I've got to admit

[BWahlberg]

Hey Re/Max, talking real estate, itsn't it amazing how quickly real estate in the Rocky Mountain West is still going up. Not just in land value, but sheer numbers?

A good friend of mine is thinking aobut writing her Master's Thesis on it. I guess they are calling the Rocky Mtn. front, from Taos, NM., to the Flathead area the 3rd Coast, like the East/ West Coast. Shes' interested in the historic preservation aspects, like reuse of old buildings and suff.

Can you share any amazing numbers? How long have you been selling in Missoula?

The 3rd coast has been one of the major economical forces in Western and Central Montana's housing costs, population growth and job growth.

I've been selling real estate in Missoula since 1999 (I was 19 - yeah I'm just a kid still). I work with my Mother who owns and manages the RE/MAX in Missoula, she has been selling real estate in Missoula since 1 year before I was born, 1978. Here's some Missoula numbers for you;

In 2000 the average house price in Missoula was close to $130,000. That was probably a 3 bed, 2 bath, 1400 Sq Ft home, 2 car garage, probably a 6,000 - 8,000 Sq Ft lot.

Today the average house price is near $200,000. Which can get you a 3 bed 2 bath, probably more like 1100 - 1300 Sq Ft, with a 1 or 2 car garage on a 3,400 - 5,200 Sq Ft lot.

The other interesting trend that is now starting is houses over $250,000 are not seeing as big of a value increase, it's starting to level off (which is good). Market time is longer, and people are taking lower offers more and more.

Over 55% of Missoula rents their home and I believe the numbers were of those who own 45% couldn't afford to "buy" the very homes they live in at today's fair market value.

No clue on Bozeman, although I believe it has a higher average price than Missoula's so there's probably a lot of similar stories there as well.

[bobcatgrad2005]

Re-Max:

You know, another thing my friend has mentioned is thath the new trend today is actually to build smaller homes with high end amenities (heated floors, stainless steel, granite countertops). By smaller, I mean a well designed and laid out home for under 1500 square feet. From our discussions, she seems to think this housing trend will take off if heating prices continue to rise like they have, especially in areas like Montana.

She wants to work with an architecture firm that rennovates old buildings for new uses. Like an old warehouse into loft apartments. She also said there is a growing trend for young professionals and empty-nesters to live in downtown apartments.

More interesting stuff than the biology stuff I work on!

[BWahlberg]

Re-Max:

You know, another thing my friend has mentioned is thath the new trend today is actually to build smaller homes with high end amenities (heated floors, stainless steel, granite countertops). By smaller, I mean a well designed and laid out home for under 1500 square feet. From our discussions, she seems to think this housing trend will take off if heating prices continue to rise like they have, especially in areas like Montana.

She wants to work with an architecture firm that rennovates old buildings for new uses. Like an old warehouse into loft apartments. She also said there is a growing trend for young professionals and empty-nesters to live in downtown apartments.

More interesting stuff than the biology stuff I work on!

Thats one trend, another is to build replicas of older homes (early 1900's) with high-end finish work. That, in fact, is what my wife and I are looking into buying right now. A two story home, designed like an early 1900's home (with some updating of course - master bath, main floor bathroom) it's on a smaller lot, and with a basement it's only going to be about 2200 Sq ft total (about 733 a floor). But it's got upgraded appliances, wood floors, a double sided gas fireplace, a big front porch.

[bobcatgrad2005]

Huh, interesting. Is it completley new construction, in a new subdivision, or in a more downtownish area?

I've always been partial to the Craftsman style home my grandparents have. It's a good size, and they updated the amenities a number of times.

[Stevicat]

A good friend of mine is thinking aobut writing her Master's Thesis on it. I guess they are calling the Rocky Mtn. front, from Taos, NM., to the Flathead area the 3rd Coast, like the East/ West Coast. Shes' interested in the historic preservation aspects, like reuse of old buildings and suff.

Can you share any amazing numbers? How long have you been selling in Missoula?

I was at a Chamber event about 2 years ago and an economist from UM (didn't know they had such a thing in Missoula) was talking about the 3rd coast phenomena. He spoke about how Salt Lake, Phoenix, and Missoula were all cities experiencing such dramatic economic and population increases over the past 10 years. The economist continued to talk about the expansion in our western portion of the State, and the unprecedented possibilities for Montana's economic future. Of course he continued to discuss the dramatic decrease of both the populations and economies in the eastern portion of the state. He broke the state down in 3 sections- the western portion (Missoula, Bozeman, Helena, etc) is seeing a huge boom, the central portion is maintaining population and economy (Billings and Great Falls), and the eastern portion is seeing a dramatic decrease in population and economy (Glendive, Malta, Glasgow, etc). It was a very interesting presentation. I believe his name was Swenson or Swanson (something like that), he has caught a lot of heat because he believes that the State Government should not give financial assistance to the eastern part of the state because it is a lost cause, and invest primarily in the western part of the state because of the economic boom that is currently taking place. Anyway, there you have my two cents on the current economic temperature of Montana.

