The current housing market seems to be a hot conversation topic around Montana right now. It is well known that there is a high demand with a very low supply of housing. Housing prices have increased considerably which can be explained by the law of supply and demand. When there is a shortage of supply and an increase in demand, prices increase.
According to InfoSparks provided by MLS, Missoula’s median sales price in January of 2020 was $325,000. Whereas in August of 2020, the median sales price was $365,000. The median days on market for Missoula in January 2020 was 53 days. In August it had decreased exponentially down to a median of 9 days. The parameters included all ranges of prices, property types, years built, square footage, bedrooms, and bathrooms with each data point being one month of collected data. The significance of this data is that while houses are selling at a much quicker rate in August than they were in January, they are also selling for a lot more money. This can indicate that multiple offers are received, and many buyers are willing to pay inflated prices to obtain their dream homes. Interest rates have also recently hit new historical lows.
The question at hand is, “Will we see a housing market crash in Montana in the near future?” No one can say for certain as the future cannot be guaranteed. However, we can take similar events from past years and predict an outcome. The market crash of 2008 was caused by an influx of buyers and shortage of sellers combined with historically low interest rates in 2007. Unfortunately, buyers then purchased real estate at an inflated market value which is not sustainable. This ultimately led to a crash in the market which translates into foreclosures.
The data presented above is mirrored to the economy of 2007. Now, we have to add in the fact that a pandemic is present. If the pandemic continues, will more people lose their jobs? There are many factors that could contribute to an economic downturn in 2020. Some examples could include the presidential election outcome, consumer spending changes, and global market changes due to the pandemic. In heading months, Montana may see an economic crash.
Bryanna Deschamps
University of Montana