The Montana housing market remains strong, thanks to a combination of high demand, limited supply, and continuously rising house prices. Also, based on the current market indicators, there is no immediate indication of a housing market crash in Montana. The balanced inventory, reasonable sale to list ratios, and the steady growth in home values suggest a stable and resilient market.
Current Montana Housing Market Trends
How is the Montana Housing Market Doing Currently? As per Redfin data, in December, home prices witnessed a substantial 3.1% year-over-year increase, painting a dynamic picture of the state's real estate landscape. The surge in home prices is a testament to the robust demand for residential properties in Montana. Buyers, driven by various factors such as economic stability and lifestyle choices, have contributed to this upward trajectory.
This increase, however, brings with it a set of implications for both prospective homeowners and the overall economic landscape. Despite the positive trajectory in home prices, the Montana housing market saw a significant 11.2% decrease in the number of homes sold during the same period. This seemingly contradictory trend prompts a closer examination of the market dynamics at play.
The decline in the number of homes sold could be attributed to various factors, including changes in buyer behavior, economic uncertainties, or a potential shortage of affordable housing options. Understanding these factors is crucial for stakeholders in the real estate sector to adapt their strategies and cater to evolving consumer needs.
Furthermore, the data reveals a 0.99% decrease in the number of homes available for sale. The shrinking inventory poses challenges for potential buyers, as a limited supply often leads to increased competition and higher prices. Real estate professionals and policymakers must navigate this landscape with a nuanced approach to balance the interests of both buyers and sellers.
Unpacking the Montana Housing Market Trends
The dichotomy between rising home prices and decreasing sales and inventory underscores the complexity of Montana's housing market. To better understand these trends, it's essential to delve into the various factors influencing the real estate landscape.
Economic Factors: The state's economic health plays a pivotal role in shaping the housing market. A thriving economy often translates to increased demand for homes, driving up prices. Conversely, economic uncertainties may lead to cautious buyer behavior and a slowdown in sales.
Population Dynamics: Changes in population, whether through migration or natural growth, can impact housing demand. Montana's attractiveness as a destination for relocation may contribute to heightened demand, influencing both prices and sales volumes.
Supply Chain Challenges: External factors, such as supply chain disruptions or shortages in construction materials, can affect the availability of homes. This, in turn, contributes to a reduced inventory and impacts the overall market dynamics.
Montana Housing Market Forecast for 2024
According to Zillow, the Montana housing market has experienced a steady growth in the past year, with the average home value reaching $442,052, reflecting a 2.0% increase. Homes in Montana are in high demand, going pending in approximately 43 days, indicating a dynamic real estate landscape.
Key Housing Metrics Explained
For Sale Inventory (December 31, 2023): The market boasts a significant inventory of 5,314 homes available for sale, offering prospective buyers a diverse range of options.
New Listings (December 31, 2023): With 837 new listings added in December, the market continues to see robust activity, providing fresh opportunities for both buyers and sellers.
Median Sale to List Ratio (November 30, 2023): The median sale to list ratio of 0.979 reflects a balanced market, with properties selling close to their listed prices.
Median Sale Price (November 30, 2023): At $455,061, the median sale price showcases the overall affordability and attractiveness of Montana's real estate.
Median List Price (December 31, 2023): The median list price stands at $520,133, indicating the pricing trends in the market and influencing buyer expectations.
Percent of Sales Over and Under List Price (November 30, 2023): Notably, 14.6% of sales occurred over the list price, while 65.4% were under the list price, reflecting a varied landscape where negotiation plays a crucial role.
Regional Housing Market Forecast
The forecast for various regions in Montana provides insights into the expected changes in housing market conditions:
- Billings, MT: The market in Billings is projected to experience a marginal decrease of 0.2% by January 31, 2024, followed by a modest increase of 0.1% by March 31, 2024, and a more significant growth of 3.6% by December 31, 2024.
- Missoula, MT: Missoula anticipates a minor decline of 0.1% by January 31, 2024, followed by a further decrease of 0.6% by March 31, 2024, and a substantial growth of 4.8% by December 31, 2024.
- Bozeman, MT: Bozeman is expected to see a positive trend with an increase of 0.2% by January 31, 2024, another 0.2% by March 31, 2024, and a notable growth of 4.2% by December 31, 2024.
- Kalispell, MT: Kalispell might face a slight decline of 0.1% by January 31, 2024, followed by a more significant decrease of 0.8% by March 31, 2024, and a notable recovery with a 6.1% growth by December 31, 2024.
- Great Falls, MT: The market in Great Falls remains relatively stable, with no significant change projected by January 31, 2024, a modest 0.1% increase by March 31, 2024, and a 4% growth by December 31, 2024.
- Helena, MT: Helena anticipates a minor decline of 0.1% by January 31, 2024, followed by a 0.1% increase by March 31, 2024, and a more substantial growth of 5.2% by December 31, 2024.
- Butte, MT: Butte is expected to experience a slight decrease of 0.1% by January 31, 2024, followed by a notable increase of 0.8% by March 31, 2024, and a significant growth of 7.7% by December 31, 2024.
Is Montana a Buyer's or Seller's Housing Market?
As of the latest data, the Montana housing market presents a balanced scenario, with a median sale to list ratio of 0.979. This ratio suggests a fair equilibrium between buyer and seller interests, creating an environment where neither party has a distinct advantage. Both buyers and sellers can negotiate terms effectively in this market, making it a favorable landscape for transactions.
Are Home Prices Dropping in Montana?
The average home value in Montana has seen a steady increase, reaching $442,052, with a 2.0% growth over the past year. Contrary to a drop, this data indicates a positive trend in home prices. The consistent demand and limited inventory contribute to the upward trajectory, making it unlikely for a significant drop in home prices in the near future.
Is Now a Good Time to Buy a House in Montana?
Considering the current state of the Montana housing market, now appears to be a favorable time for prospective buyers. The median sale to list ratio and the moderate percentage of sales over the list price indicate that buyers have room for negotiation. Additionally, with home values on the rise, making a purchase now could prove to be a wise investment in the long run. However, individual circumstances and preferences should always be considered before making such a significant decision.
Montana Housing Market Quarterly 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 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.
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