MISSOULA — While prices continue climbing in Missoula's real estate market and the supply of housing continues to lag, the data used to track the changes over time is beginning to show a slight trend toward improvement.
The Missoula Organization of Realtors on Friday released its annual market report, which noted a 2.25% increase in the median price of a home over the prior year. But the number of homes sold in 2024 also increased to 984.
While the increase in sales shows improvement, it still lags behind pre-pandemic figures, according to Mandy Snook with the Montana Home and Land Co.
“While a 3.25% increase in sales may not feel very big, it is worth noting that it's the first time we've seen an increase in sales volume since 2020,” said Snook. “The five years before COVID, we had an average sales volume of 1,465 units per year.”
Broken down by type, the median price of a single-family home in Missoula now stands at $600,400, according to the data. The median price of a townhome climbed to nearly $470,000 while Condos now ring in at $365,000 on average.
When shopping for a home, buyers remain focused on areas of the city with greater affordability. Those areas also saw a greater number of sales.
In 2024, the Sxwtpqyen area led the city in sales at 162 at a median price of $550,000. Franklin to the Fort saw 103 sales at a median price of $425,000, and Rose Park had 44 sales at an average price of $560,000.
Lower Miller Creek also saw a higher sales volume with 86 transactions at a median price of $750,000.
“Aside from Lower Miller Creek, all of these neighborhoods had a median sales price under the 2024 median of $560,400,” said Snook.
This year's report also found that the Northside and Westside neighborhoods remain the only two in Missoula where the median price of a home remains under $400,000. The Northside average was $377,000 in 2024 while the Westside saw a median sales price of $340,000.
Such prices are quickly becoming a thing of the past.
“The demand for housing under our median prices is driving these low supply rates in these neighborhoods,” said Brint Wahlberg with Windermere Real Estate. “It's affordability. People are trying to buy houses in this market, and it's very challenging.”
Affordability and supply issues linger
When looking at affordability, however, the index is trending in the right direction in that it hasn't changed at all. A number below 100 on the Housing Affordability Index shows that housing costs are outpacing income, demonstrating a lack of affordability.
But a number above 100 demonstrates that income is outpacing housing costs. Back in 2019, before the pandemic, Missoula had an index of 94, demonstrating a relatively health market.
Heading into COVID-19, however, affordability spiked, even as interest rates plummeted. That was quickly followed by a rapid appreciation in home prices and soaring interest rates. Combined, that pushed the city's Housing Affordability Index down to 62 where it currently stands.
Matt Gehr with Prime Lending said the index may be low, but it seems to have stabilized.
“This year can be defined by relative stabilization, at least when compared to the handful of years prior,” he said. “While the affordability index remains relatively low – we still have an affordability issue – but it's not continuing to get worse. That's the overall message here.”
Wahlberg attributed the lingering issue of affordability largely to the city's supply shortage. That's been an issue now for years. The recent 2045 Land Use Plan adopted by the city in December suggests that Missoula must build as many as 1,500 homes per year over the next 10 years and continue near that pace for the next 30 years to meet demand.
The current market is only providing half the number, according to the data.
“Missoula's ongoing supply issues continue to be a major influence in this market,” said Wahlberg. “It wasn't until the second half of this year that the supply notched up over three months, which is kind of our breaking point between under supply and normal balance.”
At the end of 2024, Wahlberg said the city had achieved four months of supply. The last time that happened was the third quarter of 2015.
