Some of the grandest, most expensive homes in Montana are in the scenic Flathead Valley, where the economy is improving and luxury activity is picking up

This scenic valley in the heart of the Rocky Mountains, nestled among national park and forest lands and stocked full of natural lakes, has long been a pocket of luxury real estate.

The suite of unique amenities, such as Flathead Lake and Glacier National Park, has made the Flathead Valley an attractive place for wealthy suitors from around the world seeking high-end property, particularly lakefront sites, which typically make up half of all luxury realty.

Flathead and Whitefish lakes have world-class reputations, their shores lined with grand, multi-million dollar properties.

The largest home for sale in Montana is the 24-acre Shelter Island Estate on the west shore of Flathead Lake. The stone-and-copper mansion, built by California real estate mogul Don Abbey, founder of The Abbey Co., was originally listed at $78 million but is now on the market for $59.5 million. The main house, with 45-foot ceilings, is 24,000 square feet and features a wine cellar, indoor shooting range and gym. The mansion includes 10,000 square feet of heated porticos and outdoor entertaining space looking out over the largest freshwater lake west of the Mississippi.

Just down the shore near Big Arm sits Dream Island, a $2.6 million estate with 1,616 square feet of private lakeshore. Dubbed one of the legendary estates of the Old West, the isle and its adjacent villa sites are well known for being formerly owned by the esteemed Daly family, heirs to Copper King Marcus Daly.

The shores of Whitefish Lake are no less prominent, with a sizeable crop of mansions owned by former NFL stars, TV and movie stars and business moguls surrounding the quiet mountain lake. Other smaller lakes, like Lake Blaine, are more hidden but still peppered with second homes owned by Canadians or other out-of-towners looking for a rural retreat.

It’s this idyllic frontier setting of lakefront property that competes with the best in the West, like Lake Coeur d’Alene, Lake Tahoe in the Sierra Nevada and Lake Pend Oreille in the Idaho Panhandle.

“It’s the lake living. If you love water, you love Flathead Lake. It’s clean, it’s huge, it’s beautiful,” said David Fetveit, a real estate broker with Trails West who specializes in Flathead Lake properties. “Obviously, I’m a little bit biased, but you have these incredible, towering mountains across the water. There are very few lakes in all of the United States that have that view or that dynamic.”

Now that the economy is turning around and propelling modest gains, notably in the stock market, the local luxury market is growing and could make even more gains in the coming year.

The Great Recession dealt a significant blow to the market, but it was the stock market crash that particularly hit luxury homeowners hardest.

“The demand for those types of properties is probably going to run pretty close to how the stock market performs and the general economy,” said Jim Kelley of Kelley Appraisal, who studies the real estate market and releases annual reports summarizing the local market activity.

“Luxury homes have been picking up.”

Last year saw the most sales of luxury homes in the greater valley since 2007. Luxury homes, defined as properties worth more than $1 million, reached a peak in sales in 2006 when there were almost 80 purchases at a median price of $1.5 million, according to data from the Northwest Montana Association of Realtors.

Whitefish Lake tends to demand even higher prices than Flathead because of its quieter, smaller setting. In 2013 there were eight luxury home sales on the lake for an average price of $2.34 million. That was eight fewer sales than in 2012 but nearly a half-million dollars more in average costs, according to Kelley’s report. The average cost of a home on Whitefish Lake, excluding condominiums or townhomes, has fallen from its pre-recession high of $3.25 million, but made its biggest jump in five years in 2013.

Flathead Lake saw 45 sales last year for an average cost of roughly $800,000. In the first six months of 2009, there was not a single sale on Flathead Lake. The average number of sales each year is 50 to 60.

To start 2014, Flathead Lake real estate listings were up 23 percent over a year ago. The number of distressed sales has dropped from 31 percent in 2011 to 9 percent in 2013. With healthy sales of waterfront properties for the past two years, Fetveit and other realtors are wondering how much new inventory will hit the market this spring? Prices have slowly begun to rebound and the potential exists for shadow inventory that could oversupply the market in the short term, causing an imbalance. But there could also be healthy supply and demand that returns to previous trends before the recession.

“What will happen on Flathead Lake? Right now I don’t know what will come out this spring,” Fetveit said. “I’m curious to see what happens.”

Breaking Down the Lakefront Market