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Along with the state of Montana, the Missoula housing market is one of the 31% (by population) of the areas in the country showing signs of an expanding market. This is contrary to the dramatic contraction experienced in some areas such as San Diego and Phoenix and widely reported in the national media as the long predicted “housing bubble bursting.” The fact that Missoula is not following the national trend should not lull us as a community into complacency about the housing issues that emerge from this report.

The expansion of the local market is tempered with the increased number of foreclosures in 2006. Risks posed by residential mortgage products that allow borrowers to defer repayment of principal and sometimes interest cannot always be mitigated, even in the expanding market that currently exists in Missoula.

The Housing Affordability Index continues to decline between 3% and 4% for households from 1 to 4 persons. Approximately 11% of Missoula County households have sufficient income to purchase a median priced home. Median income for current homeowners is almost double that of renters. Missoula’s owner occupied housing rate of 53% lags behind both the Montana and national home ownership rates of 68% and 75% respectively.

Providing new housing stock for continued strong housing demand is a growing challenge. Land availability and prices contribute to that challenge. The number of lots purchased in Missoula has been virtually unchanged since 2003 with the median price increasing just under $20,000 in that same time period. Growth pressures and affordability issues continue to push development into sensitive outlying areas. 2006 saw several development projects emerge and be rejected by local planners and citizens. These include projects in sensitive areas like Rock Creek, Clearwater Junction, and in the Bitterroot Valley.

While it is true that approximately 25% of the in-migration comes from residents new to Montana, the majority of the housing demand is from Montana residents moving here from another county (50%), residents who have previous ties to Montana (25%), with additional demand coming from the natural increase of the population already here.

Missoula is in an enviable position. It continues to experience an expanding housing market. It thrives on a collaborative spiri t that prompts citizens to come together to make things happen. And it is a place that inspires people. That combination applied to a collective interest in providing one of the most basic needs—a safe place to live—will serve Missoula well as citizens come together to share current knowledge in order to achieve the common vision of growing a Missoula to treasure.

Download the 2007 Missoula Housing Report

The purpose of the State of Missoula Housing Report is to give a general overview of the housing in Missoula. The report will compare 2005 to previous years and give a broad picture from a variety of data sources. Specifically the report addresses: a) single family housing; b) land costs; c) investing in Missoula Real Estate; and d) where the community growth is corning from.

Missoula experienced a strong housing market between 2001 and 2004. 2005 proved to be another solid year for home sales. The demand for housing in Missoula is on the rise and appears not to be cooling anytime soon. Contrary to common perception, the demand is fueled not so much by people moving here from out of state, including those who had lived here before and are returning, but by the numbers of people who are growing up here and want to stay.

Many factors contribute to how strong or weak the housing market is every year i.e. supply and demand, interest rates, cost of building, land prices, and more. However, there are many misconceptions about what drives the cost of a home. A Realtor can do a market analysis for a home, but it is the market that determines the price that a seller is willing to accept and a buyer is willing to pay. To put Missoula growth in simple tenus, it is a matter of supply versus demand and the market is setting the price of a home.

In order to gain a better understanding of the market in which its members live and work, the Missoula Organization of Realtors® (MOR) has sponsored a series of public forums called Community Through Business (CTB). According to national guest speakers at CTB, Western Montana has the fastest growing counties in the state with Ravalli, Lake and Missoula ranking number 1, 5, and 8 respectively. Information from CTB speakers also showed the City of Missoula is the 59th fastest growing metropolitan city in the United States.

According to the 2005 University of Montana Bureau of Business and Economic Research report, Missoula home prices increased 9.6 percent last year. According to the National Association of REALTORS® (NAR), the number of existing home sales in Montana increased by 9.8 percent. The numbers support the fact that many people want to live here and that drives the size of our community. This trend will continue as long as the rivers flow, sun shines, and Missoulians continue to be, well … Missoulians.

Download the 2006 Missoula Housing Report