About Missoula County, MT

Yesterday was a beautiful day in the valley, highs near 60 degrees and lots of sunshine. In my almost 13 years in the business I've seen that many times when the sun starts shining and it begins to warm up, buyer activity seems to increase as well. With the spring market starting to arrive I thought I'd put together a quick look at the last 30 days absorption rates to see where Missoula's inventory levels are sitting in early March.

As a quick refresher, the absorption rate represents the total amount of supply currently listed for sale in our market. I break it down by price range to give a more detailed look at where supply is heavy (and light). This is a much improved measure of market activity as compared to looking at the average days on market of similar sales because it takes active and under contract listings into account as well. The rate (number) represents the amount of months supply of houses listed for sale. So if there are 15 active and under contract listings and 5 sales in the last 30 days the absorption rate is 15/5 = 3, meaning there are currently 3 months of supply listed for sale. As a rule of thumb, usually anything below 3 months supply is a hot market that lacks enough supply, from 3 to 9 months it is in balance, 9 to 12 months I consider slight oversupply, and 12+ months gets into heavier and heavier over-supply of listings.

So lets see where Missoula sits;

$0 - $150,000: 70 active and 15 pending, with 13 sold = 6.54 months

$150,001 - $200,000: 197 active and 38 pending, with 16 sold = 14.68 months

$200,001 - $275,000: 59 active and 29 pending, with 3 sold = 29.34 months

$275,001 - $350,000: 81 active and 13 pending, with 4 sold = 23.5 months

$350,001 - $425,000: 42 active and 4 pending, with 4 sold = 11.5 months

$425,000 +: 85 active and 11 pending, with 3 sold = 32 months

So what stands out? Well just a few months ago most all price points below $425,000 were in a good supply range, now there's just 1, out lowest price point. It would appear to me that the "spring inventory" has rapidly come onto the market, many listings of which I would suspect have been for sale in the past and are testing the waters again in hopes of a better try this year than last year. I'm going to take another look at absorption rates in the next 3 weeks again, looking mainly to see if inventories are still rising and if the amount of pending sales increase as well.

A concern that stands out to me is the overall lack of even pending sales activity over $275,000 coming into March. This isn't a new concern, this has probably been a running issue since about 2009. We've seen inventory over $275,000 drop dramatically and sales activity has still not picked up. The "top end" of Missoula's market remains considerably slow.

Right now there are 534 total houses listed for sale in the Missoula valley, which is considerably low compared to years past (we used to see total listing amounts in the 1,000's at this time). There are 111 total pending sales (17.2% of combined active+pending) so overall we're looking pretty good headed into March for sales activity assuming most of these pending sales hold firm. Our volume should continue it's upward trend into the early spring, but as you can see here the areas of the most activity will drive our median price. My concern of a strong drop in Missoula's median prices stems from the activity you see in these rates - almost all of our sales have occurred under $200,000! This spring and early summer I'm going to be watching these areas to see if the activity spreads out a little more and helps to raise the median, or if it stays low and continues to push Missoula's median sales price lower (which currently sits at $193,750, compare to last year at this time which was $216,000).

I've been keeping a sharp eye on foreclosures in our area and how they're impacting our overall market. This year it is projected that the biggest wave of the shadow inventory will start to hit the market as the "robo-signing" delays in the release of foreclosed properties is now behind us. From my earlier posts this year my concerns are that 2012 will have a negative effect on the median home values, and the large cause could be foreclosures coming up for sale. I'll explore more into the median home value impact at the end of the 1st quarter when I've got a good sample of data to look over and compare with.

Today I thought I'd take a quick snapshot of the % of sales have been distressed (REO or short sale). Based upon what I'm seeing the demand in our market quite possibly outweighs the current amount of supply. This could be a good thing as it suggests buyers and investors in Missoula are eager to scoop up these opportunities. This could see quicker market times for these types of properties and would remove some of these eye-sores from our neighborhoods.

So overall we see that our current active inventory lacks the same mix that we see in what is pending (under contract or under contract accepting backup offers). This suggests to me that we've probably got a lot of people sitting on the fence anxiously awaiting for new opportunities to hit the market.

Additionally, it's reassuring that currently our market is strongly anchored by what we'd call non-distressed (or NORMAL) sales. This has more direct economic impact in our market and helps stabilize our prices. What will be interesting to track this year is how much this mix changes as more foreclosures hit the market.

IT IS the first Friday of the month and here in Missoula that means locals will be heading downtown for another First Friday celebration of the arts.

Between 15 to 20 galleries, museums and other downtown businesses will be open from 5 p.m. to 8 p.m. to give Missoulians an opportunity to check out new exhibits, visit with artists and business owners and to enjoy another busy evening downtown.

Along with all of the art to be viewed, there will be music to listen to, appetizers and drink to indulge in and a chance to run into friends, family and co-workers.

This month's First Friday is to feature more venues than in the past and with temperatures expected to be in the 20s, organizers expect a large turnout. To find the event, head downtown. From there, it will be hard to miss.

A few of the venues being featured during the art walk include:

• VonCommon Art Studios and Exhibitions, 127 E. Main, Suite 316. Music by Mountain Breathers and DJ Mermaid and art by Jonathan Marquis, Becky Jean Swantner, Chase McBride and
  Adelaide Every.
• Monte Dolack Gallery, 139 West Front Street. An exhibition by Dolack and music by Dan Dubuque.
• Selvedge Studio, 509 S. Higgins, 6:30 p.m. The Project Selvedge fashion show, an amateur fashion design competition includes live fashion show and judging.

