Flathead home sales rebound

Flathead County has seen a rebound in housing sales this year, but whether that momentum will be sustained may depend on government incentives and interest rates in the coming months.

Real estate statistics released by Kelley Appraisal on Wednesday show an 83.5 percent growth in overall residential sales between January and March over the same period in 2009.

There were 211 residential sales in the first three months this year compared to 115 a year ago. Some of the sales increase, however, was due to foreclosures.

The average price tag crept up to $300,423 during the first three months of the year, rising 30.4 percent over 2009 sales figures.

That price is well below the 2007 peak of $346,272.

Jason Mann of Mann Mortgage in Kalispell said that for the first time since the start of the housing bust, he’s working on financing homes still under construction.

That’s big, he said.

“We haven’t seen that in the last two years.”

Activity within the housing market has increased significantly recently in response to the looming end to the federal homebuyer tax credit.

With the credit set to expire April 30, many people are rushing to cash in on home deals in the $250,000-and-under price range.

Initially offered only to first-time buyers, the Worker, Homeownership and Business Assistance Act of 2009 was extended in fall 2009 to include repeat homebuyers. First-timers can qualify for an $8,000 credit and repeat buyers can receive $6,500.

Just under half of the home deals in Flathead County so far this year closed in March.

But as the cutoff deadline looms, it is uncertain whether sales growth can be sustained.

“There is no feeling yet that the credit will be extended a second time,” Mann said. “That’s cause for concern.”

On Thursday, Freddie Mac put the national average for a 30-year fixed rate mortgage at 5.21 percent. One week ago, it was 5.08 percent. That’s the highest since mid-August, when the average rate was 5.29 percent. Analysts are forecasting rates as high as 6 percent by 2011.

The average rate on a 15-year fixed-rate mortgage Thursday was 4.52 percent, up from 4.39 percent last week.

According to the National Association of Realtors, for every 1 percentage point increase in rates, 300,000 to 400,000 would-be buyers are priced out of the market in a given year.

Mann said the Federal Reserve’s program of purchasing mortgage-backed securities caused rates to be artificially lower recently. That program ended March 31, causing rates to increase.

Despite the recent increases, however, Mann maintained that rates still remain extremely good and property is much more affordable than it has been historically.

“There are still good buys out there,” he said, adding that he expects to see homebuying activity taper off when the homebuyer tax expires.

While Mann doesn’t expect a second renewal of the homebuyer tax, he said he thinks the government will do something to bolster continued growth.

“The housing industry is not healthy enough to stand on its own yet,” he said.

Federal Reserve Chairman Ben Bernanke said Wednesday that continuing problems in the housing market and high unemployment remain the biggest national economic challenges.

While he confirmed that the economy seems to have stabilized and may even be growing, he admitted to seeing no evidence of a “sustained recovery” in the housing market.

Rising foreclosures are tempering any sort of rebound.

The Kelley Appraisal statistics show Flathead County notices of trustee sales, or pre-foreclosure warnings, have risen 57 percent between January and March 2010 over the same period a year ago.

A record number of 132 notices of trustee sales were recorded last month, compared to 35 in March 2008.

Actual foreclosures in Flathead County more than doubled from January to March 2010 over the same period last year.

Foreclosure sales and short sales made up 40 percent of all residential sales for Flathead County so far this year.

With the soaring number of notices of trustee sales filed in March, the number of foreclosures is expected to rise significantly the rest the year.

The Associated Press contributed to this story.