Flathead Valley Realtors share their thoughts on our ever-changing market
Western Home Journal sat down with four seasoned Flathead Valley real estate agents to talk about our vibrant local real estate market including what is happening now and what is to come in the future. Joining the discussion was David Fetveit, owner and broker for PureWest Christie’s International Real Estate Lakeside office, Brian Nicodemus of RE/MAX Rocky Mountain Real Estate, Megan Warren of Properties Northwest Real Estate, and LeAnn Siderius of Properties Northwest Real Estate. With decades of experience between all four realtors, this roundtable discussion was centered on the growth and evolution of the current housing market and how builders and developers are responding to the increased demand. In the last year, Whitefish, Columbia Falls, and Kalispell median home prices were between $300,000 to $426,000. Actual transactions in the same area totaled 461 in Whitefish, 239 in Columbia Falls, and 989 in Kalispell. The realtors addressed the luxury home market and how the desirable, northwest Montana lifestyle is so attractive to these new buyers and owners. The common, resounding thread in the discussion was the regional effort to maintain the sense of community that continues to unite homeowners, who have lived here for generations, and newcomers alike. Here, we look at some of the observations and thoughts from these experienced real estate professionals.
whj : What primary areas of real estate do you serve
David Fetveit: When it comes to listings, I try to focus on Flathead Lake and the surrounding communities. Most of my listings are in Lakeside, Somers, Bigfork, and around Flathead Lake.
Brian Nicodemus: I primarily work the north end of the valley—Whitefish, Columbia Falls, and Kalispell.
LeAnn Siderius/Megan Warren: We primarily work Kalispell and the greater rural areas and are excited to have moved into the Whitefish market as well.
whj : Over the last ten years, what have been some of the real estate drivers in the Flathead Valley residential market?
MW: Tourism is definitely at the top of the list with over three million people visiting Glacier National Park each year. With the resorts that we have on the lake, we have many people coming and falling in love with the Flathead Valley. Summertime is incredibly busy with tourists and locals trying to be the first to see a home. The excitement that comes with it is incredible.
whj : What is happening that affects current residents?
LS: We have experienced a substantial amount of growth in the valley driven by a good economy and people’s desire to live here. There has been a great deal of new construction valley-wide, keeping the trades competitive and busy. Kalispell is the hub of the Flathead Valley where the majority of retail and commercial businesses are located, along with some of the largest employers. The economy is good and unemployment is down, so I believe the current residents are happy and hopefully thriving. It helped that the winter was mild, but the mountain had a lot of snow.
BN: Locals are usually upsizing or downsizing and perhaps want to change locations. The challenge with selling your house in this market and, then, finding something of equal value is kind of a cross trade unless there are other circumstances that make you want to sell. As far as the economic factors in our area, buyers are savvy. They have cell phones and can do a lot of checking on marketing and properties on their own. They are savvier than they used to be. There are people coming here who don’t have jobs here. They can have jobs from out of the area, come here, and work remotely. You’re really seeing the prices of houses going up. That is certainly a big factor that is changing our market. The folks who are moving here already have great jobs, otherwise they could not afford a house over $1,000,000, based on current wages in the Flathead Valley.
DF: In my mind, it boils down to several different buckets. It depends if the buyers are retirees or soon-to-be retirees. These are the full-time residents. You also have the seasonals who are here for vacation, yet they are still working elsewhere, and this is just their summer place. Then you have the folks who are actually employed and working here. It’s workforce housing, and on the higher end of that demographic are usually people who are bringing their jobs here and working remotely. As we know, our primary economic drivers here are healthcare and tourism. If you had to say there was a third economic driver in this valley, it would be the industries related to real estate.
whj : There is a great deal of local discussion regarding rentals. How is this changing the local housing market?
BN: Whitefish does not have many areas zoned for nightly or weekly rentals. It’s harder to obtain that type of property in Whitefish. There is some downtown business zoning that allows short-term rentals. I’m noticing many buyers seeing a lot of value in that kind of property. Whether they’re seeing the returns at the end I don’t know, but it’s certainly been a hot commodity in Whitefish.
