Ravalli County’s real estate market boomed last year, setting records for the number of properties sold and for the prices buyers were willing to pay.
Longtime Ravalli County appraiser and real estate agent Darwin Ernst said the housing market was driven by a migration fueled by the spring coronavirus lockdown that both forced some folks into early retirement and showed others they could do their jobs from home.
“I truly believe this is a migration from various other markets to here because of all the amenities offered here, whether it’s the low crime rate, lack of natural disasters, access to public land, (or) spread-out communities and some type of privacy," Ernst said. "We have a lot of offer those individuals who move from high-density areas.”
The lockdown showed people they didn’t have to live near their office to do their job. Ernst said that’s a game-changer for many.
Ernst recently finished compiling the 2020 numbers from the Montana Regional MLS that showed that residential sales of homes on less 40 acres hit an all-time high last year at 901.
In the 19 years preceding 2020, the average annual number of residential sales was 548. The closest year in the overall volume of sales was in 2005 when 808 properties sold.
“We doubled the number of sales since 2012,” Ernst said.
At the same time, there was 17.4% increase in the median sales price of residential properties in the Bitterroot Valley, which also set a record high. The median price is the middle number of all the annual sales.
Last year’s median price for a home on less than 40 acres was $365,000. That was up $50,000 from the year before, which was the largest annual increase in the Bitterroot Valley since 2000.
In determining the 2020 median sales price, Ernst said he did not include three Stock Farm sales — which were all over $2 million.
Residential properties also sold faster than ever, with an average of 160 days on the market. That was 20 days less than the year before.
With the supply of residential properties dropping, last year’s pace of sales might be hard to duplicate in 2021. As of Jan. 5, Ernst said there 101 active listings in the Bitterroot Valley. If residential properties were to continue to sell at the same rate as they did last year, that would only be enough properties to last 1.3 months.
“It’s definitely a seller’s market right now,” Ernst said. “To be considered stable, a real estate market would have three to six months of inventory available. There is a demand for more residential properties on the market.”
At the same time that existing home sales were booming, others were snatching up smaller lots in the approved subdivisions to build new homes.
That trend started in 2019 when 428 lots from zero to two acres sold. In 2020, there were 77 sales.
“Overall, the great decrease in sales of lots that size is because there isn’t any left,” Ernst said. “Basically people have bought up all the inventory in subdivisions that had been allowed to occur.”
New home sales also hit a record high in 2020 in both numbers and median price.
There were 99 new homes built last year on properties smaller than 40 acres. That eclipsed the previous record in 2019 when 84 new homes were constructed, which more than doubled the 41 built during 2018.
New home construction has been on the rebound since 2012 when only seven homes were built.
Last year, Ernst said 86% of the new homes built were single-story construction and almost all had three bedrooms and two bathrooms.
Ernst said builders could run into a bottleneck in the upcoming year due to a lack of lots available for new construction.
Someone looking for a lot under a half-acre would be limited to Hamilton in the current market.
The Florence area has eight current listings of bare land of a half-acre to 40 acres. Hamilton has 11, Corvallis six and Darby has eight. The Stevensville area currently has the most to offer with 28 active listings.
“Stevensville right now is the hot ticket,” Ernst said.
Florence and Corvallis were once the places where a lot of people looked to build because of their proximity to the larger communities of Missoula and Hamilton. Ernst said that mid-points in the valley including Stevensville and Victor weren’t always as popular.
“But to newcomers, the commute from Stevensville to either Missoula or Hamilton isn’t really that far,” he said. “It’s less than the amount of time they would spend commuting 10 miles in a big city…There’s still quite a bit of inventory left in Stevensville. It’s now totally a destination spot as it remains one of the more rural areas in the valley.”
The Bitterroot Valley’s real estate market tends to lag behind the national market, Ernst said.
“Right now, I don’t see any indicators that the median sales prices of residential properties are going to go down,” he said. “There has only been five times since 2000 when we’ve seen a decline in property values here.”
With money from outside the valley pushing real estate prices higher, Ernst said it’s creating challenges for people from the Bitterroot to stay up.
“It’s very difficult for the locals to understand based on their income levels,” he said. “They are being pushed out of the market by those who have more income available for purchasing.”