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November 7th, 2019 by Marco Santarelli
Over the last decade or so owning real estate has become much more attractive because it is tangible and you can see it. In this article, our focus will be on the Missoula real estate market and investment opportunities in 2020.
Missoula, Montana is a city that most overlook in favor of more famous towns in the region like Jackson Hole, Wyoming or bigger cities like Billings, Montana. Located in the western edge of the state, it is closer to Idaho than other metro areas in the state of Montana. However, the city of Missoula, Montana has a number of points in its favor.
The city of Missoula is home to around 75,000 people. The Missoula housing market is a little larger than this. Include its suburbs and surrounding small towns, and the Missoula housing market is home to around 120,000 people. It is the second largest city in Montana.
The local economy is bolstered by the colleges and state services located here. But why would you want to consider Missoula real estate investing over the alternatives? Let’s take a deep look at the latest Missoula housing market trends to come to a conclusion.
Missoula Real Estate Market Forecast 2020
The real estate data from Zillow shows that the current median home value in Missoula is $307,400. The Missoula real estate market is a seller’s market. The home prices have risen by 5.8% over the last year. And looking forward into the coming year, the Missoula Real Estate Market Forecast is that home prices will continue to rise by 3.1%.
Here is the Missoula, MT real estate price appreciation graph by Zillow. It shows us the current home price appreciation forecast of 3.1% till Sep 2020.
The median list price per square foot in Missoula is $235, which is lower than the Missoula Metro average of $237. The median price of current listings in Missoula is $355,900 and the median price of homes that have sold is currently unavailable.
However, Zillow reports that 11.7% of the listings in Missoula had a price cut in Sep 2019, which is a good thing for buyers. It shows sellers were willing to negotiate on prices as they were finding it more and more difficult to sell homes at asking prices.
The median rent price in Missoula is $1,350, which is lower than the Missoula Metro median of $1,395.
Missoula Housing Market Forecast 2020 – 2021
Here is a short and crisp Missoula housing market forecast for the 3 years ending with the 3rd Quarter of 2021. The accuracy of this forecast for Missoula is 85% and it is predicting a positive trend. The LittleBigHomes.com estimates that the probability for rising home prices in Missoula is 85% during this period.
If this price forecast is correct, the Missoula home values will be higher in the 3rd Quarter of 2021 than they were in the 3rd Quarter of 2018.
Check this page each quarter for updates to the Missoula Real Estate Market Forecast.
Missoula Real Estate Market Trends
We shall now discuss some of the most recent housing trends in the Missoula area. Currently, Trulia has 722 resale and new homes for sale in Missoula, MT, including open houses, and homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process.
The most popular neighborhoods are Franklin to the Fort, South 39th Street, Westside and Upper Rattlesnake. Here you’ll find the maximum no. of listings. Currently, there are 39 active listings in Franklin to the Fort, Missoula, MT, and the home prices range from $85K – $969K.
Additionally, there are 19 rental properties on Trulia within a range of $525 – $1.6K. The schools are rated between 3/10 – 9/10.
Similarly, there are 31 active listings in Westside, Missoula, MT and the home prices range from $129K – $9.99M. Additionally, there are 11 rental properties within a range of $625 – $1.4K. The schools in this neighborhood are rated between 3/10 – 9/10.
The rent prices in the Upper Rattlesnake neighborhood are quite high in the range of $1.7K – $1.88K. It is an expensive neighborhood in Missoula.
There are 700 homes for sale in Missoula, MT on Realtor.com. The new listings count is 92. The asking price of Missoula single family homes can start from $170,000 and can go up to $3.5M for a luxury 4 bedroom home.
Additionally, there are 78 rental properties for sale, and their rent price ranges of $555 to $2.2K per month. The median rent is $1,290.
According to their statistics, in September 2019, the Missoula housing market was a seller’s market, which means there were roughly more buyers than there were active homes for sale.
Ideally a buyer would prefer a sale to asking price ratio that’s closer to 90%. In Greenville, the sellers have held good leverage in these negotiations in the past month.
On an average, they could sold homes for 98.96% of the asking price. A seller would always prefer scenarios which can yield a ratio of 100% or higher.
The median list price of homes in Missoula, MT was $357K in September 2019, trending up 6.6% year-over-year. The median listing price per square foot was $174.
On average, homes in Missoula, MT sell after 63 days on the market. The trend for median days on market in Missoula, MT has gone up since last month, and slightly down since last year.
The median list price in Missoula is $384,999 on Movoto.com. The median list price in Missoula was less than 1% change from October to November. Missoula’s home resale inventories is 305, which increased 0 percent since October 2019.