DF: I serve on the regional MLS board, and we just founded a committee that’s trying to look at which fields of information should be made mandatory on the MLS. The one at the top of the list that we are trying to consider is whether it should be mandatory that we disclose whether a property can or cannot be used as a short-term rental. It’s the number-one question people ask.
whj : What does it take to decide?
DF: In some areas it’s cut and dry. Flathead County adopted a policy stating that if you’re in a residential zone, you can get an administrative conditional use permit, CUP, provided that there’s water, sewer, parking, and contact information. The tricky part is the way the covenants are written. The majority of properties in the county have covenants but not associations. If they have an association, the association is responsible for enforcing the covenants but this muddies the waters even more because you’ve got properties that are only subject to covenants and there’s no governing body to enforce the covenants and the covenants might be gray on the specifics of short-term/nightly rentals. The MLS does not have oversight over this. The MLS is just a platform for agents and brokers to represent what they know about property to the sellers and buyers.
““As we know, our primary economic drivers are healthcare and tourism. If you had to say there was a third in this valley, it wouldbe the industries tied to real estate.”
–David Fetveit, PureWest Christie’s International Real Estate Lakeside office
whj : Are buyers asking for that information to be included and available on the MLS?
MW: Quite a bit. When you have tourists coming into the area and falling in love with it but who can’t move here and be here full-time, they want to be able to use a property when they are in town visiting but still make money at other times. Whitefish, in particular, when you look at the price per square foot with VRBOs down here, you can be up to $685 per square foot because people are buying and wanting to have that property generate income for them. There are tax advantages to having your home be a rental, which helps the economics of buying and renting. It makes sense. Columbia Falls has some very nice VRBOs that are zoned, and they’re positioned, in that market, to perform well financially.
BN: The bottom line is that there is a demand for it. If you just have a vacation rental for 10 weeks, in the summer, it can cover your mortgage for the whole year. You can then use it for the rest of the year. I know people who move out of their homes in the summer and live in an RV.
whj : Can any of you speak to the need for multi-family homes?
MW: There’s a need for multi-family product. It’s difficult to even find land in Kalispell to put a duplex on. The government investment zone is helping make that more feasible. Starter homes under $225,000 that are decent usually have multiple offers in the first few days. It can be extremely challenging to find the right fit and still adhere to their lending qualifications. We are very lucky to have some great local lenders who help find the right programs to get people moving down the path of ownership. With new investors coming into the area, we expect significant new opportunities in the next few years to get more people in those homes.
LS: It’s a great time for first-time home buyers to get into the market. Both the unemployment rate and interest rates are at an all-time low. Many first-time home buyers living and working in the Flathead can usually qualify to purchase a home somewhere for under $300,000. The residential median sales price in Kalispell is $292,000. We are faced with two problems with this scenario. The first is a lack of inventory of homes priced under $300,000. The second is competition from investors looking for homes that pencil as long-term rentals.
whj : What’s the long-term rental outlook?
BN: Similar to the property values, the rental market is high.
DF: It’s really tight.
BN: There is a certain level of the curve to the rental market, where say, $1,000 is the median rental price and as soon as you start to get beyond that to $2,000 a month, there are not a lot of renters in that price range. You can’t buy a house for half a million dollars and rent it for $1,000 a month, the math does not work. But it can work for short-term rentals. There were a lot of primary single-family residences that could be used as rentals and they did pencil out at $1,200 or $1,400 a month. Now, those guys are gone. It’s why we didn’t see apartment buildings being built in the valley for years. Now, there’s a void and people are trying to catch up and build multi-family/apartment complexes.
whj : are there any changes in the real estate, developer, and builder relationships?
BN: I think they’re actually looking to us for a little bit more information from the clients. There are so many builders out there, and they are all busy. Back in 2007, 2008, and 2009 when the market was down, we lost a lot of tradesmen. They went to other places such as North Dakota. I think the relationship between builders and realtors is still very good. They still need us to help sell their product for many other purposes. Many builders have been working with Flathead Valley agents for a long time.
