Home sales remain even but new inventory could shift Flathead Valley market

Dec. 29—The housing stock in the Flathead Valley is increasing, but not enough yet to bring prices down.

Heading into the new year, the Flathead should see a healthier housing market, said Lakeside real estate agent David Fetveit. Construction costs have normalized from two years ago, but high interest rates continue to be the bane of the housing market.

According to Fetveit, housing prices have stagnated for around two years. Since the population boom that rode the coattails of the pandemic, housing prices jumped, leaving the county with all-time high prices.

Fetveit said interest rates sank between 5.5% and 6% over the summer but have since popped back up to 6.5%.

"It very essentially makes housing not affordable for a lot of people," he said.

The 30-year fixed-rate mortgage rate fell to a national average of 6.6% with a 52-week average of 6.72% according to government sponsored enterprise Freddie Mac.

In terms of new construction, both Kalispell and Whitefish continue to see multi-family projects dominating the landscape. Several units that have been planned or under construction in the last few years are expected to become available in 2025.

Renting is easier than buying a house right now, Fetveit said, and new rental apartments, especially in Kalispell, have been drawing more people toward renting, subsequently opening housing stock.

Regarding sales, the housing supply — how many houses sold the month before versus how many are left on the market — has grown compared to previous years.

The county hit six months of inventory in November for the first time in around four years, Fetveit said. The Northwest Montana Association of Realtors considers six months' supply as a good sign for the real estate market.

In 2021, supply was down to one and half months of inventory, "which, for practical purposes, that's zero. You can't find a house," Fetveit said.

"We just worked our way up to what a balanced market would be but in order to get prices to come back down, you have to have more than six months of inventory available," he said.

When comparing total home sales, according to data from the Northwest Montana Association of Realtors, Flathead County saw 1,204 sales this year compared to 1,212 in 2023 and 1,486 in 2022.

Sales for Kalispell rose from 749 last year to 790 this year.

Conversely, sales for Whitefish dropped from 320 last year to 292, but Columbia Falls rose from 143 to 159.

In Flathead, the last 10 years have seen home sales under $150,000 drop from 251 in 2014 to five as of this year, according to NMAR data, while homes costing over $1 million rose from 21 in 2014 to an all-time height of 306 this year.

The median home sale prices in Columbia Falls and Kalispell decreased slightly compared with last year while Whitefish increased.

The median home price in Columbia Falls went from $585,000 in 2023 to $575,000. In Whitefish, the median home sale price increased from $899,950 to $975,000 this year.

Kalispell recorded a median price of $530,000 compared to $535,000 in 2023.

Besides new completion of new construction, the sale of what has been short-term rentals could impact home sale prices in the future, according to Fetveit. Vacation rentals drove up sale prices in 2021 and 2022, but he says the popularity of those rentals has been diminishing as visitation in the Flathead has returned to normal levels following an influx of visitors after the pandemic.

CONSTRUCTION OF multi-family housing has dominated in Kalispell with 779 units hitting the market since January 2023. Of those, 156 are income-restricted, according to data provided by Kalispell Development Services Director Jarod Nygren.

This year, 128 multi-family housing building permits were issued, much less than the previous year when about 500 were issued.

Nygren said that the projects that have been under construction over the past couple of years are now materializing in the housing market.

"A lot of the ones that hit the market this year started all the way back in 2020," Nygren said. "That's why this year our multi-family is low [for new units], because there's still so many units that are going to be hitting the market in 2025."

One such project is Junegrass Place. Located on North Meridian Road, the partially opened development aims provides deed-restricted housing for low-income families. The 138-unit complex offers one- to three-bedroom apartments.

Also still under construction is the Parkline Towers luxury apartment complex at 820 E. Idaho St. in Kalispell, which broke ground in June 2023. The apartments will offer 224 studio, one-, two- and three-bedroom units in two four-story buildings, according to the project's website. The project is expected to be completed in 2025.

In terms of single-family housing permits, Kalispell has issued 133 permits. This is up slightly compared to the 98 issued last year.

Currently, there are about 600 housing units under construction, reports Nygren, which should be completed throughout 2025.

Nygren said that because of the number of new units coming online, the city won't have a full grasp on vacancy rates until the middle of next year. The city's development services department is set to release its annual housing report in January.

IN COLUMBIA FALLS growth remains slow due to a lack of space and an influx of vacation rentals, wrote Interim City Manager Mark Shrives in an email to the Inter Lake.

Columbia Falls issued six single family residential permits this year with one more anticipated before the end of the year. Last year saw similar numbers with five single family permits issued.

Permits were also issued for two townhomes and one duplex this year.

"There is really limited space for any sort of housing development with primarily single home vacant lots and only a handful of places you could put more than that on and even those would require creativity," wrote Strives in an email to the Inter Lake.

A subdivision approved in 2021, Garnier Heights, which is planned for 102 units off Meadow Lake Boulevard, has been put on hold, according to Strive. Twelve townhomes planned on Fourth Avenue West are in the same situation.

"We did have an increase in building this year versus last year so there seems to be a trend towards increasing housing. As always, affordable housing continues to be something the city works toward," Stives wrote in an email to the Inter Lake.

Development this year was slow in Whitefish, according to city Planning and Building Director David Taylor. He suspects high interest rates and construction costs to be a factor behind slower growth in the area of single-family housing development.

However, multi-family unit projects continue to be in the works, he said.

Approved in 2023, the Whitefish Corridor Community is set to provide 146 rental apartments between Texas Avenue and Colorado Avenue. The project includes one- and two-bedroom units in seven buildings.

A percentage of the units are set to be deed restricted as affordable.

Building permit numbers for Whitefish for 2024 were not available for press time.

Reporter Jack Underhill can be reached at 758-4407 and [email protected].

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