When is the housing bubble going to burst? Will the real estate market drop? What do you believe the real estate market will look like a year from now? Every one of us Revel Agents are being asked questions like this, daily. Buyers, while still bullish on Western Montana, don’t want to be the ones who bought at the top of the market just before a big drop. Questions about whether it’s best to wait out the current economic volatility or to remain engaged in identifying a property for purchase, are top of mind. So, should you continue your property hunt? Here are 5 reasons why 2022 is, still, a good time to buy real estate in Western Montana:
1. There is no end in sight for the lack of inventory – so values will remain high
We’ve written several times recently about the simple economics of Supply and Demand here in Western Montana. As so, the single-most contributing factor to the area’s increased (and increasing) prices is the sheer lack of homes and land for sale. Additionally, builders are not keeping up with demand for single-family homes, and with so little inventory versus the increased interest in living in Western Montana, there will be no way for inventory to catch up, for a while.
2. Home prices are likely to increase into 2023
Related to point #1, above, prices are highly likely to continue to increase through 2022 and into early 2023 – so, similar properties viewed in a few months, versus today, will most likely increase in price.
If you were to purchase property today, and if you could hold onto it for 7-10 years, whether it’s a primary residence or an investment property, any potential value decline will even out and likely increase in value.
Truly, we are in a “if you wait, the prices just continue to go up” situation; even when prices plateau (and they will), they are not likely to have a huge decrease – which leads to our next point…
3. Contrary to previous declines in the Western Montana Real Estate market, the Flathead Valley – and in particular, Whitefish – is now less subject to economic peaks and valleys
This is a less-isolated market than 15 years ago, and with a general increase in mobility for working environments, combined with our market being (relatively) lower in price and with an incredible quality of life…the interest to own secondary properties is looking only to increase.
Like it, or not, Whitefish is “on the radar.” It is a known resort destination and is a great value, in comparison to other mountain vacation markets.
4. If you’re looking for a primary residence, the investment in buying is still better than paying rent
Rental properties have, also, been heavily impacted by the demand for living in the Flathead Valley – quality rental properties are, almost, non-existent and are renting at rates seen only in large metropolitan areas. While we don’t have quantitative data to support this, the qualitative data we have is that some renters are seeing rate hikes as much as 50-60% around town.
5. If you’re looking for an investment property, rental income is high and appreciation potential looks strong
For long-term rentals, see #4, above – quality rental demand is very high (and the rental rates are also high), whether for a long-term occupancy or a seasonal occupancy, while a party waits to build a residence.
For short-term rentals – we are in an under-inventory environment for visitor bed-base, and many tourists attracted to the area are turning to non-hotel vacation rentals (eg: AirBNB). If you are interested in acquiring a property approved for short-term rentals, we encourage you to explore Eagle Lake, a new, premium, condo development currently under construction in Whitefish.
So…why might it not be a good time to buy?
1. Your primary goal is to flip a property within 12 months
The elevated costs to purchase and improve a property, along with the holding costs and closing costs, will make it difficult to realize much, if any, profit.
2. Your expectation is for a short-term rental property to “pencil” with all costs
While there is high demand for short-term rentals, the purchase prices are so high that the income will, likely, cover the holding costs of property taxes, HOA fees, insurance and maintenance…however, the income is not likely to, also, cover the cost of money/mortgage costs.
3. You’re looking for the bargain
If a property’s list price looks amazing – there is a reason – we guarantee it. Talking with an experience REALTOR will help you understand why a property is priced at a “bargain.”
All of the above involve a much higher level of risk and set expectations that are likely not to be met, with the current market. In these cases, it may be best to be patient, wait and watch the market. There are always a few exceptions which is why it’s even more imperative to work with an experienced and knowledgable Revel Agent who can keep you apprised of opportunities.
Have the conversation with us, to determine what is best for you. It’s our job – and honor – to help you make informed decisions.