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.
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.
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.
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.)
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