Ups and downs of housing prices and inventory in Madison County
Housing prices are going up and inventory is going down across the Ruby and Madison Valleys.
The Madison Valley has experienced a huge jump in prices from 2019-2020 while the Ruby Valley felt a more modest increase from 2018-2020 due to more limited inventory.
“For a home to jump 16.5% in town or 35% out of town is a huge increase in price when over the years, we’ve averaged two-five percent increase in price on the average and in our best years, we average eight or nine or ten percent increase,” Melinda Merrill, real estate agent since 1995 and currently the regional managing broker with Hayden Outdoors in Ennis, Mont., said.
From 2019-2020 there has been a 16.5% increase in price for in town homes and a 35% increase for out of town homes in the Madison Valley.
Merrill likes to look at trends. The big ones she is seeing now are the rising prices, an increase in out of town properties and land sold and a decreasing inventory of homes and land.
“Covid lite a fuse,” she said, and the internet changed real estate. Merrill used to sit in her office, waiting for people to come in asking about property. Now those quarantined in different parts of the country can use Zillow or Realtor.com to see listings in Ennis with mountain views instead of a neighbor’s living room.
“The fires and the riots pushed us off a cliff,” she finished. The jump in prices has basically happened since April, she said.
“The ability of people to work from home, which was always here, and now has been accelerated through Covid…their jobs are mobile,” Frank Colwell, managing broker with Berkshire Hathaway in Sheridan, Mont., said. He thinks that trend is here to stay.
More out of town and bare land spaces have been sold in both valleys over the past two years. In town homes tend to sell for less money than open acreage. “Out of town, you’re on a larger acreage and they just command a larger price,” Merrill said.
Land sales in the Ruby Valley from 2019 to 2020 have almost doubled. In the Madison Valley, 137 parcels were sold in 2019 and 186 have been sold in 2020 with 23 pending.
Both realtors see inventory dropping. Colwell said anything priced near market or perceived market value is sold right away, which is good for sellers, but not for the long line of buyers. “Even bare land is becoming scarce,” Colwell said.
Only 100 parcels of land are left in the Ennis, Harrison, Norris, Pony and Virginia City area. Ninety are less than 20 acres.
“A good part of our activity has been people coming from other areas of Montana,” Colwell said. He described these buyers as looking for the ‘real’ Montana and fleeing the development of places like Belgrade and Bozeman. He mentioned out of state buyers also fit into this trend.
Merrill said she is asked all the time if she thinks there is going to be another market crash, giving those who missed out on buying before the prices increased another shot. She answered this question by giving three examples of how this market differs from the 2004-2007 market.
Lending laws have changed and have stricter criteria buyers must meet before receiving a loan, resulting in less foreclosures. Interest rates are lower, allowing people to buy a better house for less. Inventory is at about a third of what it was in the early 2000s.
Put all those conditions together and you get lower interest rates, a huge demand, less foreclosures, not enough supply and continued price increases.
“For some, higher prices reduce the opportunity for limited or fixed income households to purchase a property. With our limited inventory in the Ruby Valley, an increase in the number of buyers has the potential to create competition and multiple-offer situations,” Dawn Marie Dickson, sales associate with Berkshire Hathaway in Sheridan, said.
Thinking of individuals that may have bought before the high prices of today, “That’s awesome,” Merrill said. They are going to see a 15-30% increase in the value of their home.
Those who did not buy before, “that’s the person that’s going to cringe knowing what’s happened,” Merrill said, and is also the person asking if the market will crash.
At the moment, her short answer to this question is no.