The Missoula housing market in 2024 is showing signs of continued growth, though at a slightly slower pace than in previous years. Home prices are still rising, but the pace of increase has moderated, and the median sale price in October 2024 was $574,000, representing a 4.5% year-over-year increase.
This suggests that while the market remains competitive, buyers may have a slightly better chance of finding a home within their budget and negotiating a fair price. The city is also a popular tourist destination, with its proximity to the Rocky Mountains and Yellowstone National Park.
Another factor driving up home prices in Missoula is the limited supply of housing. The city is growing rapidly, and there is not enough housing to keep up with demand. This is particularly true for affordable housing. Let's delve deeper into the current trends shaping the Missoula housing market to get a clearer picture.
Missoula Housing Market Trends in 2024: A Comprehensive Look
Home Sales
According to Redfin. the number of home sales in Missoula has been on the rise. In October 2024, there were 72 homes sold, compared to 56 during the same period last year, representing a 28.6% year-over-year increase. This increase can be attributed to several factors, including a low-interest rate environment in previous years (although rates are climbing now), a strong local economy, and a growing population drawn to the area's natural beauty and outdoor recreation opportunities. However, I do anticipate this increase to moderate as interest rates continue to rise.
While the increase in sales is a positive sign for the Missoula real estate market, it's crucial to remember that this is still a competitive market. With the increased competition and higher interest rates, potential buyers need to be prepared to act quickly when they find a property that suits their needs. It's also helpful to have your financing pre-approved to demonstrate to sellers that you are a serious buyer ready to move quickly.
Home Prices
As mentioned earlier, Missoula home prices continue to climb, but the rate of appreciation has slowed compared to previous years. The median sale price of $574,000 in October 2024 represents a 4.5% year-over-year increase, which is still a healthy gain but is down from the double-digit growth seen in recent years.
This slowdown can be attributed to factors such as the rising interest rates I mentioned earlier, which have impacted affordability for some buyers. As interest rates have increased, the affordability of homes in Missoula has become a barrier for some buyers. I believe the rise of interest rates will continue to suppress growth in home prices in 2024 and beyond. However, the increased competition for housing in Missoula may still drive up home prices beyond the national average.
In comparison to the national average, Missoula's housing costs are about 3% lower, which makes it a relatively attractive market compared to many other areas of the country. This data point is helpful for people considering relocating to the area.
Housing Supply
The housing supply in Missoula remains a significant factor influencing the market. The number of days it takes to sell a home has increased from 54 days last year to 65 days in October 2024. While this increase in days on the market can be seen as a sign of a cooling market, it also reflects the slight easing of the competitive pressure that buyers have faced in recent years.
The increase in the number of days on the market also shows that sellers may need to be more realistic with their pricing strategies to attract buyers. As a buyer, if you are considering purchasing a home in Missoula, you may have a better chance of negotiating a lower price than in previous years.
However, inventory is still relatively low, and the market remains competitive. Builders are doing their best to keep up with demand, but construction costs and labor shortages have made it difficult to construct many new homes quickly. The shortage of inventory will likely drive up prices in certain areas of Missoula and increase competition for homes in those neighborhoods.
Market Trends
Several key market trends are shaping the Missoula housing market in 2024.
- Shift from a Seller's Market to a More Balanced Market: While the market remains competitive, it's shifting towards a more balanced state compared to recent years when sellers held the upper hand. The rise in interest rates and inventory increase have helped level the playing field for buyers.
- Increased Competition for Certain Homes: Despite the slight increase in inventory, some homes, particularly those in desirable neighborhoods or with attractive features, will continue to face significant competition.
- Increased Affordability Challenges: The rise in interest rates, coupled with the increase in home prices, has made homeownership more challenging for some buyers. Affordability will continue to be a big topic of conversation in the Missoula housing market.
- Impact of Interest Rate Hikes: The Federal Reserve's interest rate hikes have slowed the market and made it more challenging for buyers to qualify for loans, impacting demand for homes and potentially leading to a further cooling of the market.
- Growing Demand for Missoula: The Missoula area's natural beauty and strong local economy continue to draw people from other parts of the country, creating ongoing demand for housing. This high demand makes Missoula a challenging housing market for people to enter as buyers.
Is Missoula a Buyer's or Seller's Housing Market?
