Interest Rates Climb, But Housing Prices Remain High in Missoula
The Federal Reserve has been incrementally increasing interest rates over the past few months in an attempt to slow down inflation, but the housing market in Missoula doesn’t seem to be cooperating.
KGVO News reached out to Missoula Realtor Brint Wahlberg with Windermere Realty for details on the current conditions in the local real estate market.
“Interest rates are up, right?” began Wahlberg. “They're kind of hovering around that 5 percent range, where a couple months ago they were about one and a half percent lower. Higher interest rates raise monthly mortgage payments, which lowers borrowing power. What we've seen is that the rise in rates has expectedly moved people's ability to purchase down which has caused a little bit more constraint in the market. It's led people to revise their search ranges or their expectations in properties.”
In normal times, rising interest rates would force housing prices down, but Wahlberg said that hasn’t yet occurred.
“In Missoula, western Montana and mostly across the entire state, that's not the case yet,” he said. “This is still largely due to our tight supply and lack of options and so, while rising interest rates can impact many borrowers’ ability to borrow at a certain point, we are still seeing bidding over asking price competitive offer situations. So we are definitely not seeing a market wide decrease in the medium sales pricing yet.”
Wahlberg said the market simply cannot bear that kind of imbalance. Something has to give.
“You can sense that the winds of change are coming into this market,” he said. “That means sometimes houses are having to spend a little more time on market, which wasn't the case in the last two years; or people are having to do a small price reduction or a couple of price reductions to get the contract but they’re still doing quite well in terms of median sales price. So things are changing slowly. It's not leading to devaluation. I would probably say what we're starting to see a lot more activity that's probably suggesting the market is leveling off.”
The rental market has been dismal over the past two years, but once again, Wahlberg said help is in the way for renters.
“On the rental side at the bare minimum, the good news is on the horizon with the two very large, affordable unit complexes that should be ready in the start of next year,” he said. The last year in 2021, and I think in 2020 as well, we saw a giant spike in what we call multifamily units, that’s units of more than two permits being approved.”
Click here to see the most recent report from the Missoula Association of Realtors.