Flathead homes 'very affordable' now

Home sales in Flathead County continue to rebound from the four-year recession, with prices stabilizing closer to a 29-year affordability index and fewer bank-owned properties remaining on the market. That’s the message in housing numbers compiled by Jim Kelley, at Kelley Appraisal in Kalispell.

Residential home sales in the Flathead for the first half of 2013 were 12.7 percent higher than for the same period last year, which was 28.3 percent higher than in 2011.

The median price of homes sold in January through June 2012 fell 7.2 percent to $181,000 but rebounded for the same time period in 2013 by 11.6 percent to $202,000.

One trend Kelley compiles is an affordability index graph based on annual median household income and average annual interest rates for a 30-year mortgage. For this graph, an affordable home is one where the annual property tax and insurance payment equals 1.3 percent of that year’s median price, the annual mortgage payment equals 28 percent of median household income, and there is a 25 percent down payment.

“This graph illustrates that home prices are currently very affordable and is likely one of the primary reasons that the number of sales in 2013 is nearly 13 percent higher than what it was on this same date in 2013,” he said.

Kelley’s graph shows median home prices following an affordable index line that starts at $40,000 in 1984 and climbs to about $150,000 in 2003. But that’s when median prices jump off the line, climbing to more than $240,000 in 2006 and 2007 before falling below the affordable index line in 2010 and 2011. Median prices rebounded slightly in 2012 and 2013 and are now back close to the line.

One factor that affected home sales and median prices was foreclosures. About 17.4 percent of the 690 homes sold in the Flathead this year were bank owned, and about 6.1 percent were known short sales. But that’s a major improvement over last year — about half as many home sales were bank-owned in May and June this year as compared to the same time period last year.

Citing figures from foreclosure.com, 3.46 units per 1,000 in Flathead County were in foreclosure in June. That’s better than the 5.85 national average but not as good as the 2.08 Montana average.

The good news for home sales in the Flathead is not uniform across the valley. The greater Whitefish area has seen the most improvement this year, with a 20.7 percent increase in sales volume and the median price increasing 5.9 percent to $243,000. The Kalispell area has likewise seen good numbers this year, with sales increasing 18 percent and median prices increasing 5.4 percent to $173,000.

The numbers for Columbia Falls area are not as good.

While median prices here increased 8.6 percent to $162,375, home sales fell 15.2 percent to 56 units. The Bigfork area saw a similar situation, with median prices increasing 18 percent to $253,000 while home sales fell 14.1 percent.