Missoula real estate activity has been on the rise over the summer, giving the appearance of trending toward a more stable market. Active listings, under contract numbers, and sales are all on the rise. With a steady stream of buyers actively looking for homes to purchase, we believe if additional homes become available over the next month, there are buyers out there to absorb them.
By the numbers:
- August sales are down 16.7% from July
- Approximately 80% of homes sold in August were under $350,000
- Average home prices are up 10.5% from the same month last year
- Average list-to-sale price has been at 97-98% for a little more than a year
- Absorption rates are still favorable for sellers and are running slightly faster than a normal market after starting the year as a buyer’s market
- Total number of homes on the market is 484 with an additional 159 homes 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 it is still a seller’s market and average sold prices could increase a little during this time, it is still very important to list your home with a reasonable and competitive price.
Overall, the Missoula market performed at a slightly faster pace than a normal market, producing an overall absorption rate of 4.2 months in August, compared to 4.7 months in July. This means homes sold faster than in a normal market where it takes approximately 6 months to sell a home. Overall absorption rate history for the last four years is presented in the following graph.
Inventory of Homes Listed for Sale
Over the last year Missoula had been experiencing a significant shortage of homes on the market, however, in the last few months, inventory picked up significantly through late spring and throughout the summer. At the end of August, there were 484 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 Missoula has been moving more toward a normal market.
5-Year Home Sales by Month
Missoula home sales decreased slightly this month to a total of 100 and under contract volume increased slightly from 150 properties at the end of July to 159 properties under contract in August. 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.
With low inventory 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 few 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.
Qualified buyers that are prepared to buy are 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: Aug 2014 Market Report