While there has been the normal seasonal decline the number of homes actively listed and homes sold over the last few months, the market is performing better than it did during the same months of the last couple of years. Though sales will continue the seasonal decline we believe there are still plenty of active buyers in the market to absorb any additional homes that may come on the market in the coming months.
By the numbers:
- December 2014 sales were up 5.6% from November, up 45.5% from December 2013
- Approximately 79% of homes sold in December were under $350,000
- Average home prices were 2.7% higher than last month and 15.2% higher than in the same month last year
- Average list-to-sale price has been at 97-98% for well over a year, December list-to-sale price was 96%
- Absorption rates are still favorable for sellers and are running slightly faster than a normal market
- Total number of homes on the market at the end of December was 312 with an additional 101 homes under contract
There were 76 homes sold throughout the month; at the end of December there were approximately 101 homes under contract. Despite the fact that active listings at the end of December were lower than in November, sales figures remained relatively consistent between November and December. This indicates to us that there are still plenty of buyers in the market despite the usual seasonal decrease in activity.
Overall, the year ended with 927 sales, 44 fewer sales than in 2013 – however, this was about 91 more sales (10.9%) than were realized in 2012.
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. Inventory and absorption rates are an indicator for how fast our market is recovering. If the number of homes coming on the market is proportional to the number sold, our market will continue to strengthen. If there is a substantial increase in homes that are not absorbed by the number of buyers in the market, expect our market to soften until they are absorbed by the buyers.
The Missoula market continued to perform at a slightly faster pace than a normal market, producing an overall absorption rate of 4.2 months in December, compared to 4.5 months in November. While sales have slowed over the last couple of months, homes are still selling faster than in a normal market where it takes approximately 6 months to sell a home.
Missoula’s overall absorption rate history for the last four years is presented in the following graph.
A low absorption rate in your price range may indicate an opportunity to list your home at a higher price and, conversely, a higher absorption rate in your price range may put downward pressure on your market value. The following graph demonstrates absorption rate by price range. Absorption rates below the 6-month line show which homes are selling faster than a normal 6-month market and rates above the 6-month line are selling slower.
With absorption rates ranging between 1.7 and 4.7 months, on average, homes in Missoula priced at or below $350,000 are being absorbed at a much faster rate than 6 months.
5-Year Home Sales by Month
The number of home sales in Missoula increased slightly this month to a total of 76 and under contract volume decreased from 120 properties at the end of November to 101 properties under contract at the end of December. The following chart provides a monthly snapshot of total homes sold since January 2010. (Green columns represent Under Contract properties for the current year.)
2015 Residential Real Estate Sales by Neighborhood
Overall Short-Term Market Outlook
With low inventory in the beginning of the year buyers had little to choose from, so when a good home that was priced well was listed, sellers were entertaining multiple offers and signing contracts with buyers at near asking price. Over the summer inventory increased and, despite the typical seasonal decrease in homes for sale, remained healthy as fall settled in. Inventory has decreased a bit further since fall, however, based on the absorption rates it is clear there are plenty of buyers in the market and homes are selling quickly and this winter, sellers are still getting very 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 entertain 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 96/97 per cent of asking price.
Full PDF Copy: Dec 2014 Market Report
Year End Summary by Neighborhood: 2014 Year-End Summary – by neighborhood