Missoula real estate market holding fast amid pandemic, but next few months key
If the data is any indication, the COVID-19 pandemic hasn’t taken a significant bite from the Missoula real estate market, with the number of homes sold tracking similar to years past, and buyers still paying close to full price.
But industry experts say a full picture won’t become clear for another few months as the spring buying season evolves. The number of new listings is tracking slightly lower than last year, though it’s showing some signs of a rebound.
“It does not come as a big surprise that listing activity was slow, especially during the stay-at-home directive,” said Bring Wahlberg with the Missoula Organization of Realtors. “Right now we’re at a place where our pace of listings, on a weekly basis, is about 10 to 15 listings a week. The listing activity initially was keeping up and it’s slowing down a little bit, but it hasn’t completely gone flat.”
The Missoula Organization of Realtors added data related to the pandemic to this year’s annual housing report, setting a baseline measure to watch as the economy slowly reopens.
According to the National Association of Realtors, most real estate markets have stayed fairly stable despite the economic slowdown. Local figures from March and April suggest a similar trend in Missoula.
But Wahlberg cautioned that real estate data tends to lag, as most homes take weeks or months to close on a purchase. The full impacts of the pandemic and changes to the economy will become more clear in May and June.
“What we’re seeing is that a lot of sales that’s happening – actual closing sales in April – were sales that originated in February or in early March,” said Wahlberg. “Thanks to a strong February, Missoula is still ahead of pace in 2020 in terms of sales as to where it was in 2019.”
While sales are up 6.7% year to date, they’re expected to slow as impacts from the pandemic take hold. Whether the local market will remain a buyer’s market or shift to a seller’s market – similar to the economic recover after the last recession – remains unknown.
“Right now, Missoula’s market is continuing on trend with the prior few years, with sellers getting pretty darn close to 100% of original list to final sales,” Wahlberg said. “It shows that we’re still in a competitive situation, still a tight supply where buyers are still paying near top dollar for homes.”
Lynn Stenerson, a loan specialist with Stockman Bank, said she continues to pre-qualify buyers who are looking to take advantage of low interest rates. The low rates are helping drive applications, she said.
“There’s a lot of people refinancing, taking advantage of lower rates and trying to consolidate that way,” she said. “We’ve seen an uptick nationally in purchase applications. It seems right now that everything in the purchase market is still staying pretty strong.”
At the same time, Stenerson said, credit standards are tightening. That could present a challenge to those with lower credit scores, and those who have less to offer as a down payment.
She said the pandemic has also brought changes to the appraisal process.
“Appraisal standards have changed, some requiring an exterior only inspection,” she said. “We’re also getting recommendation from Fanny and Freddy for a property inspection waiver. It’s just random and it depends on each person and the property they’re buying.”
Despite the pandemic, Missoula County’s changing demographics continue to squeeze the local real estate market, where the demand for housing has long outpaced the supply. Industry experts have attributed the housing shortage to the increase in pricing, with the median price of a home now sitting at $315,000 in Missoula.
The county’s population has grown steadily over the last decade, hitting 120,000 residents in 2018. The population in the city of Missoula accounts for nearly one-third of that.
“The majority of the population growth in the county is taking place within the city limits,” said Brandon Bridge, director of forecasting with the Bureau of Business and Economic Research at the University of Montana. “Over the last 10 years, net migration has driven the majority of the growth.”
U.S. Census figures suggest that net migration to Missoula County peaked in 2016 with nearly 2,200 new residents. It has declined each of the last two years, with roughly 1,600 and 1,400 new residents.
While the population continues to grow, so too do local wages. The median income for all households in Missoula County reached $56,598 in 2018, outpacing the statewide average but lagging behind the national average, which was $61,937.
But the median income for homeowners and renters remained worlds apart.
“We do see quite a gap between the income of homeowners and renters in the county,” he said. “That gap pretty much represents the national gap. We see the same thing going on in the county as we do across the nation.”