The median list price per square foot in Missoula is $198. In October 2019 it was $198. Distressed properties such as foreclosures and short sales remained the same as a percentage of the total market in November.
Missoula, MT Single Family Homes Statistics
Following the real estate market decline in 2007 in the U.S., single family rental homes became favorable options for investors, saving in construction or refurbishment prices. The quick turnaround for an owner to rent out their property means cash flow is almost immediate.
Single family rental properties have grown up to 30% within the last three years. Almost all the housing demand in the US in recent years has been filled by single family rental units.
U.S. single-family rental market has seen steady rent increases between 2010 and 2019. According to CoreLogic’s latest Single-Family Rent Index (SFRI), which analyzes single-family rent price changes nationally and among 20 metropolitan areas, it shows a national rent increase of 3% in April 2019, as compared to 2.8% in April 2018.
The average sales price of new homes sold in the U.S. fell by 1.6% year-over-year in July 2019, to $388,000, according to the U.S. Census Bureau. In fact, the median sales price of new homes sold fell by 4.8% to $312,800 over the same period.
For existing homes, the median price was up by 4.3% to $280,800 in July 2019 from a year earlier, according to the National Association of Realtors. July’s price increase marks the 89th consecutive month of year-over-year gains. Demand remains robust. During the year to July 2019, new and existing home sales increased by 4.3% and 2.5%, respectively.
As per the real estate company called Neigborhoodscout.com, the median house price in Missoula, MT is $330,539, which indicates that home prices in Missoula are above the national average for all cities and towns in the United States.
Single-family detached homes are the single most common housing type in Missoula, accounting for 50.56% of the city’s housing units. One or two bedroom single family detached homes are the most common housing units in Missoula.
Other types of housing that are prevalent in Missoula include large apartment complexes, duplexes, homes converted to apartments and a few row houses. Missoula has a mixture of owner-occupied and renter-occupied housing.
After the great recession of 2008, renting a home has increased exponentially across the nation. There are currently over 136.57 million housing units in the U.S. In 2018, the total number of homeowner households hit an all-time high of 76.2 million. 36.6% of households rent their homes and 64.4% buy their homes (2018 U.S. Census Bureau).
Currently, there are 312 single family homes for sale in Missoula, MT on Zillow. Additionally, there are 43 single family homes for rent in Missoula, MT. Under potential listings, there are about 2 Foreclosed and 23 Pre-Foreclosure homes. These are the properties that may be coming to the market soon but are not yet found on a multiple listing service (MLS).
Missoula, MT Foreclosures And Bank Owned Homes Statistics
As per the Missoula foreclosure data by Zillow, the percent of delinquent mortgages in Missoula is 0.3%, which is lower than the national value of 1.1%.
There are currently 8 properties in Missoula, MT that are in some stage of foreclosure (default, auction or bank owned) while the number of homes listed for sale on RealtyTrac is 267.
In September 2019, the number of properties that received a foreclosure filing in Missoula, MT was 80% lower than the previous month and 0% higher than the same time last year.
Best Neighborhoods to Invest in Missoula Rental Real Estate
If you are looking to invest in the Missoula real estate, you should know the best places to invest in. The three most important factors when buying a real estate anywhere are location, location, and location. Location creates desirability.
Desirability brings demand. Demand would raise the price of your Missoula rental real estate and you should be able flip it for a lump sum profit. When looking to invest in Missoula real estate, you need to find places where the expected property appreciation forecast is positive.
The running costs for owning and managing an Missoula rental property should be low. The neighborhoods in Missoula must be safe to live in and should have a low crime rate.
The neighborhoods should be close to basic amenities, public services and shopping malls. There should be a natural and upcoming high demand for rental properties and a low supply of income properties.
There are 13 elementary schools, 13 middle schools, 5 high schools and 12 private & charter schools in Missoula. There are 23 neighborhoods in Missoula.
Some of the best neighborhoods in Missoula, Montana are Franklin to the Fort, Moose Can Gully and Captain John Mullan. University District has a median listing price of $640K, making it the most expensive neighborhood. Westside is the most affordable neighborhood in Missoula, with a median listing price of $227.9K.
Here are the best neighborhoods to invest in Missoula rental real estate because they have the highest appreciation rates (List by Neigborhoodscout.com).
How is Real Estate Investing in Missoula, Montana?
Now that you know where Missoula is, you probably want to know why we’re recommending it to real estate investors. Investing in real estate is touted as a great way to become wealthy. Should you invest in Missoula rental real estate?
