The Bitterroot Valley’s real estate market continued its rebound in 2017 with homes selling a bit faster and for more money.
Licensed real estate agent and certified residential appraiser Darwin Ernst expects that trend will likely continue in 2018.
“It’s a seller’s market right now,” Ernst said. “That’s been unusual in the last decade.”
A combination of a steady decline in the number of discounted bank-owned properties on the market and a steady increase in the numbers of people from outside the area interested in retiring in Ravalli County has helped solidify the market.
On a national level, Ernst said people have been in recovery mode from a recession that drove down home prices and created a great deal of uncertainty for many.
“A lot of people had planned to move here to retire, but when the recession hit, they pulled back,” Ernst said. “Didn’t retire or spend money on discretionary things. Now those people are still wanting to move. We remain on that Top 10 list of where they might want to retire.”
Six or seven years ago, people moving to Ravalli County often were drawn to the large number of discounted homes owned by banks or the government.
That option no longer exists.
The number of bank- or government-owned residential properties for sale has dropped to 3.16 percent of the real estate market from a high of 30.52 percent in 2012. Those properties typically sell at a discount.
“You used to be able to buy basically a new house at discount that was sometimes up to 20 percent,” Ernst said. “It was hard to compete against, but that inventory now is basically gone.”
That’s resulted in increasing property values in the Bitterroot Valley as people moving here focus on a tightening supply of homes for sale, or opt to buy land to build their own home.
Ernst said other appraisers in the valley estimate that property values have increased by about 6 percent over the last year.
The median prices of homes sold in 2017 jumped by more than $20,000 from the year before, from $234,700 to $259,500. The median sale price means that half of all the homes sold for more; half sold for less.
On average, it took about six months to sell a home last year. When the market bottomed out in 2012, the average time was 369 days.
“When you start getting back to that six-month period, it shows the market is recovering,” Ernst said. “At this point, if a property is listed right, it will usually sell between three and six months. There are always properties that are overpriced that won’t sell that quickly.”
Sales of bare land also increased in 2017, with most that activity focused in and around local community hubs.
About 60 percent of the land that sold last year was less than 2 acres. Thirty percent of the sales were parcels ranging from 2 to 11 acres, and the remaining 10 percent were larger parcels.
Even with the uptick in land sales, Ernst said there is still about a two-year supply of the most desirable smaller tracts available on the market.
“There are a lot of tracts of land left over from the subdivisions that occurred during the last peak in the market,” he said.
Construction of new homes bottomed out after the recession in 2012 when seven homes were built in the valley. In 2017, that number had jumped to 37.
Unlike the last building boom that topped out in 2007, Ernst said there aren’t as many multimillion-dollar “McMansions” being constructed now.
“People looking to retire now are not necessarily looking to make that kind of statement any more,” he said. “They are OK with a cozy home rather than building a five-bedroom mansion. There’s not as much demand for that kind of home anymore.”
Overall, Ernst said he doesn’t expect to see housing prices soar anything like they did in the early 2000s.
“What you want to see in a real estate market is stability,” he said. “There were a whole lot of people willing to list their homes in 2001 to 2005 because property values were going up at an extraordinary rate. When that happens, investors get involved. They are certainly trying to hit that peak and then sell.”
In 2005, the market topped out about 800 residential sales and then plummeted to a little over 300 in 2008.
That number has stabilized close to 500 annually since 2013, which is nearly the same as 2001.
“We’re looking at a fairly stable rate in sales because property rates aren’t depreciating at a rapid rate and not appreciating at a rapid rate,” he said.