MISSOULA — The number of homes sold in the Missoula market remains at its lowest point since the housing bubble more than a decade ago, but with this week's interest rate cut, housing officials say that could change.
The Missoula Organization of Realtors (MOR) on Wednesday told members of the Missoula Midtown Association that while volume is down, housing prices continue to climb. As of August, the median price for a single-family residence in Missoula topped $605,000.
The median price of a townhome also ticked up to $470,000 while condominiums increased to $372,000. With home prices rising and interest rates high, home sales have fallen over the last few years.
“We're about 40 homes off pace from where we were last year,” said Brint Wahlberg with Windermere Real Estate. “Barring a giant 4th Quarter rally, which could happen with rate cuts like this today, we will likely post the lowest amount of sold residential property in Missoula since the bubble years. Sales are going down but median prices are going up.”
So far this year, the Missoula urban area has seen only 696 home sales while the median price for all housing types combined climbed to $562,000 — an increase of 1.9% over the same point last year.
The local market's housing supply also remains low, standing at around 2.4 months in August. A healthy market sits between three and nine months, according to Wahlberg.
“If you drop below, you're in an under-supply, which means there's not enough housing to meet the current demand when it comes to sales activity,” said Wahlberg. “So you're forced to pay close to full price, if not over. We are still in a very tight supply market.”
But the housing supply and rate of absorption varies by price. In Missoula, housing listed for $600,000 or less has less than 1.7 months of supply, which is considered very tight.
The market for housing listed over $600,000 enjoys a normal supply, according to MOR data.
“For $600,000 and under, we're in a tight supply. If you go higher, it changes quite a bit,” Wahlberg said. “The market is very fractured right now as it pertains to sales point.”
Higher-end homes tend to sell more when the Stock Market is strong. Historically, the market enjoys a prolonged rally when interest rates fall and with this week's cut, that could bring more activity to Missoula's top market.
“Generally, most of our higher-end homes have a higher cash percentage than financing,” said DJ Smith, a managing broker at Berkshire Hathaway. “So when the market does well, the higher-end homes do well.
The city and county of Missoula have approved more than half a dozen large subdivisions in recent years, most with a blend of housing types ranging from single-family to townhomes.
Given the pace of construction, the city's stubbornly tight market may come as a surprise. But Wahlberg said high interest rates have hindered the market in many ways, though there may be hope on the horizon.
“We've got some signs. We may see some hopeful things with the subdivision activity,” Wahlberg said. “That's something that could really help us in meeting buyer needs and flooding more of that sub-$600,000 market.”
“A lot of the people buying are people that own and either need to downsize or upsize, but they're taking the market really slow. A lot of my people are move-up buyers," Wahlberg added.