Many real estate investors have asked themselves if buying a rental property in Missoula is good investment? You need to drill deeper into local trends if you want to know what the market holds for the year ahead.
We have already discussed the Missoula housing market 2019 forecast for answers on why to put resources into this market. Although, this article alone is not a comprehensive source to make a final investment decision for Missoula but we have collected ten evidence based positive things for those who are keen to invest in the Missoula rental properties.
Investing in Missoula rental properties will fetch you good returns in the long term as the home prices in Missoula have been trending up year-over-year. Let’s take a look at the number of positive things going on in the Missoula real estate market which can help investors who are keen to buy an investment property in this city.
We’ll focus on real reasons to invest in the Missoula real estate instead of giving you vague appeals to buy a house or an investment property because of general ambiance and mere promises of future growth.
1. A Lack of Housing Supply
Demand for properties in the Missoula real estate market is greater than supply. The area hasn’t seen new construction at the rate necessary to meet demand.
That’s why home prices hit a record price of 300,000 dollars in August, 2018. They’ve remained in that ballpark ever since.
2. The Lack of Affordable Housing
Builders have limited access to skilled labor and building materials, so they’ve chosen to build luxury homes over affordable ones. This is why there is a shortage of homes priced 150,000 to 300,000 dollars.
This is causing homes in this market segment to appreciate rapidly and overall rising rental rates. The relative lack of affordable housing helps explain why the average rent in the Missoula housing market has long been higher than the national average.
3. The Bargains in the Luxury Market
We can’t say that the average Missoula real estate investment property is a bargain. The average home on the Missoula real estate market costs more than 300,000 dollars. However, there are opportunities to find homes for less than they are worth.
Properties in the 425,000 to 500,000 dollar price range have a two year supply relative to demand, while the 350,000 to 425,000 dollar price range has almost a one year supply.
Yet there are people who need to sell to settle estates, bankruptcies and divorces. This means you could find relative bargains in the luxury market from distressed sellers, whether you want to hold it as an investment or rent it out to tourists.
4. The Favorable Legal Climate
Montana may be cold, but it has a favorable legal climate for investors. There is no state level estate tax if you died. You can set up a series LLC. There isn’t a business court in Montana as you get in Nevada, and it isn’t as easy to set up an LLC that protects your privacy like Wyoming, but it is lightyears ahead of California and other western states.
5. The Moderately Landlord Friendly Climate
Montana is not as landlord friendly as many southern states, but it ranks much better than most Western states. The law doesn’t cap the size of security deposits, but you have to return it within ten days.
The owner of a Missoula real estate investment must disclose the identity of anyone and everyone authorized to act on your behalf. Furthermore, you must disclose specific health and other information to tenants in the rental or lease agreement.
The law says you must give at least 15 days before you raise the rent but doesn’t limit how far you can raise the rent. Tenants have a reasonable three days to pay late rent.
Termination and eviction for violating the rental agreement like unauthorized pets or extra residents is allowed, but you have to give them three days to move out before eviction can start.
6. The Low Tax Rate
You’ve probably heard that it is what you keep that matters, not what you make. In this regard, Montana is an excellent place for real estate investors. While the state ranks average on income taxes (22 out of 50 states), the corporate sales tax if you incorporate is twelfth in the country.
On property taxes, the state is tenth lowest. State and local property taxes hover around 1500 dollars a year per capita.
7. The Impact of the Local Economy
The Missoula real estate market is becoming a bigger rental market for several reasons. First, the unemployment rate here is half a point lower than the national average. Unfortunately, many of these jobs are relatively low paying.
The average resident earns 26,000 dollars a year, several thousand less than the national average. However, the average house in the U.S. is roughly 220,000 dollars a year, while the median home price in the Missoula housing market is more than 300,000 dollars.
This forces many in the Missoula area to rent when they want to buy. A side benefit of Missoula’s location is that it isn’t dependent on tourism like Billings. However, the University of Missoula students do pump up the local rental market.
8. The Impact of Geography
The Missoula housing market faces several literal constraints. For example, the Missoula real estate market is bounded by the Lolo National Forest, Flathead National Forest and Flathead Reservation to the north and west.
The Next Perce Clearwater National Forest is to the southwest. Mountains to the east make it expensive to build new homes in that direction.
Nor can they build homes in the Clark Fork River floodplain. This drives up the cost of property in the Missoula real estate market.
9. The Slow and Steady Growth of Missoula Housing Market
One of the problems with a hot real estate market is that the prices could collapse if the factors causing prices to balloon are resolved.
