In one of my previous entries in November I talked about the growing importance of the affordable ($100,000 to $250,000) segment of the Missoula housing market.  Now that we have the final numbers for 2009, I can report that the trend continued, and in fact increased, both in terms of total dollar volume and unit sales signaling a major shift in our housing market.  Check out the graphs below:

But here's the real news, look at how affordable housing surged forward in 2009 in dollar value:



What’s it mean?  The total dollar value and number of homes sold in Missoula under $250k are both increasing, while homes priced higher are actually still declining in terms of unit volume and dollar value.   So if you’re selling property priced higher than $250,000, expect lots of price pressure from the limited number of buyers out there.  On the other hand, if you’re in the lower-priced category, things are much rosier with good activity. I’ll have a much more detailed look at the affordable segment in my next post.

 PS:  I’m looking at numbers for the “metro Missoula” area that’s roughly between East Missoula and the “Y” in the north and Lolo in the south.  In terms of homes, I’m counting all residential types, but no commercial.

Overview and Summary of posts on affordable home market in the Missoula area

Below are my two final graphs that look at sales statistics for affordable homes over the last three years.  Check out my two previous posts to learn about the price, home types and areas I included in the search. 




The list to sale price ratio is derived by dividing the final list price by what the home actually sold for, i.e. if a home's list price was $100,000, and then it actually sold for $96,800, then its ratio is 96.8%.  As you can see from the graph, homes are being discounted at an average that's slightly higher than 3% in most of 2009, which is much different than in 2007 where homes sold within 1 to 1 1/2% of list price.  This simply means that sellers are more willing to discount under pressure from buyers.  Even though the discounting is increasing, it's still very limited compared to other locations and product segments.



Average days on market is simply a measure of time from when a house is listed on the MLS until it's sold.  Overall, the trends have been pretty consistent, more days on market over the winter, shorter sales times in the summer.  2009 has tracked pretty close to the other 2 years with the exception of the third quarter.  The next couple of months will tell us if that's just a temporary increase, or if the market for affordable homes is getting softer. 

Below are the charts for Average List Price and Average Sold Price for homes in the $100,000 to $250,000 range for Missoula. 



Great news if you're a seller, but a tougher message if you are a buyer (except for the last 2 quarters of 2009).  Average list prices in this catagory continue to increase overall year to year, even with the addition of more condo units which frequently carry lower prices and price pressure from aggressive buyers.  These numbers are based on the final list prices of homes before they were sold or withdrawn from the market.



I think 2007 was a fairly good expample of market trending we had come to expect, ie higher prices in the late spring and summer, with lower prices in the winter and early spring.  2008 was radically different, largely due to the bad economic news in October.  For 2009, I think we saw some discounting as the year progressed and sellers became nervous about getting their homes sold before the first-time buyer tax credit ran out.  Seeing average sold prices dip below 2007 in the 3rd of 2009 is amazing, but I don't think it signals the beginning of a trend and we'll probably see average sold prices go back up in the 4th quarter.  Now that the tax credit has been extended--and expanded to other buyers--it will be interesting to see how we'll finish the year out.

Next I'll put up the numbers for average days on market and the list to sale price ratios which will tell us how long homes are staying on the market and willing sellers are to discount.

And now the Disclaimer and Qualifiers:
   Area:  this area corresponds roughly to an area from East Missoula to Y and then down to Lolo
   Type:  I included everything from single family homes to mobiles, priced from $100,000 to $250,000
   Source:  the MOR MLS database (so this won't include properties sold without a Realtor)
   Accuracy:  these graphs are meant to illustrate trends, not provide specific data-contact your agent for more detail
    **sales numbers are rounded to the nearest $1000

Today I'm going to begin posting the results of some research I did on affordable housing inventory in the Missoula area.  I think you will see some interesting trends. 




As you can see, the total number of affordable homes sold is down quite a bit from 2007, but have been pretty close to 2008 and actually better than 2008 in the 3rd quarter.  1st quarter and 4th quarter numbers are usually lower due to the effects of winter, and even with the present market stresses we should continue to see seasonal variation.

Please keep in mind the following qualifiers:
   Area:  this area corresponds roughly to an area from East Missoula to Y and then down to Lolo
   Type:  I included everything from single family homes to mobiles, priced from $100,000 to $250,000
   Source:  the MOR MLS database (so this won't include properties sold without a Realtor)
   Accuracy:  these graphs are meant to illustrate trends, not provide specific data-contact your agent for more detail
    **sales numbers are rounded to the nearest $1000

I've written before about my focus on workforce housing both as an active agent and in teaching classes.  But beyond how important I think affordable housing is, the numbers show that it is a huge, and growing, part of our total housing market.  So far in 2009, homes that sold at prices between $100,000 and $250,000 comprise almost 72% of the total sales, which is up from last year's 66%.  Click on the link to see the graph:  graph of home sales by price.  Part of this shift is the bigger relative decline in the number of sales of more expensive homes, at the same time that tax credits were stimulating first-time buyers to enter the market.  I'll be putting up some more information on this market segment later in the week that will look at the trends in more detail. 

I pulled the sales numbers from the MOR MLS database on single family homes (homes, condos, mobiles) in the Missoula urban area (E. Missoula to the Y and down to Lolo) priced above and below $250,000.  Visit the Missoula Organization of Realtors' website at www.missoularealestate.com to learn MOR. 

Some thoughts on a radio program discussing increasing default rates on FHA loans.  Its only a minute and a half long, give it a try!

The first time buyer tax credit for 2009 will expire in just 1 month.  If you are a buyer who's been planning on taking advantage of this tool, its probably too late if you are not already "under contract", since most transactions are taking about 45 days (at least) to close.  What to do?  Call or email your local congressional representative and ask them to support the legislation to extend and expand the program that is working its way through the system right now.  After that, find a Realtor, and get busy shopping!  Prices are usually at their lowest in the winter and it looks like interest rates are on the rise for 2010, so there's no time to waste.  For more details on the credit go to http://www.irs.gov/newsroom/article/0,,id=204671,00.html.  Happy hunting!

This year I've beome involved in teaching a class for Realtors called Workforce Housing.  In the class we learn about the programs and resources that are available to help workforce housing buyers (folks that earn somewhere from 60 to 120% of the area's median household family income) get started on the path to owning a home.  One the best tools I've encountered is a website created by the Montana Assoc. of Realtors that is filled with great information about everything from special lending programs to the closing process, www.MTHousingResources.com .  Check it out!

The difference between 2007 and 2008 new family housing starts is amazing and gives a good indication at just how slow the market was in 2008.  In Ravalli County for instance, starts were down to 197 from 303 in 2007, a decrease of 34.98%.  Missoula County's situation isn't nearly as gloomy, with a decline of 21.46% from 233 to 183 units in 2008.  This doesn't include building in the City of Missoula though, where 293 homes were built in 2007 and only 186 in 2008 (a decline of 36.52%).   Overall, I think new construction slowed a little more than sales in general, so we should begin to see some of the excess inventory get sold and absorption rates fall to more normal levels, especially in light of the stronger market in the first quarter of 2009.


 Stats were taken from the Montana Builder, 4th Qtr Ed.