By the time you are reading this we will probably not know a whole lot more about where the real estate market is heading than we did back in the late summer, but we’ll look for some clues by reviewing where we’ve been. The market has been trolling for a bottom for, well, lets just say for what seems like a very long time now. Clearly, the “highs” of the 2005-2006 market era retreated dramatically as the false sense of absorption and demand that a surge of speculative acquisition brought into being gave way to more need based purchases and a corresponding drop in volume.
Still, while looking in the rear view mirror is not a great way to predict what lies ahead, reviewing the past can shed some light on our journey. Looking back into 2004, there were 212 MLS reported transaction in the Big Sky and Canyon markets. While MLS had been introduced to the Big Sky area in 2003, I’m going to discount it as a unreliable metric due to its uneven use by the local real estate community at that time. By 2004, the use of MLS information was more universal and representative, resulting in sales of 212 properties in all categories: homes, condos, town-homes, small and larger lots. Anything on MLS (Multiple Listing Service). 2005 saw absorption of 207 properties in our market. Interest rates were low and lender underwriting standards were, well, a work in progress. Several projects came on line: land subdivisions, condos and a raft of speculative houses, yet by 2006, the year many consider the “peak” of the bubble and certainly a year in which there were some astounding and escalating price points, MLS closings dropped to 178 units, then 140 units in 2007 (the year that the “recession” officially began...). By 2008, a year that saw the complete upending of the American financial system, the closing of Lehman Brothers and coining of the satirical and caustic phrase “Too Big To Fail”, there was a slight decline in absorption to 121 closings reported on MLS and speculative building had all but ceased. Not many shovels were going into the ground. Inasmuch as the financial meltdown occurred closer to the 4th quarter of 2008, closings during the first 6 month of 2008 ran at more than double the pace than during the final 6 months and led into 2009 which saw another slight decline by 4 closings, with absorption of 117 units. It certainly did feel like 2009 was a slow year.
So, what’s happened thus far in 2010? Year to date (January 1, 2010 to November 15th, 2010) the market absorbed 151 properties, a full 20% jump in units closed on MLS over fiscal 2009, with 6 weeks left to go in 2010. What appears int the rear view mirror is the decline from 2004 into the valley of 2009 and the increase in absorption in 2010, topped off with a legendary snowfall this November.
MLS may offer an imperfect metric, and the underlaying layers of data and values should be reviewed for pertinence to a particular market layer, but its clear that any question of the resiliency of the Big Sky market would be answered with a resounding “yes”.
Broker
Prudential Montana Real Estate
55 Lone Peak Drive, Ste. 3
Big Sky, MT 59716
406-995-4060
eric.ossorio@prumt.com
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