MISSOULA REAL ESTATE SALES
Missoula’s residential real estate market is about 14 percent ahead of last year on a year-to-date basis, despite a decline in sales the last three months. At the end of October there were 391 active residential homes listed for sale in the Missoula market, which is a 9.9 percent decrease compared to last month but flat compared to the same month last year. Despite low inventory levels, under contract figures remained strong through September but in October, ended lower than the prior month and also the same month last year. Average lender rates for mortgages have been increasing steadily and, if it continues to rise, we anticipate it having a downward pull on affordability for buyers in the market for a new home.
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 the following two graphs, we are utilizing a 3-month average for sales, rather than 12 months, in an effort to demonstrate the current, short-term absorption rate.)
Overall, the Missoula market continues to perform quite a bit better than a normal market with an absorption rate of 4.8 months in October. If more homes continue to come on the market as we move into winter, we anticipate seeing the absorption rate deteriorate slightly and move toward a more normal market. However, if inventory levels stagnate we don’t anticipate seeing the absorption rate deteriorating unless there is a significant decline in sales.
INVENTORY OF HOMES LISTED FOR SALE
Over the last year Missoula has had a shortage of homes on the market. Even with the increase in inventory in September, inventory levels have remained below that of the last three years and at the end of October there were 391 homes listed for sale. This represents the lowest number of homes listed for sale in the month of October in the last three years. While we expect inventory to experience the seasonal decline as we head into the winter months, we are hopeful that the level of homes on the market will match or surpass prior year levels as homeowners take advantage of a seller’s market.
The following chart presents the total inventory of homes listed for sale at the end of each month since January 2010.
5-YEAR HOME SALES BY MONTH
Under Contract volume decreased from 128 properties in September to 116 properties in October. Sales also decreased 5.3 percent from last month. However, this decrease was only minimal, representing only four fewer homes sold.
The following chart provides a monthly snapshot of total homes sold since January 2009. (Green columns represent Under Contract properties for the current year.)
Buyer Recommendation: Take advantage of interest rates before they rise and be prepared to pay 95-96 percent of asking price, on average. With lower-than-normal inventory, sellers who have their homes competitively priced have been entertaining multiple offers and getting very close to asking price or more than 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.
Seller Recommendation: While inventory has been catching up to prior year levels, inventory is still low enough that we recommend putting/keeping your home on the market. Buyers currently have limited options, creating the possibility of getting an offer close to asking price because supply is not quite meeting demand. However, while it seems that average sold prices could increase a little during this time, it is still very important to price your home reasonably and competitively.