Recent real estate trends? (Missoula, Bozeman: sales, apartment complex, foreclosures)

[errfoil]

I've read a fair portion of the posts on this forum regarding overpriced real estate in MT. It's hard to pick up a newspaper these days that does not have dire news about the US housing market. Is anyone seeing a slowdown in MT housing and to what extent? I'm particularly interested in the Flathead valley and extended Bozeman area.

The strait scoop from some real estate professionals would be appreciated.

TIA

[rickers]

Housing sales are down and rentals are in high demand. I would consider this a buying opertunity for a person who has cash to invest. For someone who wants to come here, buy a house on payments and expect to work here to pay it off, good luck !

[jimj]

Since I'm involved in the market in Flathead county right now I can tell you that different price ranges have different things going on. From 0 to about 250-280k sales are strong. No real problems yet. From about 300 to 600k sales are flat but just started seeing an uptick in interest. From 600k+++ sales are still strong. I don't quite get the flat donut hole nor do the agents I've spoken with.
As everywhere else some are definately over priced but those are being weeded out slowly. Time on market has increased some but when your dealing with 180 days anyway whats a few more. I think part of the problem is people have been dealing with lowering prices in other states so they think it should automatically transfer here but this state has been historicaly low priced compared to most everywhere else and is still somewhat of a deal (depending on location) compared to other places so I wouldn't look for prices to drop much if at all.
As for overpriced, there are those who think property should still be $100 an acre and a 1500 sqft house should sell for 99k. Those days are long gone, heck you can't even build a house for that anymore unless it was 900 sqft.

[8 SNAKE]

Originally Posted by jimj

As for overpriced, there are those who think property should still be $100 an acre and a 1500 sqft house should sell for 99k. Those days are long gone, heck you can't even build a house for that anymore unless it was 900 sqft.

To piggy-back on what you've said, what is the average cost per sq ft for new construction? I'm not talking about the land, just the house. Obviously there are a ton of variables that will impact the price per sq ft, but what would be a good average for a nice home?

[jimj]

Originally Posted by 8 SNAKE

To piggy-back on what you've said, what is the average cost per sq ft for new construction? I'm not talking about the land, just the house. Obviously there are a ton of variables that will impact the price per sq ft, but what would be a good average for a nice home?

For a decent home it's runing about $120 a sqft, as you said depending on finish materiels. I'm betting you could get close to $100 for a lick'em and stick'em house but that would be something along the lines of purely rental grade construction and doing some things yourself.

[JoeJoeMan]

I just talked to a utility man the other day, his work naturally brings him in contact with the housing market on a daily basis, servicing new and existing homes in and around the Missoula area.
I didn't bring up the subject he did, he said the realestate market is tanking and that the realestate people won't admit it. He told me about houses sitting on the market for extended time and foreclosures on the rise.
I mentioned it should come as no surprise that realestate/sales people will never say things are 'bad' as such that would be saying "now is not a good time to buy what I'm selling".
We also discussed how buying a proberty for rental income was a thing of the past, the numbers just don't add up to a profit, and buying a place and hoping to turn it over in a couple of years is also a thing of the past with prices dropping - yes they are dropping around here, they won't admit that either -yes the median price is going up, but for various reasons the 'median' price is a misleading indicator, reason I won't elaporate on now.
The condo trend in Missoula is basically saying - "Oh you can't afford a house anymore - OK, well build cheap places to buy" - and that's pretty much what you get 'cheap' and smaller. The builders and realestate are in the process of squeezing the last bit of juice out of the lemon. But then again it should be intuitive that something just can't keep going up and lasting forever and/or defy simple economics.
I think I've said it before in other post, but - if people ever stop moving into Missoula/area the economy and housing market will tank fast than you can say 'ut-oh' - So much of the Missoula economy is depended up "growth" it's probably the biggest industry, We've seen this scenario play out back in the 80's when a smaller building boomd came to and end - people we're just walking away from their homes and leaving the area to find work else where.
In short, as that utility man said to me - the housing market is played out, but no one is going to tell you the party is over, for them it's to scarey of a thought to even thing about - because in a town like Missoula when you lose your job there are very few options left- this area isn't like a big metro area where you at least have a chance at finding something else to do.

[jimj]

JJm, I can't argue with what you heard, I'm not real familiar with the Missoula market. What I have seen leads me to believe there's still a little time left there. When condo's start going big guns (like in FL) I think the slowdown is not far behind. There will soon be if not already a huge glut of them and when they start sitting it will get interesting. Now up here in the Flathead we could use all the rentals we can get at the moment. There is a severe shortage of decent rental units here.

[JoeJoeMan]

jimj,
why aren't rental units being built in your area, if there is money to be made, you'd think developers would be crawling all over that oppurtunity. In missoula people were building and buy rental units to the point of where it was costing them money to own them - basicaly they would for go the rental income hoping the property value would increase enough in a few years to turn it over and make their money/profit - I got a feeling some of those people are living to regret that investment. I've notice that the prices of some home rentals has been pushing 2k and better if you can beleive that, and it's probably because that is what they have to ask in order to make any kind of profit, and 2k for a months rent is like asking for blood around here.

[rickers]

For a person with cash to invest these are not bad times. I know a guy who is buying older small houses as fast as he can.(He is beating the prices down to the bone!) The rents are high right now and these little rental type older houses can pay themselves off right now quite easily. I know several folks who do this and they are quite pleased with the current conditions. This is not the case for folks who need to use credit to make the buy. These same folks sometimes just buy homes to fix and flip but at this time having rentals seems to be paying off for them.

[jimj]

Originally Posted by JoeJoeMan

jimj,
why aren't rental units being built in your area, if there is money to be made, you'd think developers would be crawling all over that oppurtunity. In missoula people were building and buy rental units to the point of where it was costing them money to own them - basicaly they would for go the rental income hoping the property value would increase enough in a few years to turn it over and make their money/profit - I got a feeling some of those people are living to regret that investment. I've notice that the prices of some home rentals has been pushing 2k and better if you can beleive that, and it's probably because that is what they have to ask in order to make any kind of profit, and 2k for a months rent is like asking for blood around here.

I really can't tell you why more aren't being built, I can only guess. My guess would be short term vs long term thinking. Most builders here have been looking at the slam 'em up and sell them program vs the build a few, rent them out and let them grow. There has been one builder who has been building duplexes and selling them as fast as they went up to investors. The one our friend went to look at had 5 couples in line ready to rent at $950 to 1k a month. I think if a decent apartment complex was built it would fill rather quickly. The one issue I do hear is finding decent renters though, either they have real bad credit,have trashed places before or do not have a steady employment history or all three. I think it would be interesting to see a complex built like I lived in growing up, it was a mix of townhouses and apartments around greenspaces. It was always full and when the investors finally got tired of renting them they switched them to condo units. You don't see anything like that here in the flathead that I know of.