As I travel across this magnificent state, I am awed by the great resiliency of the people who live here and their ability to survive, rebound, and in some cases thrive in economic challenges. For the first time in several years, there is a sense of renewed optimism, energy, and confidence in almost every real estate market around the state. Although each area is in a different stage of recovery, most communities agree that brighter days are ahead.
The marketplaces in Montana are as distinctive as the economic bases, physical attributes, and multifaceted panoramas that surround each “metro” market. The “Big Seven” communities make up nearly 40% of the state’s population. In 1870, Montana’s population was just over 20,000. During the next 50 years of discovery…the Homestead Era, it boomed to over 1/2 million by 1920. It took an additional 90 years to double to a million.
Just as the Continental Divide separates the watersheds in Montana, view sheds are split into the prairies of the East and the mountains of the West. The economic diversity is also geographically divergent from agriculture and energy industries in the east to tourism and recreation in the west. The east is rarely touched by out of state influence, and the west has been heavily impacted in the last 20 years with recreational and vacation homes. The growth of tourism in and around our two National Parks, Glacier and Yellowstone, directly correlates to second home growth in the Flathead, the Bitterroot, and greater Bozeman-Big Sky areas from 1992 to a peak in 2005. This era produced a tremendous increase in the number of sales and strong across-the-board appreciation.
Let’s take a look at several of the western markets, which were more harshly impacted than eastern Montana in the last four years with declining sales and values. Reports from Missoula indicate that inventories are stabilizing and sales are increasing. Missoula has always been a relatively stable market because of its broad economic base, despite the loss of several major employers in early 2011. Single-family home sales were relatively flat in 2011 at 684 units with an average sales price of $232,878.
The Bitterroot Valley and Ravalli County area saw amazing growth and appreciation from the late ‘90s to 2005. The correction in this second home market has been severe, but it also appears to be slowly returning. Their 2011 sales units were up by 11% to 318 with an average price of $204,040. The Flathead marketplace has not only suffered from the national real estate crisis but from high regional unemployment. The real estate industry is reporting brisk activity under $200,000, and more recently the second home buyer is returning to invest in prime scenic lakefront and ski properties. According to Dave Stone, CCIM, the “collectible play” is vacant land, which is substantially undervalued today. Last year’s sales were down slightly at 763 sales with $226,700 as an average price.