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After frenzy local experts predict real estate price drop

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It’s no secret that Flathead Valley real estate has experienced rapid growth over the past few years, but the market could change.

A number of factors, including the COVID-19 pandemic, have resulted in an urban flight of buyers buying unseen properties and paying cash for far more than the original listing price. The eating frenzy has sent home prices skyrocketing, but local realtors and mortgage brokers believe a price drop is imminent.

“The median home price in Kalispell is $525,000, down from $600 a few months ago,” said Erica Wirtala, director of public affairs for the Northwest Montana Association of Realtors. “I think Whitefish has gone down a bit. The median home price was over $1 million. Now they’re about $840,000, which is for two bedrooms and two baths. This is an average median house.”

Data on home sales over the past three years show a dramatic picture of rising home prices in the valley. In June 2020, the median sales price for a home in Columbia Falls was $289,000, and in May 2022 he peaked at $751,000, according to Montana Regional MLS.

In Kalispell, the median selling price in June 2020 was $315,000. Kalispell this year he peaked at $650,000 in June.

Price increases are more pronounced in resort towns like Bigfork and Whitefish.In June 2020, a median home in Bigfork sold for $363,000. That price was about $1.1 million, about three times its April peak this year. At Whitefish, the median was $425,000 in June 2020, and this year he peaked at just over $1 million in August.

Those high prices have started to come down from their peak, and now median home sales prices in most locations are between $500,000 and $800,000.

The Slow The drop has led realtors to speculate that the valley’s high home prices are now headed downwards, but that doesn’t stop many sellers from trying to ride the gold rush.

Real estate broker David Fetveit said he asks sellers why they want their homes listed and warns them they are ready to lower prices.

“We start with where the price was, which is what your asking price is going to be. If we don’t get an offer in the first 30-45 days, we need to lower the price and figure out where the price is and where the market is for that property,” says Fetveit.

But the price cut opens the door to more common homebuyers, those looking for a 30-year mortgage. David Boye, a broker at Black Diamond Mortgage in Whitefish, said those who struggled to get loans may be more likely to find someone to work with.

“If I had credit issues, I might not have been able to find a loan officer willing to help me get a loan in 2021,” he said. “Everyone is busy with easy money, so I’m not willing to work with someone who needs more time.”

But as the market changes, it may be beneficial for future homeowners who were struggling to get a loan.

“Obviously, everything may be a little bit worse[than before the boom]but there is a desire to work with them, and a desire to work with them,” Boyet said. rice field.

That job means saving a down payment and maintaining good credit for those who want to buy property.

The Time The year in which the sale takes place is also shifting.

Winter used to represent a respite for the Flathead Valley real estate market, but in the past few years, Fetveit said he and other realtors have been busy regardless of the season.

“When we had a normal market cycle, things slowed down in the winter. But for 2020 and 2021 all the bets were off and there was no seasonality difference.If it was on the market people would buy it,” Fetveit said. say.

Experts predict other factors such as supply and demand and high interest rates will further affect the market here.

The Federal Reserve has raised interest rates this summer to curb high inflation. Currently, 30-year fixed-rate mortgages are just over 7%.

Boye said this wouldn’t have much of an impact on people who were looking to buy a home but weren’t able to afford it when the market was at its most competitive.

“People who have never made it to home ownership are taking notice. I would like to put it in, so I am willing to accept a higher interest rate or a higher price.

Experts urge first-time homebuyers to be patient and prepare for the perfect time to make an offer.

Prediction of A House prices in the Valley are down 15% to 20%, but Boye doesn’t expect the housing market to crash like it did in 2008.

He said supply and demand played a bigger role when it came to the market crash.

“Going back to 2008, there was a lot of supply but not many buyers. So the housing economy was oversupplied and then collapsed. There are a lot of people and they literally go looking for homes and there is nothing available,” Boie said.

He said the valley in particular has a supply and demand problem for single-family homes. Here he’s lived for 26 years, and he says the biggest challenge he’s seen in having adequate inventory is the time it takes developers to think of building a home and bring it to market. I was. He said he has never seen a serious attempt by a community to set aside specific areas for high-density housing.

“The problem is always that no one wants high density development in their backyard. But high density development is always the solution because it addresses supply issues, right? But pick a few spots in your community. , you need to say, “There should be a high density of housing in a particular area.” The harder it is for developers to get it, the more time it takes and the longer it takes. This takes up a lot of the problem. So it’s always too late. Every time there’s a big demand for housing, there aren’t enough houses,” Boie said.

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