The Montana housing market remains strong in 2023, thanks to a combination of high demand, limited supply, and continuously rising house prices. In April 2023, the typical home in the state of Montana was valued at $440,339. That’s a 3.3% increase year-over-year (YoY), and Zillow predicts the market will continue to rise over the next twelve months.
No metro area in Montana is forecasted to see a decline in home values over the next twelve months. Montana is a seller's market. Despite the high listing prices, demand in the state remains robust, resulting in rapid property sales. Nevertheless, each city and town has its local real estate trends.
Montana Housing Market Trends
The Montana housing market, like many others across the country, has been grappling with the impact of the pandemic on the economy, employment rates, and home prices. Matthew Gardner, the chief economist at Windermere Real Estate, provides the following study of the real estate markets in a few counties in Montana for the first quarter of 2023.
With the aim of assisting individuals in making better-informed real estate decisions, this analysis covers various aspects such as economic overview, home sales, home prices, mortgage rates, and days on the market, and concludes with expert predictions for the future.
Regional Economic Overview
Montana experienced a solid growth rate of 2.5% in terms of job additions, with 12,600 jobs added year over year. After a slowdown in employment gains in the fourth quarter of 2022, the state seems to have regained momentum. Most regions showed a similar change in trajectory, except Billings, which witnessed a loss of 400 jobs in the past 12 months. The state unemployment rate in February decreased to 2.4%, down from 2.5% in the first quarter of 2022. Among the metro areas covered in this report, Billings boasted the lowest jobless rate at 2.2%, while Missoula and Great Falls had rates of 2.4% each.
Montana Home Sales
The first quarter of 2023 saw a 29.6% decline in home sales compared to the same period in 2022. Additionally, sales activity fell by 23.4% in comparison to the previous quarter. Listing activity, on the other hand, increased by 66% compared to the same period in 2022, but saw a slight decrease of 3.5% from the fourth quarter of 2022. These trends indicate that the market has become tighter, with limited inventory.
While Jefferson County experienced a rise in sales compared to the final quarter of last year, other market areas witnessed a decline. However, pending sales rose by 14.1% quarter over quarter, suggesting the possibility of higher closings in the second quarter. Nevertheless, the low levels of inventory may pose a challenge to the market's growth.
Montana Home Prices
Despite significantly higher financing costs, Montana's housing market has shown resilience. Home prices increased by 0.2% year over year, reaching an average sale price of $747,158. Moreover, the average sale price rose by 3.1% compared to the fourth quarter of 2022. Interestingly, the median listing price across the region was 1.4% higher than at the end of last year, indicating the market's confidence relative to the rest of the country.
County-wise, prices rose in five counties year over year, remained static in one, and fell in four. However, over half of the counties surveyed experienced price increases quarter over quarter. The only counties that witnessed price declines were Broadwater, Jefferson, Gallatin, and Park. Looking ahead, Matthew Gardner anticipates a slight dip in prices before stability is reached in the summer, followed by a resurgence as mortgage rates decline.
Mortgage Rates
Mortgage rates in the first quarter of 2023 exhibited less volatility than the previous year, despite the brief but significant impact of the early March banking crisis. Buyers took advantage of rate dips in mid-January and early February, indicating their willingness to enter the market. While the March Consumer Price Index report showed a slowing of inflation, Gardner expects the Federal Reserve to raise short-term rates once more after their May meeting, followed by a pause in rate increases. This anticipated move should enable mortgage rates to trend lower more consistently throughout the year, with occasional spikes. The forecast suggests that rates will remain below 6% in the second half of 2023.
Montana Days on Market
The average time taken to sell a home in Montana rose by 19 days compared to the same period in 2022. Homes in Missoula County sold the fastest, while homes in Flathead County took the longest to sell. However, Broadwater and Madison counties saw a decrease in the average number of days on the market compared to the previous year.
In the rest of the region, the average market time increased. Overall, during the first quarter of 2023, it took an average of 93 days to sell a home in the markets covered by this report. When compared to the final quarter of 2022, the average market time increased in all counties except for Broadwater (-17 days) and Ravalli (-13 days).
Taking into account various factors such as housing inventory, price gains, home sales, interest rates, and larger economic indicators, the real estate market in Montana can be evaluated. Despite the significantly higher mortgage rates, the market has shown resilience and has been reluctant to give up the gains in home values seen during the pandemic period. However, the impact of the nationwide trend is starting to slowly affect the Treasure State. While some markets have experienced a decline in value, it is not a collapse by any means.
The current conditions in Montana's real estate market benefit home buyers, with lower sales, prices, and longer days on the market. On the other hand, home sellers benefit from inventory limitations, solid absorption rates, and higher listing prices. Although further erosion of home values is expected, Matthew Gardner predicts that some of the counties included in this report will experience price growth in 2023, although it may not be significant.
In summary, the needle on the market's speedometer is currently in the balanced area but tilted slightly toward home sellers. The Montana real estate market is likely to see a mixture of opportunities for both buyers and sellers in the coming months. It's important for individuals involved in the market to stay informed about the latest trends and consult with real estate professionals for personalized advice.
Montana Housing Market Forecast 2023-2024
According to the Zillow's forecast for Metropolitan Statistical Areas (MSAs) in Montana, several regions are expected to experience varying levels of growth in the coming months. In Billings, MT, the MSA is projected to see a growth rate of 0.7% by the end of May 2023, followed by a further increase of 1.5% by the end of July 2023. Looking ahead to April 2024, the forecast suggests a significant growth rate of 5.5% in the Billings MSA.
