Housing market rebound needs jobs
The Flathead Valley housing market
appears to be rebounding in sales but not prices, Kalispell-based
appraiser Jim Kelley told listeners at the ninth annual Future of
the Flathead event at Flathead Valley Community College on Jan.
26.
“Hopefully that’s a sign we’re towards
the bottom of this thing,” Kelley said.
Kelley gave a positive outlook for the
local housing market, but prices remain down — about 80 percent of
homes sold in 2010 were under $300,000.
“As far as home prices, we’re at a new
normal,” he said. “Any increase over the next few years, it’s going
to be minor.”
Inside the city limits of Whitefish,
housing sales in 2010 increased by 20 percent over 2009, while the
median price dropped by 10 percent to $223,750. The big change came
in 2009, when the median price fell by 20.6 percent from the year
before. The median asking-price of the city’s 207 current listings
is $329,000.
Combining Whitefish with the
surrounding 3.5-mile area, sales were up by more than a third,
while the median price was down by 12 percent. There are 216
current listings in the combined area with a median price of
$380,000.
Kalispell sees a similar trend, with
sales volume up and median prices down, but the prices were
significantly lower — with 293 current listings, the median
asking-price in Kalispell was $180,000.
The story in Columbia Falls is
different — sales volume and median price were both down from 2009.
With 40 homes currently on the market, the median asking price is
$164,000.
Sales of raw land in the county
continue to be a hard sell. With 1,574 listed properties, the
number of years properties are expected to remain on the market
ranges from 4.1 years for less than half an acre to 27 years for
properties greater than 100 acres.
With lower prices and interest rates
for a 30-year mortgage at 5.1 percent, their lowest since 1980, now
is a good time to purchase a home, Kelley said — for those who can
afford it.
Affordability in the Flathead typically
paralleled prices until 2004, but during the housing bubble that
followed, home prices climbed well above the affordability index
for most residents.
Median home prices from 2004 to 2008
ranged from $180,000 to $250,000. In 2006, the median home price
was 5.5 times more than the median household income. Since then,
the combination of lower prices and lower interest rates brought
home prices back to an affordable level.
“If you have a job, things are very
affordable at this point,” Kelley said.
Jobs are the key, Kelley emphasized.
The Flathead’s official unemployment rate is 12.1 percent, but
Kelley believes that if one considers the difference between the
number of people with jobs in 2008 and today’s number, the
Flathead’s unemployment rate is closer to 16.6 percent.
More than 5,300 jobs have been lost in
the Flathead since the current recession began, Kelley said,
leaving total employment at 2003 levels. The sharp decline in the
labor force suggests the county may actually be losing population,
he said.
Lost jobs could be one factor behind
the high number of foreclosures. While the number of notices of
trustee sales has slowed down compared to 2009, it’s still more
than double the figure in 2008, and 40 percent of the 1,187 notices
in 2010 were not canceled.
Nearly 400 properties in the Flathead
went to foreclosure in 2010, an increase of 59.3 percent over the
high in 2009, with a likely impact on home prices.
Many of the Flathead’s lost jobs were
in the home-building industry, which was dealt a crushing blow by
both the credit crisis and the high unemployment of the current
recession. New construction was down in every category in 2010 —
from single-family homes to multi-family units — although not as
badly as in 2009.
Construction of new townhomes saw the
biggest decline, a drop of 75 percent in 2009 and 25 percent last
year. The 364 homes built in the Flathead last year included 241 in
the county, 92 in Kalispell, 26 in Whitefish and 5 in Columbia
Falls.
Coupled with the high inventory of
unsold homes and platted lots, new subdivision creation is not
likely. The Flathead has a 19.2-month unsold housing inventory. The
national average is 8.8 months.
“A lot of people purchased land for
subdivision potential,” Kelley said. “If they’re waiting to
subdivide that land, they’ll be waiting for quite a while.”
The solution to the depressed real
estate market is job creation and population growth, Kelley
suggested.
“It all comes back to jobs,” he said.
“If we’re going to get things going again, we need to stop bleeding
on population. We need to get a reason for people to come
here.”