Focus on Real Estate


 

Up and down

 

By Shelley Ridenour
Flathead Business Journal

More houses have been sold so far this year in Flathead County than were sold in the first nine months of 2009, data tracked by a Kalispell real estate appraiser shows.
But the price of houses decreased at the same time, Jim Kelley of Kelley Appraisal said. Kelley has been tracking real estate data in the county for more than 30 years.
Between Jan. 1 and Sept. 30 of this year, he reports 788 houses were sold in the county, a 28 percent increase from the 614 houses sold in the first nine months of 2009. In addition, sales currently are pending on 36 houses in Flathead County. Most of this year’s sales — 528 — were traditional real-estate transactions, while 211 houses sold were classified as bank-owned and 49 were short sales. A short sale occurs when a borrower falls behind on payments and a lender decides that selling the property at a moderate loss is better than pressing the borrower. Successful short sales avoid foreclosure.
In all of 2009, 912 houses were sold in the county.
The average sale price of houses sold in the county so far in 2010 is $272,236, a 1.7 percent drop from last year’s average price of $277,043.
Kelley tracks median prices, too. His reports show the median price of houses sold in 2010 is $199,500, down 0.3 percent from the $200,000 price recorded in the first nine months of 2009. The median price means half the houses sold for less than that amount while the other half sold for more.

Housing prices have dropped for three straight years, Kelley’s data shows. The declines in 2009 and 2010 have changed the trend line to show that the median price of homes is now back in line with the affordability index. That means most people in Flathead County earn enough money to buy a house at the median price, as has historically been the case, dating back to the mid-1980s, he said. Between 2003 and 2008 the median price of houses in Flathead County increased from $160,000 to a high of $250,000 in 2007, but people’s incomes didn’t increase accordingly, which meant most people couldn’t afford to buy a house, Kelley said.
The fact that the sales prices and incomes are coming back into alignment “suggests if we’re not at the bottom of residential sales prices, we’re close,” Kelley said.
Based on the historic economy, local residential property prices are “close to the bottom,” he said. “But to be certain we need to get some employment in here.”

According to the U.S. Census Bureau, the median household income in Flathead County is $44,013 while the median household income for the United States is $52,029. The Census Bureau also reports the average sales price for a house in the United States is $270,900 and the median sales price in the country is $216,700.
Kelley said home prices have dropped “mostly because sellers realize they have to compete with foreclosures.” A house that has been foreclosed on typically sells for less than it would through a regular sale process.
In the first seven months of 2010, there have been 685 notices of foreclosure proceedings in Flathead County, but more than half were canceled while 237 trustee sales occurred. Trustee sale is the term used for the sale of a property that has been foreclosed on by the lender.
The sale price of a house in the county today is about where it was in 2004 and 2005, Kelley said.
“In the Flathead until 2005, housing prices had always been lower than the national median price,” Kelley said. Property purchases in the county then were “a good deal,” he said. So a lot of people, especially retirees, sold property elsewhere and bought a pricier home in the Flathead.
But in 2005 “that crossed over” and the median housing price in Flathead County became higher than the median price of a house in the U.S., Kelley said. Property in the county was “no longer a good deal.”
The definition of affordable housing has changed in the last 30 years, Kelley said.
In the 1980s, an affordable house was defined as costing 2.5 times as much as the household income of the buyer, he said. As house prices increased, in the 1990s the number changed to an affordable house costing 3.5 times as much as the borrower’s household income.
In 2007, the rate increased so that an affordable house was considered to cost 5.5 times as much as the borrower’s household income.
“How many people could afford that?” Kelley asked.
It has dropped to 4.1 times the household income today, he said.
Kelley attributes most of the increase in sales this year to the federal tax credits made available to home buyers through the first five or so months of 2010. Those credits have expired and the sales volume in the last couple of months has dropped, he said. People taking advantage of the tax credits typically were buying less expensive houses listed at $200,000 or less, Kelley said.
Much of the increase in median sales prices locally has come from the sale of high-end homes, he said.

Reporter Shelley Ridenour may be reached at 758-4439 or by e-mail at sridenour@dailyinterlake.com


 


Last Updated
Nov 21, 2017
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