Flathead, Gallatin Hit Hard

Sharp Divide Among Montana Housing Markets

By Travis Koch, 7-20-09

	Not a single house on Flathead Lake has sold this year. File photo by Lido Vizzutti, Flathead Beacon. Graph below by Pat Gill, NewWest.Net. Click the chart to enlarge.

The higher you fly, the farther you fall.

That’s certainly the lesson of a quick survey of the most recent data from the largest housing markets in Montana.

Yellowstone County (Billings), Cascade County (Great Falls) and Missoula County have all weathered the housing bust relatively well. Transaction volume is way down, but median prices have mostly held steady in these three markets, at least for now, and even increased by 10 percent in Cascade.

The situation in more expensive and resort-heavy Flathead and Gallatin Counties, which saw the biggest price increases during the boom, is much different. Median sales prices have dropped by 19 percent in Gallatin County and 22 percent in Flathead County, and anecdotal evidence suggests the carnage at the high end of the market is even worse than those numbers indicate.

In Flathead County, with its estimated 88,500 residents, the number of houses sold in the first half of this year—332—is 63 percent less than the number sold in the first half of 2006, according to data collected by Kelley Appraisal in Kalispell.

The declines in the Whitefish sub-market are even more extreme. The number of houses sold in Whitefish and the surrounding area has fallen 72 percent, from 187 in the first half of 2006 to 53 this year. Likewise, the median price for houses sold in and around Whitefish has dropped from $328,500 in 2007 to $194,000, a decrease of over 40 percent.

Jim Kelley, who publishes statistics for the area, reported that there hasn’t been a single lakefront home or condo sale on Flathead Lake so far this year, an event that is unheard of in the 26-year history of data he has compiled.

Adding injury to insult, the median sales price for homes in the area has plunged dramatically—22 percent countywide—from $241,500 to $188,500. Kelley reported that some lakefront property owners have dropped their asking prices more than 60 percent.

The numbers from Gallatin County (Bozeman) tell a similar story. During the first half of 2006, the median price for home sales was $336,500. This year, it was around $272,000, or 19 percent less.

But any explanation of the decline in Gallatin County has to take into account the resort sub-market in and around Big Sky and West Yellowstone, where the median price for home sales increased an astounding 198 percent from 2005 to 2006—from $520,000 to $1.5 million—without any significant change in the volume of houses sold. This year, the median price for home sales appears to be dropping back to the pre-bubble level. It’s currently at $685,000.

Contrast the declines in Flathead and Gallatin counties with other large markets that don’t have the resort component and the impact of those high-end sub-markets becomes clear.

In Yellowstone County, the largest in Montana with an estimated population of 142,000, there was a slight increase in median home sale prices since the previous peak in 2007, according to data provided by the Billings Association of Realtors. During the first 6 months of 2007, the median price in Yellowstone County was $174,900; this year it remained almost identical at $175,025.

Even more surprising in light of current trends, the Great Falls Association of Realtors reported a 10 percent increase in median home sales price in the area since 2007. Considering that housing prices across the nation have plummeted over 20 percent on average since 2006, any sign of a strong market is welcome news to realtors and sellers.

Missoula County, the second largest in Montana with an estimated population of around 110,000, is somewhere in between. The median price for home sales in the first half of 2009 fell about one percent from its peak in 2007. Between January 1 and June 30 of this year, the median price for home sales in Missoula County was $217,000, just slightly less than the 2007 mid-year price of $219,900, according to data provided by the Missoula Organization of Realtors.

As solid as the Missoula market might appear, the number of homes sales must be considered alongside the median price. During the first half of this year, the number of homes sold in Missoula County is about half of what it was three years ago—there have been 469 homes sold so far this year compared to 913 in the first half of 2006, according to data from the Missoula Organization of Realtors,

Although there are many indicators that local housing markets are strained, Missoula, Yellowstone and Cascade counties are not likely to see the same dramatic decreases experienced in Gallatin and Flathead counties because their housing markets aren’t as affected by the resort communities that fueled price increases a few years back. (For a full report on the Missoula market, click here.)

Like this story? Get more! Sign up for our free newsletters.