing a shortage of homes for buyers to choose from. However, with fewer homes on the market sellers were, on average, selling their homes for very near asking price or, sometimes, over asking price.
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