Foreclosures up 400 percent in Flathead
By RICHARD HANNERS
Whitefish Pilot
The impacts of the Wall Street meltdown and the resulting credit crisis are being felt here in the Flathead, where foreclosures are up by about 400 percent and average residential prices are down by 10 percent (see sidebar article).
The number of Flathead properties that have gone through foreclosure has increased from 29 in 2007 to 150 as of presstime, according to county records. There were zero in 2006.
Other indicators of property owners facing financial difficulties have also dramatically increased. Notices of foreclosure have increased about five-fold, from 77 in 2007 to 347 as of presstime. There were zero in 2006. Notices of a trustees sale nearly tripled, from 156 in 2007 to 462 as of presstime. There was only one notice of a trustee sale in 2006.
Kristi Bruyer, with Chuck Olson Real Estate in Kalispell, who helped organize a seminar last week on foreclosures, short sales and trustee sales, says good deals can be found on the market that are not foreclosures.
“The overall sales volume is down in the Flathead,” she said, “but the good news is there is more inventory to choose from, and homes and land are being drastically discounted.”
Prices for vacant land are particularly good right now, she said, to wit:
• A 9-acre property on the Stillwater River dropped from $250,000 to $150,000.
• In Kila, 1.3 acres dropped from $49,000 to $20,000.
• A lot in Kalispell dropped from $70,000 to $55,000.
“Interest rates are at an all-time low,” Bruyer said. “Lumber prices are the lowest they have been in years, and labor prices in the Flathead are dropping, making this a great time to build new construction at a fraction of the cost of a few years ago.”
Bruyer said the surge in high-end home construction in the past years created a shortage of labor and drove wages up from $12 an hour to $40. With a drop in construction, labor costs are now coming back down. On top of that, lower oil prices are helping bring down construction costs.
Buyers who are interested in purchasing foreclosed homes need to be aware of the risks. For starters, buyers should make sure a foreclosed property is free of liens. Kate Logsdon, at Insured Titles, in Kalispell, cited a case where a local bought a home at a trustee sale and later discovered it had an $18,000 IRS lien.
Buyers typically cannot see the inside of properties at trustee or sheriff’s sales because the owners or tenants are still living there. Once the property has gone through a trustee sale and is in the hands of a Realtor, it is available for viewing.
That rule also applies to home inspectors. Buyers can get some idea of a property’s value by having a professional look at the exterior, but there are cases where foreclosed homes were stripped of furnaces, light fixtures and appliances. There have also been stories of people heating their homes with fires after the power was shut off.
Bruyer said those were unusual cases. Many times, people who are losing their homes are embarrassed by their situation and do not damage their homes. Some homes are immaculately cleaned before the owners leave.
Some foreclosures result from individuals who speculated and builders who bought lots for spec homes, Bruyer said, but she also blamed out-of-state predatory lenders. Most Flathead lenders, she noted, carefully checked out buyers and as a result have no foreclosed properties.
It’s hard to track the number of foreclosed homes on the market because they typically go back to banks or other lending institutions. But since lending institutions typically don’t want to get into the business of selling homes, foreclosed properties often end up with Realtors and are then listed.
An online listing at foreclosure.com showed six homes in Whitefish under foreclosure, another 15 in preforeclosure and one in bankruptcy. The properties were in diverse locations — from Happy Valley to Big Mountain to downtown Whitefish to Iron Horse.
Whitefish sales sharply down
Whitefish has seen a significantly larger drop in real estate sales than the Flathead as a whole, according to data from the Northwest Montana Association of Realtors.
The number of residential sales across the Flathead, from June through November this year, decreased by about 26 percent, compared to the same period last year.
In the greater Whitefish area, including north White fish Stage Road and Big Mountain, the number of residential sales decreased by about 40 percent for the same time periods.
In dollars, total sales of residential properties across the Flathead decreased by about 34 percent, from $234 million to $152 million. In the greater Whitefish area, residential sales decreased by about 48 percent, from $77.5 million to $39.7 million.
While average residential prices in the Flathead decreased by about 10 percent, from $322,880 to $288,499, the change in greater Whitefish varied widely.
In southeast Whitefish, average residential prices increased by 4 percent, reaching $355,465. Prices in the Big Mountain-east Whitefish Lake area decreased by 14 percent, prices in urban Whitefish decreased by 26 percent, and prices on Big Mountain decreased by 34 percent.
Sales of residential waterfront properties were also dramatically down. Across the Flathead, the number of sales decreased by 32 percent, compared to 35 percent for greater Whitefish.
Total sales volume for residential waterfront properties in the Flathead decreased by 31 percent, from $73.1 million to $49.8 million. In the greater Whitefish area, sales volume decreased by 46 percent, from $32 million to $17.2 million.
Similar decreases were seen in figures for residential land, where the number of sales across the Flathead decreased by 35 percent and sales volume in dollars decreased by 50 percent. The average piece of residential land in the Flathead decreased by 23 percent, from $207,811 to $158,840.
In the greater Whitefish area, sales of residential land decreased by about 38 percent and the sales volume decreased by 54 percent, from $17.6 million to $7.9 million.
The change in average prices for residential land in greater Whitefish varied widely. In the Big Mountain-east Whitefish Lake area, where the number of sales decreased from 16 to 10, the average price for residential land increased by 48 percent.
It should be noted that in areas where there are few sales, the average price can be significantly affected by a single high-end sale. In the west Whitefish Lake area, for example, the number of sales of residential land dropped from eight to six, but the average price increased by 230 percent.