The story behind 'median' prices
As hometown Realtors, we'd like to provide some additional information regarding the decline in the "median price" of Columbia Falls homes in the widely-publicized 2011 Flathead Valley look-back real estate summary in the Feb. 1 Hungry Horse News.
Appraiser Jim Kelley's yearly review is always anticipated as a reference by all of us in the real estate business.
Many people have contacted us to help them understand what the statistics might mean for their own homes. It is understandable to confuse "median" with "average" or "typical."
The "median price" is a useful statistic that simply means that in a certain set of events (in this case, 2011 home sales), half of the transactions were above, and half were below, the median point. Jim Kelley used a set of 54 sales and found a median sale price of $100,000.
When we ran an archive report for all Columbia Falls sales in 2011 (non-waterfront, one acre or smaller lot, and excluding Meadow Lake Resort) we found 67 such sales in the Northwest Montana Association of Realtors MLS database with a median sale price of $111,000.
But no matter which set of events and median price one works with, there are some inherent oddities in the 2011 record which we think are informative and that should be understood in our community.
First, included in the 2011 total were seven modest condominiums (without garages) in Hilltop Homes (all foreclosed) that sold for between $39,000 and $50,000. Seven sales in a universe of less than 70 events have a statistical impact.
Second, there were 11 sales of in-town single-family homes between $47,000 and $70,000. All of these were older, quite small, one or two bedroom, single-bath homes, and (with one exception) without garages.
Putting it gently, the majority "needed some work." Historically, this is a surprising anomaly - so many small, outdated older houses to cross the market in a single year. Combined, the small fixer-uppers and the condos comprised 18 sales under $70,000 each which, in a universe of less than 70, had a very significant influence on the median price.
The foreclosure rate throughout the valley has been unprecedented. We attribute it more to the collapse of development and construction in the valley and to its waves of impact than to industrial cutbacks. Kalispell and Columbia Falls have predictably seen the most affect from this dynamic, as opposed to less blue-collar Bigfork and Whitefish. We have to expect foreclosures to be an ongoing factor in sales values in the foreseeable future.
We sense that homeowners who might make discretionary changes are simply staying put and holding off for a better marketing climate. Fewer high-quality homes listed manifested itself in the year-end stats by defaulting the 2011 results toward the little fixer-uppers that had such a heavy weighting.
The "median price" in the statistical summary does not mean that an average home in Columbia Falls is worth $110,000 or less. This is the misimpression that many seem to have gleaned from the publicity.
Columbia Falls homeowners should have the whole picture. Sales of more typical newer or remodeled "mainstream" 3-plus bedroom, 2-plus bath homes in nice condition with garages continue in the $150,000 to $230,000 range, with several upward exceptions.
Columbia Falls is an attractive and desirable place to live for so many reasons, and quality homes are still sought after and bring fair value. Great interest rates and a time of local population transition have created an enormous buying opportunity for buyers who for many years were "priced out" of the market for quality, move-in ready housing.
That is the silver lining in our clouded market - that opportunities for another generation of owners exist for the taking.
Bill Dakin is the broker/owner of RE/MAX Mountain View in Columbia Falls.