Martin Kidston

(Missoula Current) While the cost of housing in the greater Missoula area continues to climb, the increase slowed in 2023 as new supply helped feed demand. Still, the region remains in a housing deficit and costs continue to outpace what most buyers can afford.

The Missoula Organization of Realtors (MOR) on Monday unveiled its annual housing report, taking a deep look into prices, time on the market, supply and other data that lends insight to the health of the city's for-sale housing market.

Brint Wahlberg with Windermere Real Estate and a member of MOR's coordinating committee, said the median sales price for residential properties increased 5.8% in 2023 to roughly $550,000. At the same time, the number of homes sold fell 13%.

It's the third straight year that sales volumes have decreased year-over-year.

“Last year there were 952 residential sales in our (area),” said Wahlberg. “That's on pace with numbers we saw in 2011 and 2012, which was Missoula's floor of the bubble. The volume is way down while the median is at a new record high.”

Broken down by type, the median price for a condo in the Missoula listing area reached $340,000 while townhomes climbed to $502,000. A single-family home hit a record high of $597,000.

But while single family homes increased year-over-year, the original listing price to final sales price fell to 98.8%. It's the first time the figure has dropped below 100% of the asking price since 2020, according to data.

The increase in cost also has slowed, according to Matt Gehr with Mann Mortgage.

“The pace of housing costs has slowed. It went from $520,000 in 2022 to $550,000 last year,” said Gehr. “That growth is much less than it has been in previous years.”

Housing still hard to afford

Still, housing costs continue to be an issue, according to the city's affordability index. The index measures Missoula's median wage and how it aligns with median costs. A score of 100 would mean housing costs are perfectly aligned with wages while a number below 100 signals an affordability issue.

MOR used two scenarios to measure affordability, including both a 5% down payment and a 20% down payment. Under the first, the city's housing index improved from 51 in 2002 to 61 last year. With 20% down, it improved from 62 in 2002 to 74 last year.

But even so, a buyer with 5% down would need an income of $165,000 to afford a median-priced home while a buyer with 20% down would need an income of $136,000.

“The index tells a story of improvement, but a need for continuing improvement,” said Gehr. “It's better than (2022), but housing continues to be unaffordable within the Missoula market.”

The median housing cost by neighborhood in Missoula. (Missoula Organization of Realtors)
The median housing cost by neighborhood in Missoula. (Missoula Organization of Realtors)

Broken down by Neighborhood, Marshall Canyon had the highest median home price of $922,000, followed by Farview at $802,000, Blue Mountain at $745,000 and the Upper and Lower Rattlesnake at around $750,000.

The most affordable neighborhoods included the Westside at $303,000, the Northside at $310,000 and East Missoula at $385,000.

By volume, the Swxtpqyen area saw the highest number of sales at 150 for a median price of $519,000 followed by Lower Miller Creek, which saw 86 sales at a median price of $717,000. Roughly 52% of the city's neighborhoods have what's considered a healthy supply.

“The first quarter of 2019 was the last time until this time that we had 'normal' supply,” said Wahlberg. “Right now, our supply is sitting at 4 months. The last time we were over 4 months of supply was in 2015.”

The slight improvement in supply has had an equally slight impact on cost, Wahlberg added.

“This speaks to why you see that the increase in our median sales price has slowed,” Wahlberg said. “Increased supply has led to this situation where median sales-price gains have cooled off.”