Expert: Housing higher than demand
By HEIDI DESCH / Hungry Horse News
Flathead County could be edging its way towards a larger surplus in the housing market.
That was the message presented by appraiser Jim Kelley at the sixth annual Economic Forecast of the Flathead on Wednesday, Jan. 30 at the Red Lion Hotel in Kalispell. The event was presented by Montana West Economic Development.
Kelley, who owns Kelley Appraisal in Kalispell, gave an overview of the Real Estate market in Flathead County.
According to Kelley the supply of land and housing being created is already higher than the demand. He said based on historical trends for housing demands and population increases there has been a surplus of homes constructed in the county since 2004.
Last year there was an estimated need for 992 homes while about 1,093 were actually constructed. That was a surplus of about 100 homes for 2007. The actual number of houses constructed is estimated because Flathead County doesn't require building permits.
"The demand goes up and down. There's been a drop in demand, but we still build homes," Kelley said. "In nine of 11 years we've built more than the demand."
In the last four years about 900 surplus homes have been constructed in the county.
It's a trend that Kelley feels will impact the markets in all three cities.
"It's my personal opinion that the Kalispell and Columbia Falls markets in the next couple of years the values will baseline or slightly increase while the Whitefish market will be like the 2001 .com bubble," he said.
According to Kelley, the number of houses on the market in each city as well as the homes' average values will play roles in how the market affects them.
In Whitefish, he said, about one in every 19 houses is currently for sale. In Kalispell about 3.5 percent of the homes are on the market for sale, and just 2 percent are for sale in Columbia Falls.
Also on average a home in the Whitefish city limits will spend about 15.5 months on the market.
In Columbia Falls that number is just under six months on the market. In Kalispell a home is likely to be up for sale for about eight months.
Overall sales during 2007 were down across the county. For all three cities residential sales in city limits and within two miles of city limits sales decreased by 27.4 percent. Residential sales two miles from and within city limits made up 69 percent of all sales.
The average price for a home in 2007 in the Columbia Falls city limits was $187,584. In Kalispell is was slightly higher at $209,310, while Whitefish was at $503,707.
Kelley said that foreclosures and declining markets in other areas of the country are affecting the Flathead Valley market as well.
The Flathead County median home price recently also made its way above the national median. The median home price is just over $240,000, while the national median is closer to $220,000.
Owners trying to move those houses above the average also might have a difficult time. The homes in the over $500,000 and above $1 million aren't likely to bring in buyers.
Kelley said that was because many of the people who buy those homes here are from out of state, but because the housing market has fallen more dramatically in other states folks won't be purchasing homes here.
It's not just a surplus of homes in the market either that could have an impact. It's also the ratio of lots created vs. house construction.
Since 2001, the number of lots created in the county has continued to outpace construction rates. Through 2007, Kelley estimates there an excess of about 2,800 lots.
He said that without any new subdivisions created there is about a four-year supply of lots.