Foreclosures, short sales flood housing market
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MISSION VALLEY — The fallout of the nationwide housing market crash is still being felt locally four years later.
Jackie Smart, broker and owner of Wright Real Estate Co. in Ronan, has seen the market rise and fall in the valley over the past 35 years, but especially in the last few.
“In the last five years, the bottom really dropped out,” Smart said, noting the recession that erupted in 2008. “We’ve been just struggling since September 2008. Now the market is seeing a big percentage of homes that are bank-owned.”
As a result, nationwide, the number of foreclosed homes is expected to grow as banks move forward in foreclosure procedures. Recently, an agreement among the nation’s five largest mortgage lenders, established stricter guidelines for banks when repossessing homes.
Smart said the local market has witnessed an increase of homes sold as “short sales,” or a sale of real estate in which the amount for which a property is sold falls short of the balance owed on the mortgage. A short sale is often used as an alternative to foreclosure but does not necessarily release homeowners from unpaid financial obligations.
Nationwide, average home prices have continued to decline to their lowest levels in a decade, according to an S&P Case-Shiller home price index released this month.
Recently, Smart returned from a meeting of area realtors, where she said one realtor described the current situation best, “We still have a year’s worth of inventory due to foreclosures we need to cycle through before we will see house prices go up.” According to a 2010 census of homeowner and rental vacancies, there were approximately 15 million vacant housing units in the country.
According to the fourth quarter 2011 census, the median asking sales price for vacant “for sale” units was $133,800.
Smart said the influx of foreclosed homes also makes it hard to evaluate and establish the value of a home. Often selling a “short sale” home can take up to a year after negotiating with the bank and filing the correct paperwork.
“The name ‘short sales’ has nothing to do (with the process),” Smart explained.
There is also what is called “shadow inventory,” which are homes not foreclosed on yet, but whose owners are 60 to 90 days late on their mortgage.
But things are not all doom and gloom, according to Smart.
“We’re starting to see things pick up a little bit,” she said.
It’s an interesting market right now; there’s a lot of activity in the lower end of the market … prices have fallen, and if (people) buy right it’s a good investment,” said Mac Swan, a realtor with Mission Bay Realty in Polson.
Swan said he has noticed an increase in first-time homebuyers and crops of investors who are “snapping up” an inventory of rentals.
According to numbers from a 2012 Northwest Montana Realtors Association report, from Polson to Ronan, there were 17 sales in homes priced $150,000 and below; four homes sold at $150,000 to $200,000; three sales in the $200,000 to $250,000 range; six sales in the $250,000 to $300,000 range; one in the $300,000 price range and one in the $400,000 bracket. There were also two waterfront sales on the Flathead Lake, which range from $400,000 and up.
“A lot of local people have been on hold for a long time. Their lives are changing; their families are changing; and they are tired of waiting, even if they sell their home for less than it was worth four years ago,” Swan explained.
In the last year, Swan has witnessed homebuyers with the means to buy high-priced properties exercising their options to buy.
“Sellers in the $300,000 to $500,000 range have moved prices down,” Swan said.
According to Swan, buyers who purchase waterfront properties have been looking for a while.
“It’s a more studied process. It’s a lot of money that’s involved, half a million and up, and they take time spending their money,” Swan said. “People who come to visit like Montana so much they will come back with a mind to buy.”
As a service to his customers, Swan also provides a monthly newsletter to show the trends, properties and prices in the great Polson area.
“(But) I watch the whole market from Eureka to St. Ignatius,” Swan added.
In 2011, the market summary for the area, according to the Northwest Montana Multiple Listing Service, showed volume sold was up 1.25 million or about 1 percent over 2010. Total sales in the Polson and Finley Point area numbered 130 for the year; these included 103 residences, 16 land sales, four commercial, two multi-family units, one agricultural sale and three miscellaneous properties. In the subcategory of waterfront properties, there were 30 residential sales and zero land sales.
The majority of the sales, 36, were in the $100,000 and below range, and 31 were sold between the $101,000 to $200,000 price spans.
In 2011, there were seven residential sales in Mission Bay, one land sale on Eagle Drive, and five sales in Mission Bay Preserve.
“The Mission Bay Golf Community continues to attract buyers,” Swan wrote in his 2011 market summary newsletter. “I’m looking forward to this New Year, and I hope that you are too finding reasons for opportunism and hope.”
