Yesterday was a beautiful day in the valley, highs near 60 degrees and lots of sunshine. In my almost 13 years in the business I've seen that many times when the sun starts shining and it begins to warm up, buyer activity seems to increase as well. With the spring market starting to arrive I thought I'd put together a quick look at the last 30 days absorption rates to see where Missoula's inventory levels are sitting in early March.
As a quick refresher, the absorption rate represents the total amount of supply currently listed for sale in our market. I break it down by price range to give a more detailed look at where supply is heavy (and light). This is a much improved measure of market activity as compared to looking at the average days on market of similar sales because it takes active and under contract listings into account as well. The rate (number) represents the amount of months supply of houses listed for sale. So if there are 15 active and under contract listings and 5 sales in the last 30 days the absorption rate is 15/5 = 3, meaning there are currently 3 months of supply listed for sale. As a rule of thumb, usually anything below 3 months supply is a hot market that lacks enough supply, from 3 to 9 months it is in balance, 9 to 12 months I consider slight oversupply, and 12+ months gets into heavier and heavier over-supply of listings.
So lets see where Missoula sits;
$0 - $150,000: 70 active and 15 pending, with 13 sold = 6.54 months
$150,001 - $200,000: 197 active and 38 pending, with 16 sold = 14.68 months
$200,001 - $275,000: 59 active and 29 pending, with 3 sold = 29.34 months
$275,001 - $350,000: 81 active and 13 pending, with 4 sold = 23.5 months
$350,001 - $425,000: 42 active and 4 pending, with 4 sold = 11.5 months
$425,000 +: 85 active and 11 pending, with 3 sold = 32 months
So what stands out? Well just a few months ago most all price points below $425,000 were in a good supply range, now there's just 1, out lowest price point. It would appear to me that the "spring inventory" has rapidly come onto the market, many listings of which I would suspect have been for sale in the past and are testing the waters again in hopes of a better try this year than last year. I'm going to take another look at absorption rates in the next 3 weeks again, looking mainly to see if inventories are still rising and if the amount of pending sales increase as well.
A concern that stands out to me is the overall lack of even pending sales activity over $275,000 coming into March. This isn't a new concern, this has probably been a running issue since about 2009. We've seen inventory over $275,000 drop dramatically and sales activity has still not picked up. The "top end" of Missoula's market remains considerably slow.
Right now there are 534 total houses listed for sale in the Missoula valley, which is considerably low compared to years past (we used to see total listing amounts in the 1,000's at this time). There are 111 total pending sales (17.2% of combined active+pending) so overall we're looking pretty good headed into March for sales activity assuming most of these pending sales hold firm. Our volume should continue it's upward trend into the early spring, but as you can see here the areas of the most activity will drive our median price. My concern of a strong drop in Missoula's median prices stems from the activity you see in these rates - almost all of our sales have occurred under $200,000! This spring and early summer I'm going to be watching these areas to see if the activity spreads out a little more and helps to raise the median, or if it stays low and continues to push Missoula's median sales price lower (which currently sits at $193,750, compare to last year at this time which was $216,000).