Missoula housing prices soar
Is a surge of wealthy out-of-state homebuyers fueling a drastic increase in home prices in Missoula and western Montana? Hard data is hard to come by, but the Missoulian reached out to people in the industry with different perspectives. Some say yes, while some say no, and all agree that there's no definitive way to track the numbers. One thing that's definitely happened is that Missoula housing prices have continued to soar.
"We most certainly have (seen an increase in out-of-state buyers)," explained Rebecca Donnelly, a real estate broker with PureWest Christie's International Real Estate in Missoula. "I've been writing a significant amount of sight-unseen offers. People are coming from out-of-state in such a panic to tie something up that they are putting in offers contingent on being able to view it once they come here."
Tina Bouchee, the northern regional vice president at First American Title Co. in Missoula and a member of the Montana Land Title Association board, said title companies in western Montana are extremely busy processing real estate transactions.
"We're all seeing an uptick in purchases, specifically," she said. "It's record numbers across the board."
Donnelly said most of the buyers are coming from Washington, California, Texas and Arizona. The properties most of them are seeking fall into the $750,000 to $2 million price range, she noted.
"It's moving extremely fast," she said. "It's hard to keep inventory in. I've seen a lot of inventory that's been sitting on the market for years suddenly getting snatched up. It's extremely competitive. If something's priced right, it has multiple offers on it the first day. We had a buyer put in an offer for a property under $300,000 and it had 11 offers."
Montana has had lots of out-of-state buyers for the past few years, but Donnelly has been in the business for 16 years and talks to a lot of other Realtors. She said it's different in 2020.
"We've always had a lot, but we've never had this many out-of-state buyers," she said. "I would say the reasons are consistent. People are maybe trying to get away from states that are heavily taxed. One big one is a lot of people are wondering if this pandemic is going to be a new way of life for a while, so if they're going to have to shelter in place, they want to be in a spot where they have room to roam."
Donnelly said people in large cities are realizing that if they can work from home, they might as well earn a big-city paycheck while living in the mountains.
"I think this pandemic has shown people they can work remotely," she said. "Historically, a lot of people have steered away from Montana because it's a challenge to compete with bigger cities' income. Now, they can take their job in San Francisco or Silicon Valley and bring it here. Why not Montana? That's the number one reason right there."
Of course, real estate agents want to sell Montana to out-of-state buyers who have higher incomes and are selling houses in higher-priced markets, so they have an incentive to make the market seem attractive. Donnelly said she's having the best year she's ever had.
Not every local Realtor is seeing the out-of-state rush.
Mindy Palmer, a Realtor in Missoula with Berkshire Hathaway HomeServices Montana, has been in the industry for 22 years. She said she's seen no uptick whatsoever in out-of-state buyers.
"It's business as usual, and we track it very carefully," Palmer said.
There is no mechanism in Montana law that accurately depicts where buyers are coming from.
"Unfortunately all we have to go off is anecdotal info," said Brint Wahlberg of Windermere Real Estate.
Wahlberg works with the Missoula Organization of Realtors to compile data on the local real estate market.
"We have some stats from the housing report that shows where people are coming from, but our (Multiple Listing Service) doesn't report 'source' from where the buyers came," he said.
He said in June that a local title officer estimated to him that about one-in-four buyers are coming from out-of-state.
Shannon Hilliard, a Realtor with Ink Realty Group in Missoula, also noted there's no way to track it other than talking to people.
"In my experience, we don't have any data to say definitely where buyers are coming from," she said. "Until we have a mechanism for tracking the data, all we have are anecdotes."
DJ Smith, the president-elect of the Missoula Organization of Realtors, told reporter Nate Hegyi of public radio initiative America Amplified in June that "out-of-state buyers are coming in droves."
Smith told the Missoulian there's interest in talking with state lawmakers about changing laws and trying to make it mandatory to track where buyers are coming from.
Meanwhile, a new report from the Bureau of Business and Economic Research at the University of Montana shows that Missoula housing prices continue to soar.
The median sale price of a Missoula home in 2019 was around $315,000. According to economist Brandon Bridge, the first few months of data for 2020 shows the median sale price rising to over $340,000.
"While home prices have been growing across the board in Missoula County, they have been rising fastest among entry-level homes," wrote Bridge in the report for Montana Business Quarterly. "This has made affordability particularly challenging for new prospective homeowners, which has resulted in the past eight years being categorized as a seller's market for entry-level homes."
Bridge analyzed Internal Revenue Service data to get a glimpse of how many people are moving to Missoula from out-of-state compared to within Montana, although there is no data for 2019 or 2020 yet.
"Since 2010, the population of Missoula County has grown from approximately 107,000 to an estimated 116,000 in 2018, an increase of roughly 8%," Bridge wrote. "When looking at in-migration since 2013, over half of those moving into the county have come from another state, and those moving into the county earn higher incomes on average than those moving away."
More people with higher incomes in the same location creates competition, he noted, which drives up the price level.