Some cities experienced a boom because of a hiring spree in the energy sector or high tech industry, and they collapse when demand crashes when that industry slacks off.
In contrast, the Missoula real estate market has slow, steady appreciation. Prices have gone up 6 percent in 2019, and they are expected to rise 3 percent in 2020.
10. The Decent Return on Investment of Missoula Real Estate
The average rent in the Missoula housing market is 1400 dollars a month. Rents for a property in downtown Missoula are about 1350 dollars.
However, these numbers include everything from one bedroom apartments to four bedroom homes. The rent for a one bedroom apartment is roughly 800 dollars a month.
Rent for a two bedroom apartment averages just under a thousand dollars. You can charge twice that much for a four bedroom Missoula real estate investment property.
Investing in Missoula Real Estate: The Conclusion
Maybe you have done a bit of real estate investing in Missoula, MT but want to take things further and make it into more than a hobby on the side. It’s only wise to think about how you can and should be investing your money. In any property investment, cash flow is gold.
A number of factors combine to make the case for Missoula real estate investment over investing in other parts of the region. It is a stable real estate market with decent rates of return.
A good cash flow means the investment is, needless to say, profitable. A bad cash flow, on the other hand, means you won’t have money on hand to repay your debt.
Therefore, finding a good Missoula real estate investment opportunity would be a key to your success. If you invest wisely in Missoula rental real estate, you could secure your future. If you are a beginner in the business of cash flow real estate investing, it very important to read good books on real estate.
The less expensive the Missoula rental properties are, the lower your ongoing expenses will be. Roughly a $150,000 property is what some experts recommend starting with.
Most investors naturally gravitate to residential property investment. When looking for the best real estate investments in Missoula you should focus on neighborhoods with relatively high population density and employment growth.
Both of them translate into high demand for housing. If housing supply meets housing demand, real estate investors should not miss the opportunity since entry prices of homes remain affordable.
You must also collaborate and learn from savvy real estate investors who have retired early on in their lives by investing in some of the best real estate markets like Missoula, MT.
Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process.
They are well-informed about critical factors that affect your specific market area, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing and interest rates.
NORADA REAL ESTATE INVESTMENTS strives to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in the U.S. growth markets. We can help you succeed by minimizing risk and maximizing profitability.
The aim of this article was to educate investors who are keen to invest in Missoula real estate in 2019. Purchasing an investment property requires a lot of studies, planning, and budgeting. Not all deals are solid investments. We always recommend to do your own research and take help of a real estate investment counselor.
Other Best Places To Invest in Real Estate in 2020
Another fairly good market to choose for real estate investment is Gilbert, Arizona. The Gilbert housing market is appreciating without overheating. It has relatively high property prices but even better rents.
The local regulatory climate favors landlords, and taxes are incredibly low. This makes the Gilbert housing market an excellent place to consider investing in real estate.
The other best place to invest in real estate is Ogden, UT. The Ogden real estate market is relatively affordable for investors, but it also offers a favorable legal and regulatory climate.
Rental returns are high, while the area is seeing significant growth. This makes the Ogden housing market perfect for real estate investors. Also, the Ogden housing market is going to see continued growth for years due to a young and growing population.
*Remember, caveat emptor still applies when buying a property anywhere. The information contained in this article was pulled from third party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, the Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.
Legal climate https://nchinc.com/compare-your-state/nevada-vs-montana https://www.myusacorporation.com/articles/delaware-vs-nevada-vs-wyoming
The low tax rates https://www.maxfilings.com/incorporation-knowledge-center/which-states-have-the-best-business-tax-climate.php https://taxfoundation.org/state/montana/
Landlord friendly environment https://www.rentcafe.com/blog/renting/states-best-worst-laws-renters/ https://www.nolo.com/legal-encyclopedia/overview-landlord-tenant-laws-montana.html
Lack of supply https://missoulacurrent.com/business/2018/10/residential-sales-missoula/
Lake of affordable housing https://missoulacurrent.com/business/2018/10/residential-sales-missoula/ https://www.missoulacurrent.com/business/2018/04/missoula-rent-prices/
Impact of local economy https://www.bestplaces.net/economy/city/montana/missoula https://en.wikipedia.org/wiki/List_of_cities_and_towns_in_Montana https://en.wikipedia.org/wiki/University_of_Montana
About Missoula https://en.wikipedia.org/wiki/Missoula,_Montana
Market Prices, Trends & Forecasts https://www.zillow.com/Missoula-mt/home-values/ https://www.realtor.com/realestateandhomes-search/Missoula_MT/overview https://www.movoto.com/missoula-mt/market-trends/
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