Missoula Real Estate update for January 2013
There is currently a low supply of residential homes for sale in the Missoula Real Estate market. With 322 active residential listings at the end of January, it is the lowest month-end inventory we have seen in Missoula for the last couple of years. Despite the low inventory, however, for the seventh straight month in a row Missoula’s year-over-year sales have either matched or trended to a higher level than we have seen in the last five years. January residential home sales were equal when compared to January of last year.
An encouraging sign of a rebounding Missoula real estate market can be found in the under contract numbers. Typically, around August and September, each year we see the number of properties under contract and sales start to decline as the start of the school year approaches and fall/winter is on the horizon. While that did happen last fall, under contract figures have remained strong and at the end of January there were approximately 128 properties under contract.
Buyer Recommendation: Take advantage of low interest rates and home prices this winter to maximize your buying power. More options will be available in the spring, however, if trends continue we would expect the same homes to be selling for a higher price. Be ready to look at the good homes immediately to avoid possible multiple offer situations.
Seller Recommendation: Inventory is so low right now that we recommend putting/keeping your home on the market this winter. Buyers currently have limited options, creating the possibility of getting a better price now than in other times of the year. In our experience, winter buyers tend to come pre-qualified and ready to buy, so they are not wasting your time. While prices could increase a little by spring, there will be increased competition which may hold some homes back from selling.
5-Year Home Sales by Month:
Under Contract volume increased from 101 properties in December to 128 properties in January and, though sales have dropped off for the winter season, home sales over the last several months have either matched or outpaced most all of the last five years when compared to the same months in prior years. Watch for a greater percentage of under contracts turning into sales compared to previous years.
According to the Missoula MLS, 46 homes were sold in January this year. The following chart provides a monthly snapshot of total homes sold since 2009. (Green columns represent Under Contract properties for the current year.)
The health of the Missoula real estate market is 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.
Overall, the Missoula market is performing better than a normal absorption rate. At an absorption rate of 4.6 months in January, it was healthier than the 4.8 months absorption rate in December and one of the strongest we have seen in five years.
Homes in the price range above the black line in the charts below indicate a seller’s market and homes priced below the black line indicate a buyer’s market. Prior to October 2012, Missoula’s absorption rate performed at a slower rate than that of a normal market but has been performing at a better rate ever since. As the market improves, look for consumer confidence in the higher priced homes to increase as a positive indication of overall market health.
Average List-to-Sales Price:
List-to-sales price signifies pricing trends in the market. For the last two years homes have generally been selling at 95% to 96% of list price. For example, if you are selling a home for $100,000, on average sellers are accepting offers of $95,000 – $96,000, or between 4% and 5% less than asking price.
Overview: As inventory goes down in Missoula, look for average List-to-Sales price to increase as an indication of an improving market. A higher List-to-Sales price will also be an indicator of increasing home values. Lower list to sales prices in May- July can be attributed to high absorption rates. During these months there are more homes on the market or more competition. Motivated sellers may have to take less for their home in order to beat out the competition.
Information Provided by:Jeremy Williams Williams & Associates | Keller Williams Realty