Missoula home prices at all-time high; rental prices up 3 percent in 2015
By Martin Kidston/MISSOULA CURRENT
Home prices climbed for the fifth straight year in Missoula while rental prices ticked up in nearly all categories, according to the 2016 housing report released Thursday by the Missoula Organization of Realtors.
While rising home values come as good news for sellers, affordability remains a community-wide challenge, with a greater number of residents spending a larger portion of their income on housing costs.
The trend was especially troublesome for renters.
“We see that over 54 percent of our renters are experiencing being rent burdened,” said Jim McGrath with the Missoula Housing Authority. “That’s slightly worse than the national average. If you factor into that, in the city of Missoula, 59 percent of our households are renters.”
The report, released annually by the Missoula Organization of Realtors, found that rental prices increased in most categories over the past year by an average 2.7 percent. The average price for a 1-bedroom unit increased 8 percent to $664, while the price for a two-bedroom unit climbed to $767.
The average median income among Missoula renters was $27,606 – a figure that remains largely unchanged from the prior year.
“If you pay 30 percent or less on your housing, that means you have money left over for other things,” said McGrath. “As you move past that 30-percent line, those other elements become more challenging. You may see people going to the food bank and not being able to save.”
Those shopping for a home in Missoula faced similar challenges, the report found. Home prices climbed 6.1 percent last year to $238,700. It was also the largest increase in the local market since 2006, when the median price of a home jumped 7.7 percent to $206,600.
“Our median sales price is now at an all-time high,” said Brint Wahlberg of Windermere Real Estate. “One thing we have going on is a supply issue. The lack of supply and the high demand has resulted in higher prices.”
The report found that home sales were strongest for properties priced below $275,000. While competition for homes in that range spells good news for sellers, Wahlberg said, it has caused frustration among buyers.
“A lot of our buyers are looking for entry-level prices, and they’re finding there’s not a lot of options,” Wahlberg said. “Buyers are having to compete more for properties. That’s leading to competitive-offer situations, and that’s leading to some buyer frustration because they’re missing out on houses.”
Wahlberg said the tight supply in entry-level homes has created a seller’s market, which continues to drive up prices. Sellers are now getting more than 97 percent of their listing price, which also marks a record high.
“This price range ($250,000 and under) needs more listings,” Wahlberg said. “It’s causing the median sales price to slide up. Sellers hold the advantage in this. They can ask for more and hold tighter to their listing price.”
Wahlberg said the overall market remains strong, with home sales improving in 2015 for the fourth straight year. The 1,390 homes sold last year matches the 1,392 homes sold before the real-estate bubble in 2007.
“For homes listed at $275,000 and under, it’s a seller’s market,” Wahlberg said. “As you climb over $350,000, there’s a little bit more supply than buyer demand.”