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Missoula's slow leak

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"Malaise," "anemic," and "slump" are among the synonyms for "bleak" that economist Patrick Barkey uses in a recent report on Montana's real estate market. "Housing is really in the slow lane, if it's not still falling—which I think it is," says Barkey, the director of the University of Montana's Bureau of Business and Economic Research.

Barkey and economist James T. Sylvester released the report this month, entitled "Housing Affordability and Montana's Real Estate Markets." Notable among their findings is the contention that the bursting of the housing bubble and a subsequent slow leak have hit Missoula harder then other cities in the state.

Between 2007 and 2010, the median home price in the Garden City slid about 9 percent, from $219,550 to $200,500. Compared to the 14.8 percent decrease nationally, Missoula is faring comparably well. However, the Garden City's drop is steeper than most Montana communities'. For instance, the median sale price of a home in Billings was down 3.1 percent last year, while Great Falls saw a 1.3 percent decline.

Barkey says several factors are contributing to Missoula's lackluster performance. Foreclosure rates—at 3 percent—are higher here than in Central and Eastern Montana. And Missoula is the only major Montana city that's experienced three straight years of economic decline. The local spiral started when the Bonner plywood plant shuttered in 2007. It worsened when the Bonner sawmill closed in 2008, and fell to yet another low when the Smurfit Stone Pulp Mill in Frenchtown shut down in 2010.

The road ahead likely has a few more bumps, Barkey says, but it's important also to look at the bigger picture: "Really, the story of Missoula's experience in the recession is that we're somewhere in the middle."

Missoula Organization of Realtors Public Affairs Director Ruth Link, meanwhile, sees opportunity. After all, she says, housing is becoming increasingly affordable. Now is a perfect time to buy. "I think the really excellent part is...we're actually regaining affordability in the market," she says.

Barkey agrees, with a qualifier: "If you're buying real estate, things have never been better. Now, having said that, they could get better again next year."

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