MW: If a builder wants to build a spec home, they’re going to call us. First and foremost, it is location. What location are they going to pick that’s going to have the least amount of days on market and, then, try to target a build that fits that neighborhood and buyer profile. With the rising costs of building materials and subs, there is a significant amount of work that goes into keeping the product in the right profile and range, yet still stand out against the competition. We have moved extensively into offering opinions regarding design and finish selections for builders. This makes sure the end product is highly marketable to the target audience and by helping multiple builders, we can negotiate costs down for them to drive profitability and quality. We also go to shows around the country and visit homes in other markets to see what the latest trends are and find ways to incorporate those back into the valley.
DF: We can discuss what style of home, floor plans, and finishes are being requested from buyers.
MW: The three-bedroom, two-bath is not what consumers are looking for anymore. They’re looking for a four-bedroom with a bonus room and three-car garage. The builders we work with are usually doing one or two spec homes at a time. We have a lot of conversations about what that product’s end result will be and, then, also look at the neighborhood and make sure that we’re not going to be pricing it out of the neighborhood.
BN: The most fascinating thing to me is that it has become cheaper to buy than build. This is true to a certain price point. Five years ago, that price point might have been $250,000 and that’s just been slowly creeping up to where now the inventory has disappeared. Now, you can shop and buy a home up to almost $1,000,000 and it may be more affordable than building or than the replacement costs.
whj : What is the high-end price point that spec builders are building now?
DF: I can tell you, in and around the Flathead Lake, nobody is doing specs on the water. Those are all custom builds, but specs in Bigfork and Lakeside are still in the $350,000 range.
BN: Let’s talk about lots. There are not a ton of lots out there to build on. The problem with the slowdown in 2007 through 2010 is that there was no platting of new subdivisions. When the light switch came on again, and suddenly there’s this demand for product, the process to get those subdivisions approved in the county, and especially in the cities, took a while. We are a little behind in keeping up with the demand for lots.
whj : What kind of productis being built or developedin Columbia Falls and areas toward Glacier National Park?
BN: There’s a subdivision called Timber Ridge between Whitefish and Columbia Falls. It’s in the Columbia Falls address. It was created about three years ago. They had about 25 lots, and they all sold out in a year. There are houses that have sold in Timber Ridge from $350,000 to $650,000.
“Agent-to-agent relationships are crucial. We’re here to put deals together, not get in the way… I’m proud of the National Association of Realtors and the level of professionalism it promotes for our industry.”
–LeAnn Siderius, Properties Northwest Real Estate
whj : Are buyers buying the lots or are builders buying & building spec homes?
BN: I see both kinds of sales transactions. Builders can buy up whole subdivisions, but in Timber Ridge, lots were sold to clients who built custom homes.
LS: We’ve really seen some great things happening in Columbia Falls area over the past three years. A sense of community has been inspired by the changes. We’re seeing some amazing growth in Columbia Falls in both the hospitality industry and residential development.
MW: We are seeing developers and builders team up to build actual designer communities. There are two going in Columbia Falls now and three in Whitefish. This sharing of profitability and risk between the builder and developer is turning out to be a win-win for the developer, the builder, and ultimately the consumer. In some cases, the buyers are buying the lots and hiring builders, but the trend is going more towards builders and developers selling a package.
BN: Driving Hwy 2 right through Columbia Falls, it’s amazing how different it looks from 30 years ago.
DF: That community went from a mill and aluminum plant that operated full-time. Now the aluminum plant is gone, and the mill has been scaled back. It’s now the gateway to Glacier National Park.
LS: You used to see all the billboards, and it just wasn’t all there for being the gateway to Glacier Park. It wasn’t the most attractive city in the valley.
MW: It really lacked the feel of a community that blended tourism and local culture. We saw it started with Mick Ruis building the Cedar Creek Lodge, O’Brien’s opening The Market, and now it is extending to Compass doing the Highline Project. Yet, with all of that you still have the local favorites that can survive and thrive in the blended feel that it is taking on.
whj : What price defines a luxury home?