Similarly, in Missoula, MT, the forecast predicts a growth rate of 0.1% by the end of May 2023, with a gradual increase to 0.5% by the end of July 2023. By April 2024, the Missoula MSA is expected to experience a notable growth rate of 5.1%.
Bozeman, MT, another significant MSA in the state, is projected to see a growth rate of 0.2% by the end of May 2023, followed by a slightly higher increase of 0.8% by the end of July 2023. The forecast for April 2024 indicates a substantial growth rate of 5.8% in the Bozeman MSA.
In Kalispell, MT, the forecast suggests a minor decline in the growth rate, with -0.1% expected by the end of May 2023. However, the region is anticipated to rebound and experience a growth rate of 0.5% by the end of July 2023. By April 2024, the forecast predicts a significant growth rate of 7.8% in the Kalispell MSA.
Great Falls, MT, is expected to see a steady growth rate of 0.7% by the end of May 2023, followed by a further increase of 1.4% by the end of July 2023. Looking ahead to April 2024, the forecast indicates a growth rate of 5.2% in the Great Falls MSA.
Helena, MT, is projected to experience a growth rate of 0.5% by the end of May 2023, with a subsequent increase of 1.2% by the end of July 2023. By April 2024, the forecast suggests a growth rate of 6.1% in the Helena MSA.
Lastly, in Butte, MT, the forecast predicts a growth rate of 0.3% by the end of May 2023, followed by a consistent growth rate of 0.5% by the end of July 2023. Looking ahead to April 2024, the forecast indicates a growth rate of 6.1% in the Butte MSA.
These forecasts provide valuable insights into the expected growth patterns in different MSAs across Montana. Homebuyers, sellers, and investors can utilize this information to make informed decisions in the real estate market, taking into account the specific conditions and potential growth rates in each region.
Will The Montana Housing Market Crash?
We continue to hear rumors of a market crash, but local data does not corroborate this at this time. The increase in Montana house listing prices is causing homes to be on the market for a long. If the pattern continues, the inventory may continue to increase and dampen market activity. There aren't enough homes for sale to meet buyer demand.
Bottom line: We're not seeing any major home price decline or crash in the Montana housing market just yet. The present supply of homes in Montana still favors sellers. The housing market in Montana has seen a remarkable surge in the past few years, with increasing numbers of people moving to the state to enjoy its scenic beauty and the many opportunities it offers. However, there is growing concern that this trend may not be sustainable and that a housing market crash could be on the horizon.
Several factors are contributing to this concern. First, the rapid increase in home prices in Montana is making it increasingly difficult for many people to afford to buy a home. While this may not be a problem for those who can afford to pay high prices, it is likely to limit the number of potential buyers in the market, which could lead to a slowdown in demand.
Second, the inventory of homes for sale in Montana has been declining in recent months, which has put upward pressure on prices. This trend is particularly pronounced in popular markets like Bozeman and Missoula, where the number of homes for sale has dropped significantly in the past year. This shortage of homes is likely to lead to bidding wars, which could further drive up prices.
Third, there are concerns about the overall health of the economy, both in Montana and across the country. While the economy has been recovering from the pandemic-induced recession, there are still many unknowns, including the impact of rising inflation and the potential for future shocks to the system.
Despite these concerns, many experts believe that a housing market crash in Montana is unlikely in 2023. While there are certainly risks to the market, there are also several factors that are likely to support continued growth.
First, the population of Montana is expected to continue growing in the coming years, which is likely to support the ongoing demand for housing. This growth is driven in part by the state's reputation as an outdoor paradise, which is attracting people from all over the country.
Second, the state's economy is generally healthy, with low unemployment rates and a diverse range of industries. While there are certainly risks to the economy, including the potential for inflation and supply chain disruptions, the overall outlook is positive.
Finally, the Montana housing market has proven to be resilient in the face of past economic downturns. While there are certainly no guarantees, the strong fundamentals of the market suggest that it is well-positioned to weather any storms that may come its way.
Overall, while there are certainly risks to the Montana housing market, the outlook for 2023 is generally positive. While there may be some bumps in the road, the state's strong fundamentals and growing population are likely to support continued growth in the years to come.
Top Real Estate Markets in Montana
- Billings Real Estate Market
- Missoula Real Estate Market
- Helena Real Estate Market
- Bozeman Real Estate Market
- Great Falls Real Estate Market
- Kalispell Real Estate Market
- Butte Real Estate Market
- Livingston Real Estate Market
- Laurel Real Estate Market
- Whitefish Real Estate Market
- Hamilton Real Estate Market
- Belgrade Real Estate Market
- Lewistown Real Estate Market
- Stevensville Real Estate Market
- Anaconda Real Estate Market
- Lolo Real Estate Market
- Libby Real Estate Market
- Eureka Real Estate Market
- Havre Real Estate Market
- Polson Real Estate Market
Data Sources:
- https://www.zillow.com/research/data/
- https://www.zillow.com/mt/home-values/
- https://www.windermere.com/market-update/montana
- https://www.zillow.com/rental-manager/market-trends/mt/
- https://fred.stlouisfed.org/series/ACTLISCOUMT#
- https://www.apartmentlist.com/renter-life/cost-of-living-in-montana
- https://www.mtpr.org/montana-news/2022-07-28/montanas-job-growth-in-2021-surpassed-gianfortes-first-year-goal
