By Martin Kidston/Missoula Current
Home prices across the Missoula urban area increased nearly 7 percent over 2016 and home sales reached an all-time high, defying early predictions of a slowdown due to lagging oil prices and layoffs in the energy sector, a new report suggests.
According to the latest market trends released by the Missoula Organization of Realtors, the median price of a home in the urban area increased from $239,900 in 2015 to $256,600 last year.
That represents a 6.7 percent increase and marks the sixth straight year Missoula has seen the cost of housing climb. In comparison, the median price of a home in 2011 was $205,000.
“The story this year is how quickly inventory decreased while sales increased,” said MOR President Ruth Hackney. “We’ve had a tight supply over the past few years, but in 2016, we really saw a more alarming drop. There’s more demand and fewer homes for sale.”
MOR believes that a healthy housing market should have an absorption rate of three to nine months. Last year, that rate hovered at four months before dropping to three months in the final quarter.
More than 1,240 homes sold in the urban area last year, marking the greatest number of sales over the past six years. Across Missoula County, 1,615 homes sold with a median price of $255,000, also a record high.
“The increase in prices is the result of a reduced supply,” said Hackney. “When it’s in the right price point, homes are selling quickly, and in many cases there’s multiple offers. It’s good news for homeowners. Your property is most likely appreciating.”
Yet the continued growth in housing prices isn’t so good for new arrivals and the city’s working class. Missoula’s high cost of housing has been listed as a looming economic weakness, especially as the city looks to retain its college graduates and see local businesses grow.
According to Bryce Ward with the Bureau of Business and Economic Research, housing prices in Missoula have risen more than 114 percent since 1990 when adjusted for inflation. That places Missoula among the fastest growing metro areas in the country when it comes to housing costs.
The sharp rise in local home prices also contrasts with local wages. Ward said earnings for college graduates in Missoula are among the lowest in the country at $32,000. That’s just 63 percent of the national median of $50,500.
The latest market report reaffirms what local leaders already know – home prices in Missoula continue to outpace local wages.
“I don’t see an end in sight,” Hackney said. “We have an increasing population and we need to support those individuals and make home ownership feasible. We need to give people the ability to invest back into Missoula. We need some additional housing inventory.”
The Missoula Organization of Realtors will release its full 2017 Housing Report in March. That report takes a wider look at the housing market, including rentals and other trends.
Contact reporter Martin Kidston at firstname.lastname@example.org