BN: I have one stat I can share with you. In Flathead County last year, on my own research, we sold 2,076 residential properties. Over 100 of them were $1,000,000 or more. I remember it used to be that we have 5, 6, or 10 of those sell in a year. The most expensive one I saw was $3.8 million.
DF: With our brand, our Christie’s affiliation, they actually define what luxury is in every market. You’re allowed to put that Christie’s brand only on the luxury pieces. It is different for every market. They established in the Flathead Valley, or at least in the state of Montana, at this point, it’s $1,000,000 for residential and $750,000 if it’s raw land.
LS: There have been a handful of luxury spec homes built in Whitefish that have been priced north of $2,000,000. You’d find them on Whitefish Lake, Whitefish Mountain, or Iron Horse. The price of land is now making that number jump, and we are seeing new builds on the lake go north of $4,000,000 to $5,000,000.
MW: Luxury condos are all about price per square foot, which is some of the most expensive real estate per foot even though the square footage is smaller. We are seeing condos over $1,000,000 in downtown Whitefish.
BN: If you’re a good builder, you have a good following, and people are buying your product. So sure, maybe that builder can go ahead and build that $1,000,000 spec home.
DF: Most builders I know, if they are going to build a $2,000,000 spec home, it’s going to be something they are going to build and live in for two years.
LS: Location is key with any luxury home and waterfront ups the ante. The grandeur of Flathead Lake and the year-round beauty of Whitefish Lake draw luxury homeowners. Many of these are second or third vacation homes for people. You’ll also find luxury estate-type properties throughout the valley along both the Flathead and Whitefish Rivers.
MW: We have seen some of the new modern luxury designs being attempted in Kalispell, which would redefine the luxury expectation for that market. What we are up against there are the architectural review boards and getting something that is a mountain modern with a single pitch roof through. Kalispell likes more simplistic approaches, which tends to limit the current luxury mechanisms.
whj : Is there a design review entity?
MW: It’s by subdivision. The builders we work with pick up one or two lots at a time. They are doing spec homes on one or two lots in subdivisions that are developed. We are already working within the confines of those pre-existing associations and the neighborhood feel. We are currently working on a 30-lot subdivision in which all of the homes will have that mountain modern luxury feel, design, and expectation. It will be a very different subdivision than Kalispell has seen so far.
BN: Some areas are easier to work with than others. Most cities have a review process and subdivisions have their architectural review committees.
MW: In the past 12 months, there have been developers who have put the brakes on certain projects due to recent changes in the Whitefish city development guidelines and the fees imposed around them. Projects just aren’t penciling, and developers are looking to invest in other areas that are promoting development without penalty and more importantly with incentives.
“As new development comes into Kalispell, I’m hoping to see more modern home designs featuring new style trends. We definitely have the buyers looking in our market wanting something new.”
–Megan Warren, Properties Northwest Real Estate
whj : What is available that is affordable and desired?
BN: All price points are moving at this time.
MW: Many of them need work and updating, so it is getting to the point where tear-downs make more sense if the redevelopment standards allow it.
DF: On the lake during the last tech boom, from 1985 to 1995, there was so much built, but design-wise they are still stuck in the early ‘90s. I recently put one house under contract that was built in 1989 that has not been touched. It’s a beautiful house. It’s a $2,000,000 property. Anyone looking to buy that property, knowing they will then need to remodel 5,500 square feet on the lake, has to understand the reality of that price point in that location. Realistic remodel costs could be at least $500,000.
whj : What was the biggest sale you had in 2019 out of your office?
LS: Megan and I sold two condos in Whitefish for a total of $1,500,000. We sold a luxury home on Flathead River for over $1,000,000 but many of the larger listings were not reported as requested by the buyer and seller.
MW: We put together a $4,000,000-plus mixed-use building from design to build to lease.
BN: In my office, Brian Murphy sold a commercial property for $5,500,000.
LS: We are a non-disclosure state.
DF: Out of our Lakeside office, I closed on a $2,500,000 property on the lake.
whj : What are you excited about, and what are some of your challenges in the current real estate market?
