Still going strong

By KRISTI ALBERTSON

Flathead home sales level out, but well ahead of national trend

The Daily Inter Lake

Optimism isn't the attitude many people assume these days when they talk about the U.S. real-estate market.

A recent report from Moody's Economy.com predicts housing prices will decline in 2007, the first annual drop in national house prices since the Great Depression, according to Chief Economist Mark Zandi. Some believe markets driven by seasonal, vacation-home buyers will be hardest hit.

In the Flathead Valley, however, no such slump is in sight. The valley's real-estate market may be beginning to level out, a shift from the red-hot business it's been in recent years. That doesn't mean, though, that the market has stopped growing.

"I think it's definitely done some adjusting, there's no question about that," said Dave Gawe, a Realtor with Sotheby's International Realty in Whitefish. "Maybe even a little correcting. It has sort of leveled out a little bit, but it's certainly still moving."

Broker Mike Osler, with Chuck Olson Real Estate in Bigfork, agreed.

"I think it has softened a little bit, but I don't see it having the turnaround like some of the other places," he said.

The change is the result of having so many houses on the market, said Lee Denmark, Realtor with Kalispell's RE/MAX Glacier Country.

"We're seeing a lot of inventory," Denmark said. "It's shifting from a seller's market to a buyer's market, because we have a lot on the market."

There are 2,224 homes listed with the Northwest Montana Association of Realtors, according to president Kathy Schulte. While that's just 246 more homes than were for sale at this time last year, there may be more homes in specific markets. Her organization looks at all the real-estate activity in Flathead and Lake counties.

"When you talk to people from different communities, they might be giving you responses to their community," she explained.

And while overall residential sales are still hot, Schulte says commercial sales aren't what they have been.

"It looks like the commercial and business opportunity has slowed down compared to the previous year," she said.

HOME BUYING goes in waves, Denmark said, with occasional spikes. These are the times when many people buy vacation homes, or, when the market is extremely hot, buy property with the intention of "flipping" it - immediately reselling it for a profit.

A couple of things happen to cause the market to cool, he said.

"It's a common economic deal where if anybody fears that the interest rates are rising, people hold a little bit tighter to their money," he said. "But the market doesn't change really until the media says there's going to be a change."

Because media across the nation have been talking about a rapidly decelerating housing market, would-be home buyers are considering their purchases more carefully, he said.

"When times get a little bit rougher, we do see a big change in speculative buying," he said, adding that up-and-down gas prices and talk of changing interest rates have contributed to the change.

"What we're seeing right now is not so much a burst in any bubble," he said. "A lot of homes that were overpriced before because there was a feeding frenzy aren't selling."

Homes are selling closer to what their actual values are, he said. It used to be that wealthy buyers were willing to pay higher prices, but now, with a changing perception about real estate across the nation, they want to make sure they're spending their money wisely.

The same is true of sellers, Gawe said.

"The people who wanted to sell maybe had more drive to sell their property if they could get high dollar for it," he said.

This may be why there has been a decline in sales on the lower end of the high-priced homes. Properties $1 million and higher are still selling well, Osler said, as are the least-expensive homes on the market. It's everything in between that's harder to sell.

"The higher-ended homes - $400,000 and up - are not moving as fast as something priced in the $200,000s and below," he said.

Denmark has seen the same thing. Glacier RE/MAX has homes ranging from $150,000 to $26 million - but it's the properties at the low end of the spectrum that are selling most rapidly.

That doesn't mean it's impossible to sell homes for more, he said. As the market slows and people have more options, it will simply take a little longer to sell the homes.

"But there's nothing wrong with our economy or our market," he said. "Real estate is always an incredible long-term investment."

And in the end, it's what the home has to offer, like its condition and location, that will make the sale.

"For example, homes along the highway are going to be harder to sell because there's so much to choose from," Denmark said. "What's selling is the stuff that is competitive and priced right."

A slower-moving high-end market may indicate there are fewer out-of-town buyers seeking vacation homes, he added.

"We have quite a good mixture of local people and out-of-towners buying stuff," he said.

This may be because people have realized the Flathead isn't the only great vacation destination, Osler said. And many of the people buying less expensive homes are those with ties to the Flathead.

"We see a lot of people right now that have moved to another area, and now they're moving back home to retire. They're familiar with the area, so they're coming back," he said. "We're also seeing people that know other people that are from here, so they're moving back."

Reporter Kristi Albertson may be reached at 758-4438 or by e-mail at kalbertson@dailyinterlake.com