Big Sky Country is experiencing slow and steady real estate market growth.
Through 2013, “the volume of single-family homes being sold should be up 10 percent to 15 percent in the eighth largest realtor associations in Montana: Billings, Bitterroot, Gallatin, Great Falls, Helena, Missoula, and the Northwest,” said John E.C. Lagerquist, a sales associate at Century 21 Heritage Realty with more than 40 years of professional real estate experience in Montana.
Lagerquist added, “this will follow the strong and steady growth of 2012. In the northeastern corner of Montana, new housing isn’t being built fast enough to satisfy mounting demand from workers in the oilfields and related industries of the Bakken oil boom.”
Economists are forecasting moderate growth in Montana through 2013, which they say should create a 3 to 5 percent appreciation in real estate by the end of the year.
“The exception is the northeastern corner of the state where housing is scarce and expensive,” said Lagerquist. “Housing developers in this area are required to bring a lot of their own capital to the table. Lenders in the region haven’t forgotten the bust of the early 1980s when oil prices dropped and that led to widespread home foreclosures. However, if a developer has the capital and the development is a community that has enough infrastructure to accommodate the growth, high returns could be possible.
Appreciation rates over the next year for Montana real estate could easily end up anywhere between 5.11 percent and -2.67 percent. This compares to the .17 percent average real estate forecast for all U.S. states, as well as the highest appreciation rate of 5.65 percent for Arizona, and the lowest, -4.46 percent, for Georgia.
Montana is performing generally well economically, including in its real estate market, in large part to increased tourism. The Montana Office of Tourism indicates there was a 3 percent increase in visitors in 2012, and predicts 2013 will bring even more visitors to the state.
An article that ran in the Flathead Beacon in early March (“Reservations Reflect Strengthened Economy in Glacier Country”) reads in part: “Inns and attractions along the edge of Glacier National Park are reporting more summer reservations this year. ‘We’ve been doing crazy fantastic,’ said Stephen Malek, general manager of the Izaak Walton Inn in Essex. ‘We’re going to blow (2012) out of the water.’
“According to Malek, summer reservations at the historic railroad inn along U.S. Highway 2 are strong and should surpass last year’s and winter reservations are up 20 to 30 percent. He also said winter reservations are up 20 to 30 percent, something he believes indicate a newfound trust in the economy.”
The Missoulian reported late December of 2012 (“Employers optimistic about Montana economy in 2013”) that the area’s construction industry is also benefitting from a rebounding economy. “According to the Federal Reserve Bank of Minneapolis’ Beige Book November 2012 edition, the value of Billings-area commercial construction permits this fall was four times greater than at the same point in 2011. Residential construction permit values were up 300 percent.”
In fact, the resurgence in construction is also helping the state’s employment rate. “The Fed also reported that 31 percent of building professionals expected to hire more workers in 2013, compared to only 18 percent who were that optimistic last year. Montana posted a 6 percent unemployment rate in October, according to the U.S. Bureau of Labor Statistics. That was 14th best in the nation, while next-door North Dakota led the country at 3.1 percent and Nevada brought up the rear at 11.5 percent. Compared to October 2011, 44 states marked employment gains.”
Realty Times offered the following Montana real estate market stastics:
- The average sales price in February, 2013 was $307,356 showing a 12.5 percent increase from $268,908 in February, 2012.
- The average list price at sale in February, 2013 was $316,962 showing a 12.6 percent increase from $277,061 in February, 2012.
- Homes sold at 97.0% of list price in February, 2013 as compared to 97.1 percent of list price in February, 2012.
- The average number of days on market for sold listings in February, 2013 was 115, up 37.4 percent from 72 in February, 2012.
- There are currently 165 single family homes on less than 1 acre for sale in Bozeman.
- The absorption rate (the time it would take to sell off the current inventory at the current rate of sales) is 6.6 months, indicating a neutral market.
Realty Times reported that, because Montana is experiencing positives in terms of job and population growth as well as interest rates, the real estate market pricing structure is changing.
Montana Realtor Howard Sumner said, “when all the positives are taken into consideration, on first blush, that would seem a more than modest price increase than demand would indicate. I have asked the question before and believe that the underlying reason is the same – caution on (the parts of) both the buyers and sellers within the marketplace. Yes, sellers do want the highest price that they can achieve, yet, they do want to sell. So while you might assume sellers’ interests are not aligned with the buyer at this point in the marketplace, the assumption is most probably wrong. “So with interest rates favorable, buyers will move some in pricing of purchase, yet not as much as positives would lead us to believe,” continued Sumner. “We are now seeing an influx of buyers moving out of rentals into the market as purchasers, since the economy continues in a positive direction with jobs being more secure. As always it’s fascinating to me to watch the market and how it operates with all the different forces involved. This year should be interesting to see of how the market responds.”
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