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Missoula housing prices surge to record high, short supply

Home prices across Missoula continued climbing in 2016, with the median price of a home hitting an all-time high of $255,000. (Martin Kidston/Missoula Current)

By Martin Kidston/Missoula Current

Home prices across Missoula continued climbing in 2016, with the median price of a home hitting an all-time high of $255,000.

That marks a 6.8 percent increase over 2015 and a $54,000 jump since 2010.

Before a standing-room crowd, the Missoula Organization of Realtors unveiled its annual housing report on Thursday, one that found a growing disparity between the cost of housing and the earnings of an average Missoula household.

“Our median sales price hit a new high,” said Brint Wahlberg with Windermere Real Estate. “That’s a $16,300 increase over 2015, or a 6.8 percent increase. Over the course of six years, our median sales price has gone up $54,500, and that’s a 27.2 percent increase.”

Wahlberg said prices have continued climbing through the first quarter of 2017 as well, with the median price of a home now sitting at $260,558. More than 240 homes have sold this year compared to 203 at the same time last year.

Through 2016, according to the latest report, 1,392 homes sold in the Missoula market. Of those, 470 represented the most sought-after price point of $200,000 to $275,000. That was followed by 300 sales listed from $275,000 to $350,000.

Given the tight supply, Wahlberg said, sellers are getting 98.8 percent of their asking price, making it a hot seller’s market.

“The Missoula market does not have enough opportunities or options for buyers to buy,” Wahlberg said. “The supply issue has created a very strong seller’s market, which is what’s driving our median sales price so high.”

The tight supply could take years to alleviate, even as the number of building permits in Missoula continues to increase. Last year, the number of single-family residential permits issued in Missoula increased more than 26 percent, while multi-family permits jumped 83 percent.

While just one new subdivision was permitted in the city and one other in the county in 2016, a number of previously platted lots are now being brought to the market, according Paul Forsting with Territorial Landworks.

“People are filing their final plats and those lots are coming to the market,” Forsting said. “There are lots to be brought online that have already been through the process, and they’ll see development in houses.”

Yet even so, Wahlberg said national experts believe the market will take years to correct itself. Building subsided during the recession, though the population continued to grow.

That has tightened the housing supply and left communities working to catch up to meet demand.

“The National Association of Realtors predicts we’ll be having supply issues for at least four years,” Wahlberg said. “Every year you need to be building so much just to meet the population gains and to replace old houses. This isn’t going to solve itself this summer or next summer. It’s going to be a longer process.”

Broken down by district, just four neighborhoods saw an increase in home sales in 2016, with the Mullan and Expressway areas topping the list. That was followed by the central neighborhood and the South Hills.

As expected, Wahlberg said, it’s these areas that offer homes in the sought-after price point of $200,000 to $275,000. To afford a median-priced home in Missoula, one must have an income of $89,916.

Yet the city’s median income currently stands at $43,200.

“These neighborhoods represent the areas with the highest sales volume, and they also have some of the lower median sales prices,” Wahlberg said. “People are trying to find those affordable areas. If you took all the sales that occurred in Grant Creek, East Missoula, the Rattlesnake and Target Range, it would equal just as many sales as Mullan and Expressway alone.”

Contact reporter Martin Kidston at info@missoulacurrent.com