It’s evident that the Missoula real estate market is still constrained by a limited supply of homes. Inventory levels have remained steady over the past four months, with 133 homes currently on the market, similar to last year’s numbers. While I expect this figure to increase, I don’t anticipate a significant jump. In fact, I believe that this sluggish market may continue for several more years, mainly due to a few reasons. Firstly, foreclosure rates are at an all-time low, and homeowners who purchased properties at lower interest rates are holding onto them to rent out or invest in them. Additionally, banks are restricting builders on the number of homes they can construct at once.
One crucial but seldom discussed indicator we track is pending Missoula listings. Last month, we recorded 128 pending, which rose to 162 pending this month, representing over 30 more homes than last year. This is the most significant increase we’ve seen since 2020, and for the first time in three years, we have more pending than active listings. However, some of these pending are new construction homes waiting to be finished.
The average home for sale price for Missoula real estate last month was $616,000, although this is just an average, with some homes selling for less and others for more. Appreciation rates are also hovering around 5-6%, which is typical for a regular real estate market, quite different from the 25-30% seen in the last two years. Nonetheless, there’s still a slight dip in the market for homes priced between $650,000-$700,000, and more of a buyer’s market for properties priced at $900,000 and higher.
List-To-Sales Price And Absorption Rate
The overall absorption rate of homes in the Missoula area remains at about 2 months of inventory, way below the 6-month figure that would classify as a standard market. Therefore, the current absorption rate points to a seller’s market.
The list-to-sales price has crept up from 99% to 100%, and that means sellers are getting full price or even higher for their homes. I expect this figure to remain steady or increase a little for the rest of the year.
I get asked almost daily about Missoula real estate and the possibility of a recession. My research shows that of the last nine recessions, only one resulted in housing prices decreasing, and we all remember that one! People are still buying homes and seeing them appreciate at rates of 5-6%, even if we enter a recession. Therefore, if you’re waiting for prices to drop or a significant housing market crash, you might be waiting for a while.
If you have any questions, please feel free to contact me at (406) 926-6767 or email me at [email protected]