The song remains the same: There still aren't enough houses to keep up with all the people trying to buy them in Missoula, Mont., so that means prices keep shooting up.
The median home sales price in the Missoula Urban Area is at $337,950 so far in 2020, a 9% increase over where it was through the same period in 2019.
"We are at historically low levels of housing supply, to points that we've never seen before," explained Brint Wahlberg of Windermere Real Estate.
It's a trend that's continued for most of the last decade here. Since June of 2011, the median sales price of homes sold in Missoula has risen roughly $127,000, or 64%.
The Missoula Organization of Realtors released data for the 2020 Missoula Housing Report's mid-year update on Friday. Wahlberg chairs the housing report committee and gave a presentation over the Internet.
"Sellers hold an extreme advantage. Sellers are able to ask for a higher price and are able to obtain it," he said. "That leads to bidding wars. Sellers are going to continue to enjoy this market and buyers are going to be frustrated."
Houses are selling for 99.6% of their listing price, on average, a record high.
Wahlberg said that there was a point this summer where there was only one home for sale for below $200,000, and only six for sale under $275,000. And that is not uncommon, recently. With historically low interest rates, there are plenty of willing buyers but nobody to dance with.
"The amount of options are just not there," he said. "We have less than a month's worth of supply in all price points. Last year, there were 2.3 month's worth of supply."
In recent years, there were a lot of options and sales below $200,000, he said. For example, 2014 saw 317 below that benchmark, and 2019 saw 90. But in 2020, there have only been 43 total sales under $200,000.
The MOR started keeping track of sales of homes priced above $750,000 this year because there have been so many more sales in that range, Wahlberg explained. There used to be a surplus of those luxury homes, but not anymore.
"High-dollar homes have dropped into a normal supply range," he said.
There have only been four foreclosure sales this year, compared to seven last year.
The year started strong with the number of homes sold in the first quarter up 22.5% over 2019, but slowed during the peak of the pandemic stay-at-home directive.
Sales in April and May were down 17.2% and 16.3% respectively. But then in June, the sales volume was up 14% over last year. Through the first six months of the year, the sales volume is up 4.61% over last year.
According to Dwight Easton, public affairs director for the Missoula Organization of Realtors, supply has not kept up with demand even with a brisk home sales market.
"2019 finished just below normal market levels at 2.53 months of supply (called the absorption rate)," he said. "A normal range is a supply of housing sufficient to support three to nine months of demand. In 2020 the trend has continued downward, with absorption falling to an all-time low of 1.53 months of supply at the end of June."
The Rattlesnake and Grant Creek are the only two neighborhoods in Missoula showing a "normal" amount of housing supply.
"The tight supply was a contributing factor in moving the median sales price of a Missoula home to a new high of $335,000 through June 2020, a 6.3% increase from the end of 2019," Easton explained.
Easton said the MOR believes that there needs to be between 700 and 750 housing units built every year to keep up with population growth in Missoula. However, that mark has only been hit four times in the last two decades, and the pace of new residential construction has fallen sharply last year and this year.
Neither Wahlberg nor Easton could offer concrete theories on why there has been not enough residential construction activity, but builders in the past have told the Missoulian that high land costs, high labor and materials costs and permitting headaches are to blame.
Annelise Hedahl, a Realtor with ERA Lambros Real Estate, said she's seen a big uptick in out-of-state buyers.
Hedahl is a former city council member, and she's not sure how the city could do much in the short-term to prevent the price inflation that's happening.
"How do you stop a mass exodus from the huge metro areas to amazing places like Missoula?" she said. "I think we've just gone through the greatest experiment as a nation: All of you have to stay home for months. We also were able to really re-evaluate the need and necessity of commuting."
She can't tell where her clients are coming from besides from casual conversations and anecdotes because Montana is a non-disclosure state, meaning the former address of property buyers is not public information.
"I've had a ton of people from Washington, definitely California, the Seattle area and strangely enough a few from Texas," she said. "One gal from San Francisco said 'gosh the prices here are terrific,' but some people say 'gosh, the prices are on par with Portland, Oregon. It's all perspective."
However, at least one data source shows that the escalating housing prices in Missoula are just a continuation of a trend that's been happening for years, and there has been no spike in prices due to pandemic-fleeing city dwellers coming here.
Missoula's Housing Price Index averaged a yearly 5.7% increase from 2016 to 2019, and in just the first half of 2020 it increased 5.6%, according to the Federal Housing Finance Authority.
"In most parts of MT, (the data) do not suggest that COVID accelerated home price growth through June," explained Bryce Ward, an economist with the University of Montana. "Annually, home prices rose at the roughly the same (rapid) pace as recent years, and actual (second quarter) appreciation was fairly weak."
Other Realtors in Missoula have said they've seen no spike in out-of-state buyers. Wahlberg said in his personal experience, the ratio of local buyers to out-of-state buyers has remained unchanged during the pandemic. The MOR has no reliable way to keep track of where buyers are coming from.
But any buyer coming from a city likely is coming from a place where wages are much higher.
To purchase a home priced at $315,000, the median sales price of a home in Missoula in 2019, a family would need an income of $98,123 (and a 5% down payment on a 30-year conventional loan) to afford that home. Meanwhile, the actual median income for a two-person household was $58,688 in 2019 in Missoula. That's according to data from the Missoula Organization of Realtors.
