Missoula’s housing market has entered a more stable and encouraging phase. Based on the data in this report, we continued to gain more confidence in the Missoula housing market in 2014. Current homeowners sit in a positive position, with homes continuing to appreciate while inventory numbers, lot sales, building permits, and home sales were all in a healthy range. Coupled with a large drop in distressed sales, it presents a positive picture.
Residential lot sales, as well as their median sales price, increased in 2014. Building permits also increased, with the greatest number of new permits being issued for multi-family development, which will help in addressing Missoula’s growing population and the demand for rental units.
While the total number of home sales decreased slightly in 2014, sales began to outpace previous years by the third and fourth quarters. Condominium and townhouse sales also remained fairly strong. The median price of a Missoula home reached an all-time high of $225,000. Affordable homes saw the highest demand, with 59 percent of all home sales falling in the $100,000 to $250,000 range. Based on the inventory of homes on the market and the length of time they remained on the market, Missoula was solidly in a “normal” market again, after what equated to an oversupply in the market until 2012. In addition, the sharp drop in foreclosures and short sales meant fewer below-market-value sales. Potential home buyers may see a further increase in competition for affordable homes, and sellers may see less downward pressure on prices.
The challenge moving forward for housing is the lack of available supply in some areas. While the higher price ranges and some areas have a normal amount of listed supply, some other neighborhoods and Missoula’s more affordable price ranges are getting tighter and tighter on listed inventory. Lower-listed inventories can cause rapid bidding up in prices, which is good for homeowners but can be challenging for buyers who may be forced to pay higher prices or may get pushed beyond a comfortable purchase price. Low inventories also lead to slower market sales volume; if there aren’t enough listed homes on the market to meet the current demand, sales activity will lag.
While homebuyers now face more stringent lendingstandards, interest rates have remained low, and Missoula residents appear to be entering the homeownership process more financially informed than in previous years.
The demand for rentals in Missoula kept rental vacancy rates below the national average once again, and the cost of rent continued to increase in 2014. However, the growth in multi-family construction and permitting appears to be recognizing this demand. Missoula still faces several challenges, especially in meeting the needs of those who seek financial housing assistance and those who are homeless or at risk of being homeless.
The data on the affordability of rental housing shows that a high percentage of renters in Missoula still spend more than 30 percent of their income on housing. Coupled with a poverty rate of 18 percent, these facts offer evidence of a significant population that struggles to find affordable housing.
The Missoula Housing Authority was able to increase the number of Section 8 vouchers to assist with rental costs in 2014, but the demand for such assistance remains high, with more than 1,500 names on the waiting list.
Missoula began to make headway with the “Reaching Home: Missoula’s 10-Year Plan to End Homelessness.” While the number of literally homeless individuals did not decline in 2014, a large number of homeless people gained housing through various programs. The number of homeless or at-risk children, which had been extraordinarily high and worrisome in previous years, declined significantly, though the problem has not disappeared.
The City of Missoula is currently updating its Growth Policy to guide the future social, physical, environmental and economic growth and development of the city.
Rental prices continue to be high for renters in Missoula.
Overall, Missoula’s housing market exhibits strong statistics for 2014, though the data still reveal a number of challenges for buyers, sellers, and renters. It is clear that the economy is rebounding, the market is stronger, and Missoula is working hard to make this community a viable home for all.