A recently released Flathead County real estate report for 2011 details a market characterized by “mixed messages,” with noteworthy improvements in residential sales and new construction in Whitefish but also eye-catching declines in home prices in Columbia Falls.
Given these vast discrepancies, the author offered two possible alternate titles for his report: “The Tale of Two Cities” or “The Good, the Bad and the Ugly.”
Meanwhile in Kalispell, residential construction declined for the fifth straight year in 2011 and home sales stayed fairly on par with the past several years, meaning still sluggish and dominated by bank-owned properties and short sales.
And in most places across the county, new construction and subdivision activity remained near historic lows, while foreclosure notices declined, indicating that the annual rise in total foreclosures may finally be ending.
Those figures come from Jim Kelley’s latest Flathead County real estate report, which serves as an annual barometer for the health of the local real estate market. As with every other year, Kelley was invited to discuss the report’s findings at Montana West Economic Development’s Economic Future of the Flathead event beginning at 7 a.m. on Jan. 25 at Flathead Valley Community College. Kelley is the owner of Kalispell’s Kelley Appraisal.
The most dramatic numbers in the report come from Whitefish and Columbia Falls, which seem so far on opposite ends of the real estate spectrum as to belie the fact that the towns are similar in size and located less than 10 miles apart – hence Kelley’s reference to the “The Tale of Two Cities.”
The volume of sales in Whitefish, including the city and area comprising 3.5 miles outside of city limits, was the highest since 2007. There were 218 sales, compared to 216 the year before, 157 in 2009, 182 in 2008 and 278 in 2007.
Notably, bank-owned properties and short sales represented only a combined 21.2 percent of the overall market, compared to 43.1 percent in the Kalispell area and more than 50 percent in the Columbia Falls area, including an astonishing 66.7 percent within city limits.
The median price of a residential sale in the Whitefish area jumped 9.1 percent in 2011 from the previous year to $246,500, though that’s still down from $256,825 in 2009 and sharply lower than at the tail-end peak of the city’s housing boom in 2007, when the median price was $335,000 and the average was $567,260.
New construction also increased in Whitefish with 43 new residential units, the highest total since 2007.
Doug Zignego, president of the Northwest Montana Association of Realtors MLS, said Canadians taking advantage of favorable exchange rates, low interest rates and affordable home prices are driving a large share of the market developments in Whitefish. As buyer confidence rises, he expects positive trends to continue through 2012.
“People tend to have a herd mentality: If they see things selling, they think the bottom is passing them by,” he said. “I think that will continue as long as these interest rates are low.”
Columbia Falls, including the city and 3.5-mile area surrounding city limits, saw residential sales decline for the fifth straight year to 101, just slightly fewer than 2010’s 105. The market peaked in 2006 when there were a total of 212 residential sales. Median prices plummeted 15.9 percent and 30 percent within city limits.
Looking strictly at sales within the city of Columbia Falls, the median residential price fell to $100,000 in 2011 from $142,900 the year before. In 2008 the price was $189,000. Sixty-three percent of all sales in the city were bank-owned properties.
“The Columbia Falls market appears to be finally feeling the full impact of the layoffs from the lumber industry and the aluminum plant,” Kelley wrote.
Zignego said a disparity in affluence between many homeowners in Whitefish and Columbia Falls helps explain some of the statistics, including the large difference in total bank-owned properties. He also said: “I can’t emphasize enough the role of Canadians.”
“I don’t think the Canadians are buying in Columbia Falls; they’re buying in Whitefish,” he said.
Kalispell and its surrounding area saw median residential prices fall to $158,250, down from $169,000 the year before and a high of $207,000 in 2007. The total of 442 sales was similar to the previous three years. There were 455 in 2010. The city also continued its residential construction decline, with the number of new units falling from a high of 349 in 2006 to 72 last year.
While total foreclosures in Flathead County increased again, from 393 in 2010 to 481 in 2011, Kelley is encouraged by the fall in foreclosure notices from 1,187 to 862.
“This is an indication that the number of foreclosures will likely decrease in 2012,” Kelley said.
Rick Doran, president of NMAR, anticipates the Flathead real estate market to improve in 2012, particularly in regards to sales of existing residential property.
“With the improvements nationally, we’re going to see some rebound from that,” he said.
Doran hopes the market is turning the corner, but says obstacles remain, including a lack of jobs and “public perception” of the economy inhibiting buyer confidence. Zignego, however, detects some signs of increasing confidence.
“My belief is that we have a three-legged stool and two of the legs – low interest rates and incredibly low prices – are there,” Zignego said. “The third leg that needs to happen is buyer confidence.”