A buying frenzy, with soaring prices and out-of-state buyers, continues to dramatically affect the housing market in Missoula, Mont., but at least one data source shows it's just a continuation of a years-long trend.
"Prior to COVID, about a third of buyers would be from out of state," said Annelise Hedahl, a realtor with ERA Lambros Real Estate in Missoula. "That's flip-flopped to now two-thirds are from out of state. What's interesting is local Missoula buyers have so quickly been priced out of the market."
She represented a local buyer on a house in the South Hills. It got 12 offers, and her offer was $20,000 above the asking price.
"We got third place," Hedahl explained. "It's happening so quickly. We are seeing escalator clauses, which means people will write in their offer that they'll go $1,000 above the highest offer up to $20,000 above asking, for example."
She said cash offers used to get people discounts on prices, but all it does now is move you to the front of the line. Buyers are waiving the inspections now, as well, just to get a deal closed.
"It's crazy that you forfeit that," Hedahl said. "It's like, whatever, rodents don't matter."
When houses are selling for more than they're appraised for, she said properties are being "hyperinflated."
Even Missoula's traditional working-class neighborhoods are seeing huge price spikes.
"This is so depressing," Hedahl said. "You take the Northside or Westside. I love those neighborhoods. There was one a block off the Poverello Center (homeless shelter). It's a beautiful property. I know an agent, and their client went $10,000 over asking, and it was already high-priced for the neighborhood. And they got fifth place."
She has to tell her clients that they can't wait on putting in an offer and need to go over the asking price, even though the Missoula Urban Area's median home sales price soared to $337,950, according to a mid-2020 update in September from the Missoula Organization of Realtors. For just the month of July, the median sales price was a whopping $370,000, according to the MOR.
Hedahl said people assume she loves when prices go sky-high.
"People say, 'You Realtors must be loving it,' and I always say no, I just want to sell reasonably-priced homes to people," she said. "I have to tell my clients they gotta go higher or they're probably not going to get it. The overall temperature is this sort of heightened frenzy."
There's a lot of disappointment for buyers. For sellers, it's the opposite. Hedahl had a $1.25 million listing and coached the sellers by saying they might have to wait a while and play the long game.
"I had it on the market for six days and had six showings and a cash offer," she said.
Hedahl has a client who works for Facebook who decided she can work from home and is trying to buy a house in Missoula.
"Her budget is pretty healthy," Hedahl said. "She said she doesn't think she's ever going back to (Facebook headquarters in California), but she doesn't plan on retiring. She might commute back and forth and maybe Airbnb the house or rent it and keep it as a summer home."
Hedahl is a former Missoula 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."
Hedahl knows that wages in Missoula don't compare with bigger cities.
To purchase a home priced at $315,000, the median sales price 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.
"The saddest thing is all the people I grew up with around, here, eventually it's going to be too expensive to live here," she said. "I remember when I was on council, experts would talk to us and say the trajectory we're heading for is Boulder, Colorado. We were all adamant that no, it's Missoula. It's never going to happen. But now, oh my gosh, it's happening."
Many buyers have Montana roots, she said.
"Surprisingly, a lot of them grew up here or have some sort of tie here," she said. "They grew up here and now want to get a piece of Montana before it's too late, sort of like the old gold rush."
Hedahl wouldn't be surprised if developers put more thought into building home offices into homes now.
Bryce Ward, an economist at the University of Montana, said the housing price growth in Missoula doesn't seem to be accelerating any more than it has in recent years before COVID-19, at least according to data from the Federal Housing Finance Authority.
"In most parts of Montana, they do not suggest that COVID accelerated home price growth through June," Ward said. "Annually, home prices rose at roughly the same (rapid) pace as recent years, and actual (second quarter of 2020) appreciation was fairly weak."
He said the data from July and August might tell a different story.
"People are freaking out about housing prices on Twitter, but these data aren't consistent with the anecdotes," he said. "To the extent that people are talking about the crazy things in the housing markets in April, May and June, these data don't suggest there was some sort of massive change in the nature of housing price appreciation at least."
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.
