The number of houses sold in Flathead County last year increased by 5.4 percent compared to 2009, and was also higher than the number sold in 2008.

According to data compiled by Jim Kelley, a Kalispell real estate appraiser, 1,037 houses sold in Flathead County last year, up from 912 in 2009 and 984 in 2008. However, the number remains far below the recent high of 1,870 houses sold in 2006, the 1,789 sold in 2005 or the 1,357 sold in 2007.

The price of houses sold in the county continues to decline, according to the report. The median price of all houses sold in 2010 was $197,000 and the average price was $271,890.

Included in the 2010 total were 293 bank-owned houses, which had a median price of $164,000 and an average price of $204,107. Another 69 houses were sold through a short sale last year, at a median price of $195,000 and an average price of $206,524.

Although prices are dropping in the county, the median price of a house in Flathead County — $197,000 — is above the median for the rest of the country — $173,091. The median price of a house in the western United States is $220,373.

Flathead County’s median house price is below the median of $230,000 in Gallatin County and $210,000 in Missoula County, but above the median of $190,000 in Ravalli County, $178,750 in Lake County and $165,000 in Park County.

While 32 percent of residential sales in the valley last year were classified as distressed sales, 18 percent of Flathead Lake waterfront sales were distressed.

There will probably be plenty of houses sold through the foreclosure process again in 2011, according to David Fetveit at Trails West Real Estate in Lakeside. The process for selling those properties this year will go quicker than it has in the past, he said, because now everyone understands how foreclosures work. A few years ago, no one was used to the process and it took a long time to complete a foreclosure sale.

“We need to get the foreclosures off the market or at least the number reduced,” he said.

Kelley defines an affordable house as one with a monthly payment of no more than 28 percent of a household income, with a 30-year loan on a house bought with a 25 percent down payment. Based on that, the recent decreases in house prices has put the affordability index back within reach for more people, assuming there are jobs in the county for those people, which isn’t the case, he said.

Sales of waterfront properties rebounded in 2010, Fetveit said.

In his market report, Fetveit said 50 waterfront properties were sold last year, the most transactions since 2006 when 56 waterfront properties sold. In 2009, just 20 waterfront properties sold and 23 sold in 2008.

An interesting sales trend that Fetveit pointed out was the increase in sales on the southern end of Flathead Lake last year.

“However, the trend of increased sales by virtue of decreased prices in 2010 magnified the price gradient that exists as more expensive properties tend to sell at the northern end of the lake,” Fetveit said.

Last year, 23 of the sales occurred in the Polson area, 14 in the Lakeside/Somers/Rollins area, eight in the Bigfork area and five in the Dayton/Elmo/Big Arm area.

Fetveit said lower prices contributed to the sales increase. The average adjusted price per foot of waterfront property dropped to $4,024 in 2010, compared to $5,575 in 2009 and $7,001 in 2008. On average, he said, prices are down by between 30 and 60 percent from where they were in 2006.

“The bottom line is price,” he said of housing sales.

Sales prices last year were about at the same levels recorded in 2002 and 2003, he said, if distressed sales are removed from the list. Those distressed sales prices “are really low,” he said.

However, Fetveit said there are other factors that helped boost sales numbers last year, including low mortgage interest rates, a rebounding of the stock market, changes in government and an overall increase in people’s optimism.

“A lot of the people who had been sitting on the fence got enough confidence to buy,” he said.

There were few out-of-state house hunters in the Flathead in 2008 and 2009, Fetveit said. In 2010, some of those people came back to the market, but were looking at less expensive properties than they may have looked at five or so years ago, because the property they may plan to sell in another state won’t sell for as much as it would have a few years ago.

Although sales volume may be up, there are still a lot of houses for sale in Flathead County.

In 2010, just 32.5 percent of all houses listed for sale actually sold. The previous two years also recorded low percentages — 27.8 percent in 2008 and 28.6 percent in 2009. That contrasts to 2000 when 100 percent of the houses offered for sale in the county sold and 97.6 percent in 2001, 89.3 percent in 2002 and 60.5 percent in 2003, according to Kelley’s report.

There is a 19-month inventory of houses for sale in the county today, Kelley said, compared to an average of about nine months of inventory throughout the U.S.

Perhaps more encouraging to Fetveit than the 2010 sales boost was the volume of business he saw in January this year.

“We’ve had more activity this January than ever,” he said. “Usually this time of year is very slow. This year may buck the trend.”

Part of that prediction comes from the fact that prices will most likely stay low in 2011, he said, but inventory is also decreasing. Inventory is decreasing not only because property is selling, but also because a lot of sellers who put their house on the market at the wrong price are realizing it won’t sell for as much as they want so they have taken it off the market.

While no waterfront property sold last month, he said six properties are under contract.

There is good news in the industry, Fetveit said. “It’s that we’ve got a shovel in our hands and are digging out.”

Reporter Shelley Ridenour may be reached at 758-4439 or by e-mail at sridenour@dailyinterlake.com.