Affordable Housing Segment Holds Up

While the overall market is significantly down, when the residential sector is analyzed by price segments, it is easy to see where the biggest declines have taken place. The entire residential market showed a drop of 46% from Q1 2008 to the first quarter of this year. However, the segment at $200,000 or less only dropped 10% over the same period. The higher-priced segments decreased significantly more.

Is the Free-Fall Over?

The most challenging and often impossible thing to do when analyzing changing markets is to ‘call the bottom’ of a downswing. The national and local media has been covering the recession daily along with the volatile swings in the stock market and soaring foreclosure rates in the real estate sector. Yet there have been a few preliminary signs of recovery in the first quarter of 2009. The national and local markets are beginning to see month-over-month increases, although it may be 2010 before we see the year-over-year increases and know when the actual bottom of the market occurred.

Leading factors for the potential recovery of the housing market include low interest rates, low home prices, and first-time home buyer incentives. These factors will certainly increase the sales volume of the first-time buyer market segment, but does not do much to help the vacation and second-home end of the market here in the Flathead. Ultimately, if the value segment of the market demonstrates a healthy and consistent recovery, other segments are sure to follow with increased buyer confidence. These increases, however, will be severely tempered by reduced buyer equity across the board.