Flathead real estate market continues to rebound
The Flathead real estate market is continuing to recover and is gaining momentum, according to Jim Kelley, of Kelley Appraisal in Kalispell.
Kelley tracks trends in the market and issues periodic reports. His recent annual report for 2013 notes a number of positive trends that support the belief that the market bottomed out in 2011.
Employment continues to improve, the inventory of bank-owned and low-priced properties is lower, sparking new interest in development and some new home construction, and the number of foreclosed properties continues to decline, although investors interested in acquiring bank-owned properties “are now getting into bidding wars” that could drive up prices, Kelley reports.
But the impacts of the recession continue to be felt. Subdivision activity continues near its all-time low, and new home construction continues at a relatively low rate, Kelley said. And while land sales saw a relatively large increase, their numbers are still far below what they were in 2007.
Most of the activity is taking place outside of Columbia Falls in Kalispell, Whitefish and the county. No new lots were created in Columbia Falls in 2013, and 17 building permits were issued.
Only 10 new lots were created inside the city limits of Kalispell last year, compared to a high of 582 in 2006. Residential sales inside Kalispell account for nearly 29 percent of all residential sales in the Flathead. Bank-owned sales accounted for 14 percent of the 385 sales in 2013, about half the number of bank-owned sales in 2012.
Residential sales inside the city limits of Whitefish account for nearly 15 percent of the Flathead market. About 7 percent of the 198 sales in 2013 were bank-owned, down significantly from 20 percent in 2012. Ten new lots were created inside Whitefish, and the city issued 81 building permits.
Countywide, 205 new lots were created by plat or survey in 2013. A total of 1,539 residential sales were recorded in the county in 2013, a 15 percent increase that followed a significant 29 percent increase in 2012. Nearly 13 percent of sales in 2013 were bank-owned, less than half the 28 percent seen in 2012.
Median home prices are on their way up, increasing by 6.7 percent countywide to $210,150, by 16.5 percent in Kalispell to $167,000, and by 8.2 percent in Whitefish to $245,000.
After seeing significant decreases for three straight years, median prices in Columbia Falls increased by 32 percent in 2012 and by 15.9 percent in 2013 reaching $153,000. The low point in Columbia Falls was $100,000 in 2011.
Kelley notes that housing affordability in the Flathead typically trended with median home prices from 1984 to 2004, but the housing bubble changed all that. By 2011, the median price had dropped to $180,000, well below the historic affordability level. But median prices began to increase again.
“In 2013, the affordability index and the median price are nearly the same, and both are nearly on top of the historic trend line,” Kelley reported. “What this suggests is that prices are likely to see only minor changes in the next year.”
Kelley notes that mortgage interest rates are a key factor in determining affordability. The 30-year mortgage rate was around 4.2 percent in 2013, up from the historic low of 4 percent in 2012.
“As interest rates increase, affordability tends to decrease,” Kelley said.