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After frenzy local experts predict real estate price drop – Daily Inter Lake

It’s no secret that real estate in the Flathead Valley has been booming for the past several years, but a change in the market may be ahead.

Many factors, including the COVID-19 pandemic, contributed to urban flight that saw buyers purchasing properties unseen and paying cash for much higher than the original listing price. The feeding frenzy has caused housing prices to skyrocket, but local realtors and mortgage brokers believe price drops are on the horizon.

“The median home price in Kalispell is at $525,000, which is down from what it was a couple of months ago when it was in the six hundreds,” says Erica Wirtala, Public Affairs Director for Northwest Montana Realtors Association. “I think Whitefish has fallen a bit, they were at a median home price of over a million. Now they’re at about $840,000 — and that’s for a two bedroom two bath – that’s just your average median house.”

Data from home sales over the past three years paints a dramatic picture of rising housing costs in the valley. According to Montana Regional MLS, the median sale price for a home in Columbia Falls in June of 2020 was $289,000, which peaked in May of 2022 at $751,000.

In Kalispell, their median sale price was $315,000 in June of 2020. Kalispell reached peak prices in June of this year at $650,000.

In resort towns like Bigfork and Whitefish, the price jump is more significant. In June of 2020, the median home in Bigfork sold for $363,000, that price nearly tripled at its peak in April of this year at around $1.1 million. In Whitefish, the median price was $425,000 in June of 2020 and peaked in August of this year at just over $1 million.

These high prices have started to fall since their peak— now most places sit with a median home sale price of between $500,000 to $800,000.

THE SLOW decline has realtors speculating that high home prices in the valley are now on the way down, but that doesn’t stop many sellers from trying to get in on the gold rush.

Real Estate Broker David Fetveit said he will ask sellers what they would like to list their home for, cautioning them that they should be ready to make price reductions.

“We’ll start out at where the prices were, you know, what your aspirational price would be. But I always tell them upfront to be ready to do some price reductions. If we’re not getting offers in the first 30 to 45 days, then we need to start dropping the price and try to kind of figure out where the price is, where the market is for that property,” Fetveit said.

But price drops open the door for more typical home buyers — someone looking for a 30-year mortgage. David Boye, a broker with Black Diamond Mortgage in Whitefish, said people who had a hard time getting a loan might have a better chance of finding someone who will work with them.

“If you had credit challenges, you might not have been able to find a loan officer that was willing to help you get a loan in 2021,” he said. “Everybody’s busy with easy money, so they’re not that motivated to work with somebody who needs more of their time.”

But as the market changes that may be beneficial for those prospective homeowners who had a harder time obtaining a loan.

“Obviously, everything is probably a little bit worse (than before the boom) but the desire to work together is there for me to work with them and desire for them to put the work in,” Boye said.

That work means saving for a down payment and maintaining good credit for those eager to buy property — being ready at a moment’s notice, because even though the market is cooling down, it’s still pretty hot.

THE TIME of year that sales are happening has also shifted.

Previously winter would mean a moment of reprieve for the real estate market in the Flathead Valley, Fetveit said, but over the past several years he and other realtors stay busy no matter the season.

“Back when we had normal market cycles, things would slow down in the winter. Primarily just because a lot of those, the second and third home market — those people just wouldn’t be up here shopping in the winter. But all bets were off in 2020 and 2021, there was no difference between seasonality. If one was on the market, people were buying it,” Fetveit said.

Professionals predict that other factors like supply and demand and high interest rates are going to do more to affect the market here.

The Federal Reserve moved to raise interest rates this summer in an effort to lower high inflation. Currently, the interest rate for a 30-year fixed rate mortgage is just above 7%.

Boye said this isn’t as impactful to people who have been looking to buy a home but couldn’t when the market was at its most competitive.

“People that have been unable to get into homeownership are focused. So, people with credit challenges or for whatever reason in their lives they couldn’t qualify for the loan, they’re willing to accept the higher interest rates or the higher prices because they want to get a home,” Boye said.

Experts urge first time home buyers to be patient and be prepared for the perfect time to put in an offer.

PREDICTING A 15% to 20% drop in prices for homes in the valley, Boye still doesn’t expect a crash in the housing market like in 2008.

He said when it comes to that market crash, supply and demand played a much bigger part.

“If you go back to 2008, we had a massive supply and not that many buyers. So we oversupplied the housing economy and then it crashed. In this case, you have a lot of people that want to get into homeownership and they will literally go to look for a house and there isn’t anything available,” Boye said.

He said the valley in particular has a supply and demand issue with single family housing. He said in the 26 years he’s lived here, the biggest challenge he’s seen for getting an adequate inventory is the amount of time it takes for a developer to go from thinking about creating housing to getting it all the way on the market. He said he hasn’t seen a serious attempt at communities setting aside certain areas to become high density housing.

“The problem is always that nobody wants high density development in their backyard. But high density development is always the solution because it addresses the supply problem, right? But you have to pick a couple of spots in your community and say, ‘We got to put high density housing into certain areas,’ and the harder it is for a developer to get that, then the longer it takes, and the longer it takes the more of the problem this is. So it’s always too late — every time we have a big housing demand, we don’t have enough housing,” Boye said.



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