Montana's housing sector.

• Author: Rickard, Scott

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It has been a shaky year for Montana's housing sector. Montana is experiencing many or the problems facing the rest of the nation, albeit to a lesser degree. Home prices may be declining in some parts of the state. Sales and construction are both down relative to previous years. Mortgage defaults are growing but are still lower than the national average. And against this backdrop of bad news, a statewide reappraisal process reminds every Montana homeowner how much his or her home has grown in (taxable) value, whether or not they have any desire to sell.

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Housing Prices

Nationally, average home prices have been falling along with other prices. The Federal Housing Finance Agency (FHFA), which tracks changes in home prices, estimates that U.S. home prices fell 3.8 percent in the past 12 months, at the same time that the general price level declined 2.8 percent. This means that in real terms, average home values declined by about 1 percent. The National Association of Realtors statistics show even greater declines of 7 percent. In our region, state-level home values have grown between 40 percent and 80 percent since 2000. But since 2007, average prices in first Idaho, and later Montana and Wyoming, are tending to be lower (Figure 1). For Montana, this decline is 3.6 percent.

For those urban areas that are tracked, Billings and Great Falls show year-over-year price increases, while Missoula's index shows a small decline. Outside of these areas, the FHFA-derived prices are down 3 percent. Compared to Montana, the indices for urban areas in the Dakotas are performing a little better, while those in Wyoming and especially Idaho are performing worse, especially Boise, with an 11 percent decline in the past year (Table 1).

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Housing Sales and New Construction

As elsewhere in the nation, home construction in Montana continued to decline in 2009. Nationally, construction of single-family homes has fallen by two-thirds, to under 600,000 units annually In Montana, housing starts declined nearly 30 percent in 2009.

Within Montana, construction has held up better in some counties than in others. With the exception of Lewis and Clark County, housing starts in our most populated counties were down between 22 percent and 45 percent in the past year and down 31 percent to 75 percent from their respective peaks (Table 2). Most dramatic is the building decline in Flathead, Gallatin, and Missoula counties.

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