7 Missoula Housing Market Trends You Should Know in 2025

What is going to happen in the housing market this 2025? I see some positive shifts happening in our local real estate market that I’m excited to share. I’ll also talk about some of my predictions for the coming months.

1. Increased consumer confidence. We’ll see an increase in consumer confidence thanks to lower everyday living costs, such as gas, groceries, and more. When people feel like they have more money in their pockets, they’re more likely to consider buying a house.

2. More mortgage applications. Our internal mortgage company reported a 33% increase in mortgage applications just a few weeks into January, which is a great sign that buyers are ready to purchase a home. You can attribute this to potential rate drops and lenders offering appealing buy-down programs for potential homebuyers.

3. Rates should decrease slightly. People are getting used to the current higher interest rates. Low estimates suggest rates may drop to between 6.32% and 6.6%, while they’re currently around 6.8% to 7%. Of course, this varies based on credit and other factors.

4. Local market expectations. Currently, there are over 300 residential properties for sale in Missoula County, the highest inventory in a decade. Other counties are experiencing similar trends.

There are more houses on the market due to fewer buyers being able to afford to purchase them. With interest rates around 7%, many potential buyers don’t qualify for loans to buy homes. For instance, someone who could afford an $800,000 home three years ago can now only buy a $400,000 to $450,000 home.

Sellers haven’t adjusted their prices, which surged during COVID. Many listings still reflect inflated values despite a slight decline in prices over the past two years. Homes that were once sold for $100,000 over asking can’t command those prices now due to affordability issues and higher inventory.

If your home is listed under a million and you’re not getting three to five showings a week, it may be overpriced. For homes over a million, expect one to two showings. A lack of activity usually indicates the market doesn’t see it as a good value.

It’s always a good idea to consult your listing agent about comparable sales to understand your home’s position better.

5. Increase in sales. Over the past three years, the real estate market went through major changes. Interest rates rose sharply from around 3.5% to nearly 8% within a few months in April 2022. As a result, home sales in Montana declined. However, I believe we will see a slight increase in sales this year because market conditions are improving.

6. We are in a normal market. Some people think that with the change in administration, home prices will skyrocket again. However, they increased so much during COVID that there’s no room for further growth due to affordability issues.

We’re currently in a normal market, where home values appreciate by about 1% to 3% a year. When you factor in your mortgage and taxes, that modest increase won’t give you any real benefit compared to selling now.

7. Increase in buyer activity. I see more homebuyers ready to enter the housing market. Our buyer specialists are showing more properties, and I’m signing more Buyer Representation Agreements than ever this early in the year. The market is shifting, and the year is off to a good start.

With more buyers expected to enter the market, what should sellers do? Here are some things I suggest:

• Analyze comparable sales. Dive deep into the comps of recently sold homes and those currently on the market to understand your competition.

• Consider timing your home sale. If you’re planning to sell, now is a great time. Many believe homes only sell in summer, but that’s a myth; sales activity fluctuates only about 10% through the seasons.

• Capitalize on limited inventory. With fewer homes for sale now, you have a better chance of selling. Listing your home now can lead to more showings before the spring influx increases competition.

• Control your move date. Just because your home is listed doesn’t mean you have to move immediately. You control the timing of your move, and the selling process can take one to four months, so plan your pricing strategy accordingly to maximize your sale.

If you’re looking for a property, our lender, Envoy Mortgage, has a great offer: a first-year rate buy-down that won’t cost you anything upfront. This could save you $300 to $500 a month, depending on the home’s price, and they can provide more details.

Every home is unique, and so is the marketing plan for each. If you have questions about selling your home or its value, just ask. You can contact me at (406) 552-4443 or jason@jasonbakerteam.com. I’m here if you need anything real estate-related