First Friday at Mismo, 1900 W. Broadway. Music by The Whizpops and a chance for the kids to enjoy face painting, pizza and the Bounce House. There is a fee for this.

Families First Children's Museum, 225 W. Front Street. Art from area students.

Dark Room, 135 N. Higgins. Dramatic landscape photographs by Eric Pallister.

There also are numerous other exhibits, events and musical performances scattered throughout the downtown area.

My best advice is to put on a warm coat, walking shoes and head downtown. From there, just start exploring and see what you find along the way. The odds are good you'll run into someone you know and something you like.

Grant Sasek works for Real Estate Pipeline, an on-line lead generation service.

Volume in Missoula continues to do well, today is Februrary 24th (77 residential sales in the Missoula Valley YTD / 177 total sales in the MLS YTD). Missoula as well as the entire MLS have not out-paced our quicker start in volume of sales since 2008... that's right pre "bubble" considering it was the start of 2008. I went back and looked at volume of 1/1 - 2/24 going all the way back to 2003, you can see the "ramp-up" and the cool down, and now the slow and steady volume recovery. I'm very encouraged to see that volume is continuing to notch up, especially considering it's out-pacing 2010 when that market 2 years ago propped up with the 1st time home buyer tax credit. Here's a chart showing the volume trends over the same date range going back 9 years now.

So volume is slowly and steadily working it's way back, that's a good thing. Unfortunately this is paired with a growing concern of mine in regards to home values. Looking at the same date range and over the last 9 years here are the median sales prices observed.

So what jumps out? Well a few things to me, first of all it's no shock that we saw a fast rise in the boom years and it's often been reported that Missoula has really not lost a lot of its home values despite the big slow down. Secondly, 2009, holy cow what happened there? Well think back to that time, the stock market had just collapsed, there were no home buyer incentives that were effective in the market, banks were failing, and the government was rolling out the first of a few bailout plans. A lot of buyers exited the market and the overall diversity of buyers dwindled (its no surprise to also see 2009 was the lowest in volume).

The concerning thing to me is the drop from 2011 to 2012 and the reason why is mostly due to foreclosures. 2011 wasn't influenced very much by foreclosures (just about 10% of our total sales volume). The big reason why was the slow-down in foreclosed homes re-listed by banks due to the "robo-signing" fallout and lawsuits. That is now behind us and banks are free to re-list these properties. 2012 (and probably 2013) will be the last big glut of foreclosures to hit the market, that should continue to drive up volume as investors take advantage of low prices and low interest rates. However that will really impact equity for homeowners all across the valley.

So far early trends are pointing to median sales price falling back down and not holding to 2011's final median sales price, however it's early. This is something I'm going to continue to track this year. I foresee that with more foreclosed listings entering our market we're going to see great opportunities for buyers and investors but it's going to come at the cost of lost home values for current home owners.

It's bee a time of reflection for me, just about 1 year ago my mother decided to close down the local RE/MAX franchise that she'd owned for 16 years. As a group most of our office joined up with the local Windermere office and we've loved it. The Missoula market was very choppy at that time, our early winter/spring was the worst we'd seen in terms of volume. We came out of the winter with a solid summer market but the lasting effects of a down winter wound up putting Missoula's volume of sales at another decline compared to the years before.

So it got me to thinking about 2012 so far and the market leading into it. This year we're finally comparing "apples to apples" as we look at 2011's market to 2012's. I've been interested in seeing how our market is doing this year and so I've put together two quick comparisons. First off the Nov/Dec/Jan market comparisons and then just YTD to YTD for 2011 and 2012.

Starting with looking at 11/1/2010 through 2/1/2011 and comparing that to 11/1/2011 through 2/1/2012.

• In the prior year for Missoula there were 152 sales with a median sales price of $215,500. Of those sales 16 were foreclosures, or 10.5% of all sales.

• Jumping forward to this current comparison there have been 177 sales with a median sales price of $201,000. Of those sales 21 were foreclosures, or 11.9% of all sales.

So the good news? Missoula's volume is up in a big way for it's "slowest" time frame of the holidays and winter months. We've seen an improvement of almost 16.5% in volume. That's big, especially considering that the market conditions were relatively the same, and foreclosures have not dramatically had an increase in the market. The dip in the median I expected for the main reason that this time last year the market had just exhausted it's first time home buyers as the tax credit time-frame to close a sale ended in September of 2011. This time around our market of buyers is much more diverse and we've seen more sales across the full spectrum.

Now lets just look at 2011 YTD to 2012 YTD (1/1 through 2/11):

• For 2011 there were 55 sales with a median sales price of $212,000 with 7 foreclosures sold that consisted of 12.7% of the market

• For 2012 so far we've had 62 sales with median sales price of $188,750 with 11 foreclosures sold that consisted of 17.7% of the market

Volume is up, which is good, a 12.7% increase, however in the shorter range the median sales price dip is a trend worth watching, if that stays this low we're going to see that the 2011 median sales price increase for our market as a whole be a one time thing. It's still way too early to determine of 2012 is going to keep putting downward pressure on sales prices and values, but this early start suggests it might. Also the bump-up in foreclosures re-sold is worth watching, as the robo-signing delays are now in the past it's expected that more foreclosures will infiltrate our market, that's another trend that could punch values down some more.