Flathead real estate market holding stable

With employment picking up, bank-owned properties moving out of the market, affordability holding steady, and new home construction picking up slightly, the real estate market in the Flathead held stable last year, with similar numbers to 2013.

That’s the message from Jim Kelley, of Kelley Appraisal in Kalispell.

“The Flathead market was mostly stable in 2014, with continued signs of improvement,” he said in his recently released 2014 Flathead County Real Estate Market report.

Overall residential sales in the Flathead declined 2.1 percent compared to 2013 to 1,507 units. That follows two years of 29.5 percent and 15.5 percent growth in 2012 and 2013. Median home prices gained about 9.4 percent in 2014, reaching $230,000.

But to narrow the figures down to the typical property bought and sold by full-time Flathead residents, Kelley compiled residential sales numbers for properties with less than two acres and no waterfront. Sales volume for that class increased by 6.1 percent over 2013 to 1,170 units, and the median price gained 9.3 percent, reaching $207,000.

Kelley also compiled residential sales by price range. More than half the listings were in the $100,000 to $400,000 range, and about two-thirds of the sales were in the $100,000 to $300,000 range. Those figures also reflect how long homes stayed on the market before selling.

“According to the National Association of Realtors research department, the national average inventory as of December 2014 was 4.4 months,” Kelley said. “In Flathead County, the average inventory for properties under $300,000 was 5.0 months, but the overall average is 8.8 months.”

Homes on lots with less than half an acre accounted for about a third of all listings in 2014 and more than half of all sales, averaging about 5.7 months on the market.

“This shows that the largest percentage of the demand is for homes on small lots that are typically in an urban location,” he said.

Sales figures for the three cities in the Flathead Valley give an idea how the area real estate market is faring.

• Sales inside the Kalispell city limits, representing nearly 30 percent of the Flathead market, increased 14.5 percent in 2014, and the median price increased 6.3 percent to $177,500.

• Sales inside the Whitefish city limits fell 8.1 percent, while the median price increased 17.3 percent to $287,500. That followed two years of 26.4 percent and 21.5 percent sales growth in 2012 and 2013.

• Sales inside the Columbia Falls city limits increased 9.8 percent after flat growth in 2013. The median price increased 14.8 percent to $175,000.

Construction permits issued last year in Kalispell included 81 single-family homes, three duplexes and 14 townhomes; in Whitefish that included 72 single-family homes, six duplexes and 15 multifamily units; and in Columbia Falls that included eight single-family homes, six townhomes and two multifamily units.

To determine the number of new homes in the county, Kelley used figures from the county health department for final septic system inspections. They recorded 346, which includes commercial properties.

Thirty-six new lots were created in Kalispell last year, down from a high of about 575 in 2006. A total of 478 lots in Kalispell expired over the past five years. In Whitefish, 44 new lots were created last year, down from a high of about 300 in 2005.

Kelley reported that 7.9 percent of all residential sales in Flathead County were “REO” or bank-owned properties. That’s down from double-digit numbers in 2009 through 2013 — a third of all sales in 2011 were bank-owned.

“The combination of a decrease in REO listings and a subsequent decrease in REO sales continues to indicate that we are mostly out of the local foreclosure problem,” he said.

The commercial real estate market in the Flathead has also improved, Kelley said. Sales by the square foot were 41.6 percent higher than in 2013, and the median price per square foot was up by 18 percent.

“Overall, the commercial market is improving, but not at the rate that the housing market has in the last year,” he said.

Kelley also tracks housing affordability, based on incomes, median prices and interest rates.

“Since 1984, housing affordability had been closely related to the median home price,” he said. “Then that all changed in 2004, as the housing bubble drove prices above the historic affordability level.”

In 2014, he reported, the affordability index and the median price were about the same but still above the historic trend line. He also noted that the average 30-year mortgage rate was 4.2 percent, up from the historic low of 4 percent in 2012.

“As interest rates increase, affordability tends to decrease,” he said.