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Economic outlook: Real estate market on fire
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Economic outlook: Real estate market on fire

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Real estate is booming in Butte. Homes, land and old Uptown buildings are flying off the market.

The market was red hot by summer. Now it’s on fire.

“We’re just slammed,” Butte Real Estate Group’s Tracy Miller said. “I've got six new agents and all of them are producing like crazy. There's so much business right now it's incredible."

According to Multiple Listing Service data provided by Miller, the average residential property sale price in Butte was $189,000 this past July, and is now up to $208,000. In 2017, an average recent year, the price was $149,000.

The median property price in Butte was $150,000 in January 2020, and $165,000 in July. It’s now $185,000.

Miller stressed that these prices are skewed downward because they include homes and land lots.

Miller and Century 21 agent Gary Shea both attributed some of the trend to Butte’s relative affordability compared to Bozeman and Missoula, cities also in the midst of a boom.

For the entire Big Sky MLS region, which encompasses everything from Anaconda to the Bozeman area, the average residential sale price has jumped from $450,000 to $554,000 since summer. It was $355,000 in January of 2017.

Miller and Shea said the biggest share of the buyers are looking to move to more rural areas from out-of-state or bigger cities in Montana.

Shea said the trend was in motion before the pandemic.

“The reason that it was in play, in my opinion, was we’re just within a world now where people can live in more rural areas and still do the work that they do. And that's a technology thing. My understanding is that pretty soon 30% of the workforce in the United States will be able to work remotely. And that just didn't happen overnight,” Shea said. “In 2020, with the COVID, the social unrest, it just heightens the movement from densely populated areas to rural areas. And so it's kind of kicked it into higher gear.”

Miller said the majority of buyers therefore don’t go too rural in the end.

“Anywhere that has Wi-Fi and cell coverage is selling like crazy,” Miller said.

Demand is high, but home inventory is relatively low.

Inventory in Butte peaked this time last year, Miller said, with 148 homes on the market. Now there are 101.

Because so much buyer interest is unprecedented in winter, Miller is concerned about supply when summer swings back around.

“Will those houses actually be available like they normally are? Or will we continue with the amount that we have available right now, which is pretty much nothing?” she said.

This winter realtors can’t blink without selling something.

In January 2017, 43 was the median number of days for a house to sit on the market before being sold. By January 2020 it was 27. Now it’s just 14 days.

Land is going especially fast.

"A year ago, we would be able to pull up the MLS if somebody was looking for land, and I would be able to send them 200 listings of land that really was like, there's not too huge of a difference," Miller said. "This morning I pulled up all land available in Butte and surrounding areas, and I think there were 80 total land lots."

Miller brought in a buyer from Washington D.C. in October, and showed him 12 lots of land matching his specifications. When it came time to show another potential buyer the same lots before Christmas, only one remained.

“They’re just flying off the market,” she said. “A land listing usually sits on the market for a year, sometimes two years before it sells.”

When a new lot recently came on the market, Miller sold it within 24 hours after multiple offers above asking price.

For Shea, the scarcity of land close enough to urban centers to get city water and sewer services is a concern going forward, and he thinks more subdivisions like the planned Copper Fox Estates, slated to create 84 or 85 lots on 25 acres just north of Margaret Leary Elementary School, will be necessary to keep up with demand.

A few financial details need to be sorted, but developer Markovich Real Estate expects ground to break on Copper Fox Estates in April.      

Columbia Gardens Estates was the last major area subdivision, completed about nine years ago, just east of the 2400 block of Continental Drive.

Investors are a different breed than those looking to buy homes for themselves. They buy properties to flip them or rent them.

Shea said investors have for a while been targeting markets in Missoula and Bozeman, but Butte has posed a riskier investment because the return is less certain.

Miller said that is starting to change.

“Because Butte-Anaconda sits in the opportunity tax zone, a lot of your big investors, I would say more experienced investors, are coming here trying to educate themselves on our market to seek to take advantage of that opportunity tax zone. And then also with the amount of kind of dilapidated properties, you're getting house flippers that are coming in because they can still buy affordably. You're getting people that are coming in to buy rentals, because … you can still get them for around an 8% cap rate pretty easily in comparison to other markets,” Miller said.

Designated Montana Opportunity Zones in Uptown Butte and around Anaconda offer tax incentives to investors who put private capital into distressed communities, according to the Montana Department of Commerce.

“They (investors) didn't do anything throughout the majority of 2020, because they were seeing where this pandemic took them. And then they realized, wow, this is not going to have a major impact on the housing market. So then they all started coming out and really aggressively buying,” Miller said.

For Miller, that started in October. Usually she would only sell a quarter of her properties to investors. Now investors account for half her sales.

Shea stresses that there is a difference between investors and developers, where developers buy properties that need major work.

Developers are buying, he said.

Jeff and Danielle Zimmerman are developing condos in the O’Rourke Building on the corner of Alaska and Quartz streets. Shea, the listing agent, said there will be 11 units for sale. As of mid-January, five of those were under pending contracts, he said, and the condos are nearly complete.

The buildings at 59-65 E. Park St., including the Rudolph’s Furniture building, recently sold, and the buyer is now a partner in the ExerDance building at 75 E. Park St. Belgrade area realtor Michael Libster, who facilitated the partnership, said renovations of both buildings are planned.

Shea was the listing agent on the Rudolph’s buildings.

The same buyer also bought the old YMCA building on 405 W. Park St. on Dec. 21.  

Libster said the buyer is from out-of-state, but has properties in Montana.

The Standard was unable to contact the buyer as of press time. Both Libster and the seller, Stephanie Sorini, said they are under the impression the buyer intends to redevelop the old YMCA.

“It was a very great opportunity for our family,” Sorini said of the sale, “but even better for Butte, because we were excited to see someone do something great with it.”

Dan Fisher, longtime Butte-Silver Bow assessor, said the old Salvation Army building at 121 E. Broadway St., the old Budget Motel on 920 S. Montana St., and the old Milwaukee Tavern at 1000 S. Montana St. recently sold as well.

The boom’s bottom line is relative affordability, Fisher said.

“You have people who are buying places here — I mean they sell their place in California or some place and come here and they can buy 10 houses here for what they sold one for in California,” he said.

Shea, Miller and Fisher are all optimistic real estate will stay hot into 2021. They say the boom is real.

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