Lakeshore housing sales down in 2009
Not a single home has been purchased or sold on Flathead Lake in six months.
But with so many for sale, owners are beginning to find creative ways to sell their properties.
John Thornton, a businessman who lives in Chattanooga, Tenn., owns a 5.5-acre lot near Bigfork with nearly 350 feet of lake frontage. On the property, there is a home built in 1948, a guest house and a cherry orchard with about 100 trees.
However, Thornton has not been to Montana in three years and has decided to sell the property. But since the acreage has been listed for two years and has not yet sold, Thorton is making a bold move: auction.
And it's an auction without limits.
"No matter what it brings, it sells. No minimum, no reserves," said William Bone, president of The National Auction Group Inc., the company in charge of the auction. "He's a risk taker. [John Thornton] told me he knew how to make money but it wasn't buying and selling real estate."
JIM KELLEY of Kelley Appraisal, who has been monitoring housing market trends for 26 years, said he is surprised by the lack of sales on the lake, which has never happened since he's been keeping track.
"The market for second homes and recreational properties is very soft," he said. "It's reflective of the general economy. We're talking about buyers that come from outside the area. Their property values have seen substantial decrease. Those in California, Nevada, Washington and Texas, they don't have the money anymore, and have taken a big hit on their other investments."
The bottom line of Kelley's observation?
"People aren't buying what they don't need."
Some lakefront homes are listed at 60 percent off the original asking price. They are listed for 15 to 20 percent less than what their owners paid for them in the boom years of 2006-07, when 46 properties were sold on the lake for an average price of $931,061.
"It got to a point where people were buying homes in speculation, paying unreasonable prices, based on the assumption [the properties' would be worth more when sold," Kelley said. "'Homes never go down in value' - that was the general attitude. You have a situation that people no longer have the confidence that their home will increase in value."
All over the Flathead Valley, home sales prices are falling. The average residential sale price in Flathead County plunged from $241,500 in 2007 to $188,500 this year. In Bigfork, prices have nearly halved, dropping from an average $495,006 in 2006 to $272,284 in the first half of 2009.
On Flathead Lake, there were 27 sales in 2007 at an average price of $1,160,716.
Kelley said that there is a growing number of lakefront homes in the foreclosure process and that he expects area housing prices to drop back to the levels they were at in 2002-03.
THE AUCTION, scheduled for Aug. 6 at 1 p.m., could jump start the Flathead Lake housing market, said Hilary Shepard, a listing broker at Glacier Sotheby's International Realty. Shepard has been Thornton's agent for years.
"Our market has no sense of urgency," she said. "There's continual waiting - 'We'll wait until this summer, we'll wait until this fall.' This auction is bold, but it creates a sense of urgency in the market."
John Thornton hopes that the auction, which he noted is not a distressed sale, will result in a good price for the property.
"A lot of people know of the beauty of the region," Thornton said. "We hope it will result in a price that's good for us."
Thornton owns a number of properties around the United States and views the sale of this property as reducing his inventory.
"You can only be in one place at one time, and I just don't need this," he said. "We were going to build a 10- to 12-million-dollar home, but we just never got started on the construction of that home and we don't intend to. The property just doesn't fit right now in my portfolio. Somebody is probably going to get one heck of a deal."
Reporter K.J. Hascall may be reached at 758-4439 or by e-mail at kjhascall@dailyinterlake.com