In 2024, the Missoula housing market is transitioning from a strong seller's market to a more balanced market. While sellers still have some leverage, buyers have more opportunities to negotiate and find favorable terms. I would say it's more of a balanced market at the moment. However, certain segments of the market, like the high-end market and in-demand neighborhoods, might still favor sellers.
The increased competition and limited inventory in some neighborhoods could lead to sellers receiving multiple offers, particularly if their home is priced competitively and in good condition. However, buyers have more negotiating power in general.
As a buyer, you need to stay informed about the local market trends and work with a trusted real estate agent to identify opportunities and make informed decisions. I would suggest being prepared to act quickly when you find a property that suits your needs, and don't be afraid to negotiate.
As a seller, you need to be prepared to price your property competitively to attract buyers in this new balanced market. Pricing your home correctly will increase your chances of attracting a buyer quickly and for a reasonable price.
Are Home Prices Dropping?
While the pace of home price appreciation has slowed in Missoula, home prices are not dropping significantly as of October 2024. Home prices are still rising, but at a more moderate pace compared to previous years.
It's important to understand that the housing market is complex, and factors like interest rates, inventory levels, and local economic conditions can influence price trends. While a drop in home prices is possible, especially if the economy enters a recession, I don't see significant price drops in the near term.
I do think it's reasonable to expect a slight moderation in price growth over the coming months due to the rising interest rates. However, the continued demand for housing in Missoula, coupled with the low inventory, will likely prevent a drastic decline in prices.
Here's a table summarizing the Missoula Housing Market Trends for your quick reference:
| Metric | October 2024 | Year-over-Year Growth |
|---|---|---|
| Median Sale Price | $574,445 | +4.5% |
| Number of Homes Sold | 72 | +28.6% |
| Median Days on Market | 65 | +11 |
Factors Influencing the Missoula Housing Market
In addition to the trends discussed above, several other factors are influencing the Missoula housing market:
- Local Economy: Missoula has a strong and diverse economy, including healthcare, education, technology, and tourism, which helps attract and retain residents, boosting demand for housing.
- Job Market: The job market in Missoula is relatively strong, which contributes to the demand for housing. The unemployment rate in Missoula is comparatively low, contributing to the high demand for housing.
- Outdoor Recreation: Missoula is a hub for outdoor recreation enthusiasts, with access to nearby mountains, rivers, and trails. This attracts many people who desire an outdoor lifestyle, fueling the demand for housing in the area.
- Quality of Life: Missoula is consistently ranked as one of the best places to live in the US, and this high quality of life is a major draw for people looking to relocate. The quality of life and desirable surroundings attract a diverse population of people to Missoula.
- Climate: Missoula's climate and four distinct seasons attract those who enjoy outdoor recreation. However, factors such as wildfires and floods can negatively impact property values and the housing market.
My Thoughts
From my perspective, the Missoula housing market is in a period of transition. After several years of rapid price growth and intense competition, the market is showing signs of slowing down. However, it's still a strong market with a healthy level of demand, and I don't foresee any dramatic price drops in the near future.
I've observed a few factors that suggest this transitional period will continue into 2025. Interest rate hikes and increases in inventory will help bring down demand and pressure in the market, which is good for both buyers and sellers. This is a good time to make a decision on whether or not to buy a house in Missoula, as the market is cooling and buyers have more negotiating power.
Missoula Housing Market Forecast 2024-2025
What's Ahead for Homebuyers and Sellers? It's a common question, especially given the recent ups and downs in the real estate world. Based on the current forecast from Zillow, the Missoula housing market is expected to see a modest rise in home values over the coming months, with a projected 3.1% increase by September 2025. However, the path to that point is anticipated to be slow and steady, with lower growth predicted in the near future.
Let's dive into the specifics of the Missoula housing market forecast and explore what it might mean for those looking to buy or sell a home in the area.
Home Price Forecast for Missoula
I've been following the Missoula housing market closely, and Zillow's recent data provides valuable insight into the anticipated trajectory. Here's a breakdown of their forecast:
| Location | State | Projected Home Value Growth (Oct 2024) | Projected Home Value Growth (Dec 2024) | Projected Home Value Growth (Sep 2025) |
|---|---|---|---|---|
| Missoula, MT | MT | 0.3% | 0.2% | 3.1% |
As you can see, the growth is expected to be slow over the next few quarters. The forecast predicts a 0.3% increase in home values by the end of October 2024, rising to 0.2% by the end of December 2024. The most significant growth is predicted towards the end of 2025, with a predicted 3.1% increase from September 2024 to September 2025.
