May 2022 Update
Flathead Valley Real Estate Market Report
Brought to you by Tory Baughan, Broker at Montana West Realty.
Real Estate Professionals with uncommon expertise, striving to help you purchase, sell, develop, subdivide, invest, or improve your existing assets.
Residential Real Estate Market
2021
The average sale price in Flathead County continues to increase. The average price in 2021 was $726,300, up over 26% from 2020 and 71% from 2019! The overall quantity of sales fell from the boom of 2020, down to 2,532 sales in 2021. Figure 2 shows that 2021 saw the least amount of days on the market, maybe ever, down to 114 days on average. Sellers typically got 101% of their asking price in 2021. Overall, the market was obviously very very strong.
2022
Fast forward to the present day, the average price is still increasing, with the months of March and April seeing the highest average sale price on record of $903k, and $892k respectively. With rising interest rates and high prices, it should slow market appreciation down from the breakneck pace that we saw during the pandemic. Quantity of sales could be a predictor of future market prices. Prior to the 2008 market crash, the number of sales peaked approximately 12 months before peak pricing. 2021 saw fewer annual sales than 2020, however, 2020 should be considered an anomaly due to the pandemic. 2021 annual sales were up 22% from 2019, and so far in 2022, the quantity is 11% higher than in 2019, the last “normal” year in the real estate market.
Individual Markets
Relative to peak pricing in 2007/2008, Kalispell and Columbia Falls are outperforming Whitefish, Bigfork, Lakeside, and Somers. Kalispell prices are 121% higher than their peak in 2007, while Columbia Falls prices are a staggering 160% higher. Whitefish is up 74%, Lakeside & Somers are up 80%, and Bigfork is up 89%. Waterfront properties are up 78%.
Inflation, Interest Rates, and Prices
The last time the U.S. experienced inflation like we have today was over 40 years ago. In the late 1970s and early 1980s inflation rose to 15% (figure 15). Subsequently, interest rates rose all the way to 18.5%! Interestingly, the average home price in the U.S. did not fall (figure 16). The annual inflation rate is 8.5% as of today while mortgage rates have increased to ~5.5%. Buyers should know that from 1970 until 2008, interest rates were higher than they are today. It is very unlikely that interest rates will be going down and are almost certainly going to rise in the future.
Figure 11: Flathead County monthly residential sale price with monthly sales quantity.Flathead County Land Market
Average land sale prices peaked in 2007, but prices fell much slower than residential prices. Prices hit bottom in 2013 and have been slowly increasing until 2019. Since then they have increased a whopping 113% despite home construction prices doubling. Existing home prices increased $302k during that time while land increased $200k. Given those numbers, the cost of a brand new house increased faster than existing inventory. It took an average of 248 days to sell, and sellers accepted 98% of the list price on average.
Land / Home Combo
Homes on various acreages are broken down by acreage in figure 14. In 2021, the average price for a home on acreage ranging from 0-0.5 acres was $515k and 0.5-1.0 was $680k. That price increases to $1.32m for homes on 20-40 acres.
Figure 16: Average Home Price.
Time to Sell?
All residential prices have increased greatly over the past few years. If you’ve been thinking of selling your home, land, investment property, etc, there has never been a better time. If you live in Kalispell or Columbia Falls and wish to move to Whitefish, Bigfork, or Lakeside, now may be the best time to make that move. Sales of luxury or high-end homes are particularly strong, and supply across all segments is very low.
Time to Buy?
Even though the prices are very high and interest rates are rising, it is still likely a smart decision to buy a home, especially if it is your primary residence. Inflation and interest rates are very likely to continue to rise, and if the 1980s were an example of what to expect going forward, real estate prices are not going to fall.
Buying land may be a good long-term strategy. Building costs are very high right now which lessens the demand for raw land. If you can afford to hold the property and build in 2+ years, that could end up working in your favor.
Future?
Northwest Montana has been discovered. Glacier National Park breaks visitor records with regularity. Whitefish and Whitefish Mountain Resort are continually publicized for great skiing, great accommodations, and friendly locals. Kalispell is the number one fastest-growing micropolitan area in the country, and Glacier International Airport had arguably the strongest recovering during the pandemic of any airport in the country.
Questions?
If you have any questions about the May 2022 Flathead County Real Estate Market Report, feel free to reach out! Tory Baughan: (406) 210-2425 or [email protected].