I have lived in Western Montana all of my life and I can not believe the current economic situation and am wondering what is happening in other parts of the country. Housing prices have gone through the roof in the last 5 years not unlike many other parts of the country. The average price of a home in Missoula MT is 220k while in Bozeman it is 280k which to some of you may seem paltry, but these are amazing prices being driven by out of state investment and retirement. The crazy thing is that median income in both of these Western Montana towns in less than 30k/yr. To me this is completely out of whack. Isnt a huge correction in the western Montana housing market coming? If the out of state money stops coming because of faultering real estate markets in other parts of the country who will be left to buy up our overpriced crap? Certainly not any working stiff making less than 30k a year. There are no decent paying jobs to speak of unless you are a real estate agent or in construction. I have talked to many real estate brokers and developers who say that Western Montana is insulated from National Trends and that the housing market will hold steady. I say bullshit and it pulls back hard. Anybody care to shed some light? Thanks....
"Isnt a huge correction in the western Montana housing market coming? " not only in western Montana but most likely the entire United States. Onces ARMS start to reset expect forclosures to rise dramatically. Ill email you some of the articles I have been reading, nearly everyone one of them is calling for a recession in 2007.
I remember when looking for my first house and thinking 145k was too much to pay for a brand new 1800 sq. ft home (this was in las vegas a few years before the boom) Well i cashed out for 300k and am now renting a little 1bdrm apt in northern CA now for 825 per month. A cheap condo here is like 225k for a tiny 2 bdrm with 300 per month in association fees (so thats like buying a 270k house.) Im sitting on my money and i will buy in 2009 when prices are back to normal.
I guess my more exact question would be, can a certain area of the country be totally insulated from national trends and the forthcoming real estate correction that nearly everybody agrees is going to happen?? It is just amazing to me that in tiny little Missoula Mt one has to fork out 150k to live in a 800 sq. ft. pile of crap built in 1920 and put another 40k into the house to make it liveable.
"I talked to a real estate broker who said this market is insulated" Of course a broker would say that, they are in the business of selling homes. That is like asking a retail stock broker where the market is headed, or the CEO of a publicly traded company if the stock is over-bought.
An area with a job base that is insulated from an economic downturn and hasn't appreciated much during the boom should do ok. Some place like Houston, TX or some small town without a retirement community and next to a military base might hold up. One horse towns with dependable jobs like those in small college towns (those that haven't already seen huge runups) or towns with defensive industries as the economic base might hold up. Some place like Des Moines, IA might hold up well as a lot of Chicago insurance outfits relocate there and prices have always been cheap. The crux is very few people want to relocate to these towns by choice and will only move when their company sends them there. This is all just conjecture, and I don't claim to be a real estate expert.
Real estate is no different than the stock prices of companies comprising an "index." Some areas will "crash" and give back a decade of gains, other areas will barely downtick. There's always demographic shifts going on that move "spreads." If we went back 70 years I'm sure we'd find homes in what are now ghetto's in places like Philly or Chicago that cost more at that time than a home in Beverly Hills. For that matter I can remember even less than 20 years ago when homes in Scottsdale cost less than homes in "working class" Chicago suburbs. IMO there will be a coming/continued "de-urbanization" of America. Retirees who are now seemingly living forever will continue to flee the high taxation, crumbling infra-structures of the old industrial cities for warmer or more "livable" places. The whole notion of "employment base" will become an antiquated variable in valuations. Never again will American's feel compelled to live within walking distance to their factory job.
Thanks for the replies and the insight. I agree with you all, I think we get stagnation in the local market followed by a correction. How much of a correction and how long it will take is something only time can tell....