I'll tackle this one 1st. His name is Larry Swanson, he is the director for the Center of the Rocky Mountain West. I had him speak at two different Realtor events in Missoula. What he says in controversial, but I see truth in it. I also saw it as a little extreme as well. Larry, and his department, has started an online newspaper for the "Third Coast," The Headwaters News, http://www.headwatersnews.org/ Also here is the Center's website http://www.crmw.org/

Larry's message is that Montana pumps money into dying economies, Rail, Military, Mining, Lumber, Ranch/Farm. While we tend to ignore what is driving Montana's economy, tourism, medical, and real estate related services/businesses. His message is extreme, but I think he's trying to make a point, the Montana government over the last few decades has been so worried about our rapidly declining businesses and not capitalizing on what is really making us money in this state.

I saw Gov. Schweitzer last night where he talked about bio deisel and how Eastern MT can play a huge role this which will improve the economy in that part of the state. Does anybody know if this is really feasable?

I have to admit that the Gov is very impressive and very likable and looks to be a future star for the Democrats. I understand that 60 Minutes did a story on him and will be running it in the near future.

[rtb]

There is an article in today's Daily Inter Lake about the Governor.

http://www.dailyinterlake.com/articles/ ... news01.txt

[G.W.Bush]

I saw Gov. Schweitzer last night where he talked about bio deisel and how Eastern MT can play a huge role this which will improve the economy in that part of the state. Does anybody know if this is really feasable?

Schweitzer has been talking about bio diesel for quite awhile. What I don't understand is why he likes it so much. Everything that I have read and heard about in regards to bio diesel is that the product is not cost effective. I really don't see a future in bio diesel, but I know some people really like the idea (agriculture people especially).

[rtb]

I believe it is becoming more and more cost effective as oil prices spike. They are improving ways to get higher yields so I think that with time it will become one decent alternative.

[catamaran]

One of the ideas he is aggressively pushing is extracting coal oil for use instead of using petroleum (I don't have time right now to read the article but I thought this is an interesting industry option)

[SonomaCat]

And if it is even remotely close to being in-line with the costs of imported fuel, then I say we go for it. It creates jobs at home and reduces our reliance on the crazies in the Middle East.

[Stevicat]

His point was to put Montana out in front of new energy and fuel sources. Bio diesel, clean burning coal (coal gasification???), and wind power. I don't know much about any of it but am interested to learn more.

It was refreshing hearing a gov with a personality and a bold vision for the state.

[bobcatgrad2005]

The trick this time around is to keep the industry in the state. Montana has a long history of being almost a colonial economy with the rest of the nation: it exports raw materials and imports manufactured goods.

I'm not sure how to go about it, but it's a good thing to keep in mind. Maybe a biodiesel processing plant in Butte, as it's a crossroads between I-90 and I-15?

[BWahlberg]

Huh, interesting. Is it completley new construction, in a new subdivision, or in a more downtownish area?

I've always been partial to the Craftsman style home my grandparents have. It's a good size, and they updated the amenities a number of times.

All new construcion, it's on the more northwest end of town (not the cookie-cutter neighborhood near the airport though).

[Bleedinbluengold]

Larry's message is that Montana pumps money into dying economies, Rail, Military, Mining, Lumber, Ranch/Farm. While we tend to ignore what is driving Montana's economy, tourism, medical, and real estate related services/businesses. His message is extreme, but I think he's trying to make a point, the Montana government over the last few decades has been so worried about our rapidly declining businesses and not capitalizing on what is really making us money in this state.

Ya.....change is hard. I saw where Montana has had 3 years in a row of 4%+ economic growth, which was the first since the 1970's. Pretty much all due to oil/gas/mining, tho, which tells us that Montana's is still a natural resource driven economy.

[briannell]

even with the 4% growth I don't know where these crazy prices are coming from. You don't make much money in MT as a whole to justify the prices for real estate. I laugh to think that if I divorced my husband (we ran the numbers once and it was over 3700/mth) my amount of support every year would be more than the "average" MT income, certainly wouldn't be great to support a family of three on, but think about it. that's just wrong. How are these people buying homes 300K and up like we have in WA? WA has the job market to sustain housing prices over 300K , Montana doesn't. In fact in today's homes and land magazine the development about a half mile from mine is pre selling 1800 sf homes for 265K that's without upgrades. i think brint said that's what they're running there in Missoula. I know from experience 1750 sf on 1/3 acre in Bozeman was going to be 250K. that's just nuts when people earn less than 30K a year

[BWahlberg]

even with the 4% growth I don't know where these crazy prices are coming from. You don't make much money in MT as a whole to justify the prices for real estate. I laugh to think that if I divorced my husband (we ran the numbers once and it was over 3700/mth) my amount of support every year would be more than the "average" MT income, certainly wouldn't be great to support a family of three on, but think about it. that's just wrong. How are these people buying homes 300K and up like we have in WA? WA has the job market to sustain housing prices over 300K , Montana doesn't. In fact in today's homes and land magazine the development about a half mile from mine is pre selling 1800 sf homes for 265K that's without upgrades. i think brint said that's what they're running there in Missoula. I know from experience 1750 sf on 1/3 acre in Bozeman was going to be 250K. that's just nuts when people earn less than 30K a year

It is nuts, and its why over half of Missoula rents.

