Missoula Real Estate Market
OVERVIEW: Over the last two months, real estate activity has been on the rise after having been incredibly slow over the winter months. We are feeling more confident that we are beginning to see a stabilization of the Missoula market. Active listings, under contract numbers, and sales are all on the rise.
By The Numbers:
• Sales are up 5.7% higher than previous month
• 81% of homes sold are under $350,000
• Average home prices are up 2.8% over last year
• Overall sales are down 26.7% from this time last year but catching up fast
• 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 445 and an additional 203 homes are under contract
Buyer Recommendation: Despite the increase in homes on the market, with buyers out looking, those sellers whose homes are competitively priced have been 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. For the purposes of this discussion we are utilizing a 3-month average for sales.
Inventory of Homes Listed for Sale
Over the last year Missoula has had 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 two months, inventory has picked up significantly and at the end of May, there were 449 homes actively listed for sale. Inventory levels are still behind the levels of 2010, 2011, and 2012, however, based on our evaluation of the absorption rate, we believe that we may be witnessing Missoula’s ascent toward a more normal market.
5-Year Home Sales by Month
Missoula home sales increased this month to a total of 75 and under contract volume increased from 155 properties at the end of April to 203 properties under contract in May. Based on the low number of sales in the first quarter of the year, we believe there may have been some properties that were under contract at the end of March that did not end up closing until April or May.
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 on the rise, 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. Sellers have put more homes on the market in the last two months and since there are currently plenty 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: May 2014 Market Report Powered by: Jeremy Williams Williams & Associates [email protected]