|Flathead Valley Real Estate Recovery Update
We are excited to welcome spring in the Flathead as flowers have begun to bloom and the days are noticeably longer. As our natural surroundings begin to come to life, our local communities seem to mirror spring with new economic activity as well.
Annual sales numbers for real estate in the northwest Montana were up once again with a 6.5% increase in total sales volume. We are beginning to see a few transitions in the various market segments as you can see in the tables below.
Residential sales decreased the first quarter of this year as expected as inventories have been declining over the past 12 months. This has raised median residential prices with an increase of 13.5% compared to the first quarter of last year.
As the residential segment sees decreased inventory and increased prices, the land segment has finally begun to come to life. Sales volume more than doubled over last year, averaging nearly $10M per month in sales. Prices have also stabilized with a 2.2% increase over median sales prices last year. This is more likely due to higher priced lots that have begun to sell and not an increase in price for the same properties.
While this change in land sales data is encouraging, any excitement about the land market is quickly dampened by the reality that we have more than 3.5 years of active inventory in the market (seasonally adjusted). There are currently over 2,800 active land listings in MLS, and and additional unknown shadow inventory available.
Total Residential Sales from NMAR MLS
Sales by Segment
As you can see in the graph below, the first quarter of this year just slightly outperformed last years winter ‘valley’.
Impact of Distressed Properties on Local Market
Distressed sales continue to play a role in our local market, but not nearly as significant as in the past 3 years. Annual sales of distressed homes dropped by 16 points between 2012 and 2013, and the trend is generally holding.
Another good sign in the distressed sales segment is the market’s relatively low inventory of bank-owned properties. Based on our current absorption rate, there is less than three months’ inventory of bank-owned residential listings currently on the market compared to a healthy 6 month inventory for the overall residential market.
Based on low inventory of distressed property, I expect to see continued upward pressure on pricing in the coming year.