A few reasons I've seen;

1. Land, or lack thereof. In Missoula a 30 x 120 lot is worht about $50,000. Based on the cost of new construction (my guess, an average of $115 per square foot, taking fees and profits in consideration) puts an 1100 Sq Ft home at the build price of $126,500, add the lot you're at $176,500. There's other costs as well, mainly impact fees. Many cities (Missoula, Bozeman, Helena, Kalispell, Billings to name a few) charge the builder to upgrade their lot with curbs, sidewalks, boulevards, running the sewer, and setbacks. It's all quality control, but the builder has to pay for it, and where does he make that back? When he sells the home. Taking that into consideration add $10,000 to the package, you're now looking at a 3 bed, 2 bath home thats 1,100 Sq Ft for $186,500.

2. Inpact fees, mentioned it above

3. Out of staters from larger markets. Before people go off yelling about those damn Californians, recent studies have two other states, Washington and Oregon, ahead of Cali in regards to having more people move to Montana on a yearly basis. West coast states have a higher average sales price, so when they move here, things are a good deal.

4. The individual cities have good economies. Bozeman, Kalispell, Missoula, Billings, and Helena all have good local economies, people in these areas, on average, make more money than other areas across the state, so they can afford more expensive properties.

[rtb]

Re/Max, do you want to do an analysis on my town? You will probably feel a lot better about the prices in Missoula, Bozeman, and Kalispell. It is pretty much out of control here right now.

According to National City we are the 18th most over priced market in the country. They estimate housing prices are 56% higher than they should be!!

Unfortunately Billings is the only city in Montana that makes their list. I would like to see the same study done for Kalispell, Bozeman, and Missoula.

http://www.nationalcity.com/corporate/EconomicInsight/ go to the bottom right where the housing value analysis is.

[BWahlberg]

Re/Max, do you want to do an analysis on my town? You will probably feel a lot better about the prices in Missoula, Bozeman, and Kalispell. It is pretty much out of control here right now.

According to National City we are the 18th most over priced market in the country. They estimate housing prices are 56% higher than they should be!!

Unfortunately Billings is the only city in Montana that makes their list. I would like to see the same study done for Kalispell, Bozeman, and Missoula.

http://www.nationalcity.com/corporate/EconomicInsight/ go to the bottom right where the housing value analysis is.

Bend Oregon right? You should ask Brad about his market, I could be wrong but I think San Fran is the highest priced market in the country with an average house price over $700,000.

At a RE/MAX convention 4 years ago I met one of the top RE/MAX sales agents of all times, she was a very humble lady, until I read it on her business card I wouldn't have expected that she was in the top 1% of all producing RE/MAX agents. She was/is a Broker in San Fransisco, and she only sells 25 - 30 homes a year, Luxury homes. If $700,000 is the average I wonder what the price of a "luxury" home would be, probably over $2 million.

[rtb]

True, San Fran is the highest priced, but when you weigh the cost of houses vs. the cost of other goods and the average salary that is where the rubber meets the road.

Look at that link and check out appendix two, most places are in California and Florida, but there are quite a few surpises on the list for Q3.

[SonomaCat]

Re/Max, do you want to do an analysis on my town? You will probably feel a lot better about the prices in Missoula, Bozeman, and Kalispell. It is pretty much out of control here right now.

According to National City we are the 18th most over priced market in the country. They estimate housing prices are 56% higher than they should be!!

Unfortunately Billings is the only city in Montana that makes their list. I would like to see the same study done for Kalispell, Bozeman, and Missoula.

http://www.nationalcity.com/corporate/EconomicInsight/ go to the bottom right where the housing value analysis is.

Bend Oregon right? You should ask Brad about his market, I could be wrong but I think San Fran is the highest priced market in the country with an average house price over $700,000.

At a RE/MAX convention 4 years ago I met one of the top RE/MAX sales agents of all times, she was a very humble lady, until I read it on her business card I wouldn't have expected that she was in the top 1% of all producing RE/MAX agents. She was/is a Broker in San Fransisco, and she only sells 25 - 30 homes a year, Luxury homes. If $700,000 is the average I wonder what the price of a "luxury" home would be, probably over $2 million.

$2M here will get you a decent 2,000 square foot house, probably. In my neighborhood (near the ballpark -- a former warehouse slum that is now very chic and trendy with lots of lofts and entertainment), it seems like most studio or 1 BR condos/lofts are going for at least $700K, and that gets you about 600 square feet, maybe a parking spot, and likely a $700/mo. HOA on top of it.

Needless to say, I have a hard time justifying those kinds of costs when most MT ranches were probably originally purchased for less than that. Word is that the market is starting to pull back right now, though, so maybe prices have leveled off or might even retrench a very little bit.

I will now turn it over to Grizlaw, who lives in the one area of the U.S. that probably puts my 'hood to shame in terms of pricey homes.