Comparing Missoula to Other Montana Markets
It's also helpful to compare the Missoula housing market forecast with other areas within Montana. Zillow’s data shows that the growth is modest compared to other cities in the state.
- Billings, MT: Expected to grow by 1.2% by September 2025.
- Bozeman, MT: Expected to grow by 1.2% by September 2025.
- Kalispell, MT: Expected to grow by 3.2% by September 2025.
- Great Falls, MT: Expected to grow by 2.4% by September 2025.
From the data, it's clear that Missoula's housing market is predicted to have a slightly lower growth rate than some other cities in the state, like Kalispell or Great Falls. However, it also appears to be more stable than Bozeman which is projected to experience a small decline in home prices at the end of 2024.
Will Home Prices Drop in Missoula?
Based on the Missoula housing market forecast, it appears unlikely that we will see a dramatic drop in home values. However, the anticipated slow growth for the next few months does indicate that the market won't experience a significant surge. In my opinion, it's improbable that the Missoula market will crash in the near future. It's a desirable location with growing demand, but it seems like it's poised for a more gradual and sustained growth in the coming years.
Missoula Housing Market Forecast for 2026 and Beyond
While Zillow's forecast doesn't extend past September 2025, I personally believe that the Missoula housing market will likely continue a slow and steady growth pattern in 2026 and beyond. Missoula's thriving economy, natural beauty, and desirable lifestyle continue to draw new residents, which creates a solid foundation for sustained demand. However, with interest rates still a major factor, it's difficult to predict precisely what will happen.
Should You Invest in the Missoula Real Estate Market?
Missoula, MT presents a promising opportunity for real estate investment, supported by several factors that make it an attractive choice for potential investors.
1. Population Growth and Demographics
Missoula has experienced steady population growth over the years. A growing population often translates to increased demand for housing and real estate. With its attractive lifestyle, educational institutions like the University of Montana, and a diverse demographic mix, Missoula is likely to continue attracting residents.
Missoula, Montana's population has grown by 6.88% since 2020, when the census recorded a population of 74,394. In 2022, the population of Missoula MSA (metropolitan area) was 121,041, which is an 112.43% increase from 1969 to 2022.
2. Strong Economic Base
The city boasts a robust and diverse economy. Key industries include education, healthcare, tourism, and manufacturing. Institutions like the University of Montana and major employers such as St. Patrick Hospital provide a stable job market, attracting individuals and families seeking stable employment and, subsequently, housing.
Although most of the mills are gone, in recent years Missoula's economy has grown increasingly diverse. The University of Montana, government, healthcare, tourism, and professional services have replaced agriculture, mills, and natural resources as the major economic drivers of the region.
As of December 18, 2023, Missoula, Montana's total gross domestic product (GDP) for 2022 was $7,710.069 million, which is not seasonally adjusted. In 2021, Missoula's GDP was $7,112.467 million, and in 2020 it was $6,168.694 million.
3. Tourism and Recreational Appeal
Missoula's proximity to stunning natural landscapes, including the Rocky Mountains and Yellowstone National Park, makes it a popular tourist destination. Tourist influx often leads to short-term rental opportunities and increases the demand for vacation homes or rentals, which can be a lucrative sector for real estate investment.
4. Real Estate Market Trends
Despite recent fluctuations, the real estate market in Missoula has shown overall growth. With a median home value of $557,197 and a predicted increase in value, investing in Missoula's real estate market can potentially yield significant returns in the future.
5. Investment Potential and Affordability
Compared to real estate markets in larger metropolitan areas, Missoula offers relatively affordable options for investors. Lower acquisition costs coupled with the potential for future appreciation make it an enticing proposition for both seasoned and new real estate investors.
Thus, considering its population growth, economic stability, tourism appeal, real estate market trends, and investment potential, Missoula, MT emerges as a promising location for real estate investment. However, as with any investment decision, thorough research, consultation with experts, and market analysis are crucial before making an informed investment choice.
I hope that this article has given you a clearer picture of the Missoula housing market forecast. Always remember that predictions are just that – predictions, and the market can always change. Staying informed and working with a knowledgeable real estate professional is crucial when making decisions about buying or selling a home.