LS: The biggest challenge for me is technology and how quickly it changes. It’s also exciting to learn new marketing techniques and media platforms. Having Megan as a partner has renewed my excitement for the business. She’s grown up with technology, so it’s second nature for her. We have to provide our clients with innovative marketing to stay relevant and competitive. There are a lot of real estate agents in the valley. It’s a competitive business.
MW: I think it’s blending the referral bases along with the technology and adjusting the marketing to two ways of doing business.
BN: We have shot up to 1,100 agents in my association. Good training is imperative.
LS: Many buyers are educated about the market before we even get them in our cars. They’ve spent hours looking at pictures of properties online, researching different areas.
DF: I think we are fortunate in this market because quite a bit of it is custom. Even those savvy buyers who have acquired a lot of information on their own can actually help us build a level of trust much more quickly by exchanging realistic and relevant details. In my office, my goal and my agents’ goals are to have property photography reflect reality. It should be good enough so that a buyer wants to see the property, and when the buyer sees the property, we hope that in real life it’s better than the photography. It should have no colorization and no crazy filters. There are companies that will do virtual staging. They will take photos of an empty house and then you pay a service to put furniture in. It’s a challenge, but it’s all part of the new technology and services that attempt to give potential buyers what they want.
“We’re here to help our clients achieve their real estate goals.”
–Brian Nicodemus of RE/MAX Rocky Mountain Real Estate
whj : How are the Flathead Valley agent-to-agent relationships?
BN: If you’re a good agent and you’re ethical and do things the right way, I think your relationships are great with everybody. Not every agent does that and maybe that strains some relationships. We’re still ultimately here to help our clients achieve their goals and do it responsibly.
DF: I think going through the recession eliminated many local agents, and those who remained had to have the endurance and reputation to stay afloat. The reality is that in the last five years, I would say that the agent-to-agent relationship has probably been the best they’ve been in a very long time. I worry we’re getting so many new agents in the market and we’re seeing the craziness of much more money in the market, and that can create an opportunity for it to get strained. There’s still a group of good, professional, ethical agents who are the core. The reality is that those are the agents and brokers who are going to be doing the majority of the business anyway.
BN: To add to that, we haven’t had many professional, standard claims against one another, especially in the last couple of years, even though the market has really been booming. If it stays that way, then we’re all treating each other and the public the way we’re supposed to. That says a lot.
LS: Agent-to-agent relationships are crucial. We’re here to put deals together, not get in the way. Above all, it’s about the client. Ethics and integrity are the only way you can truly succeed in this business. I’m proud of the National Association of Realtors and the level of professionalism it promotes for our industry.
whj : Are there new communications in use to do business?
LS: I think e-signatures have really changed how we do business. Documents can be sent to multiple parties around the country for signatures and returned signed, sealed, and delivered within minutes.
DF: From a business transaction perspective, I agree 100 percent. I went paperless 10 years ago. I don’t do a single paper transaction. This is the good side because you can leverage your time. The other side is that I do have clients who do not want to sign electronically, so you have to sit at your desk and explain the contract to them, which is a good thing.
whj : How do clients find you?
DF: My clients are primarily referrals and repeat business. However, 98 percent of real estate searches are online. Zillow is the best example. They were first to capture leads and sell them to agents. It’s a pay to play process.
LBN: The majority of my clients are also repeat and referrals. I’m working with people whom I have worked with for many years. Through them, I get a lot of additional business and begin new relationships with new buyers.
LS: Agents who have been in the business for over 15 to 20 years have a sphere of influence and a referral base. Newer agents who don’t cultivate the relationships with their clients earlier on, and where everything is done via text and email, I don’t know if they will have the retention.
whj : What excites you for the coming year?
MW: As new development comes into Kalispell, I’m hoping to see more modern home designs featuring new style trends. We definitely have the buyers looking in our market wanting something new.
BN: The new relationships I will make with buyers and sellers this year. That’s a big plus about being a realtor.
DF: All of our feeder markets are strong, and those buyers want to get out of the cities. I see the local real estate market staying strong for the next several years.
LS: We live and work in “The Last Best Place.” The real estate market is strong. This is northwest Montana and it does not get any better than this.