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At Home in Bozeman Real Estate Blog

Tim Hart


Displaying blog entries 1-10 of 425

Mid and Low Tier Rentals Scarce as Prices Grow

by Tim Hart

Mid-tier and low-tier apartments for rent have grown more and more scarce as developers continue to build a higher percentage of luxury rental apartments across the United States.

Despite the multi-family construction rate maintaining its high levels, most of these homes, 80% in fact, have been built in the luxury sector, while mid and low tier apartments have become increasingly scarce.

Based on construction costs for apartments across the United States, any developer would prefer to build luxury rentals, particularly over mid-tier rentals. According to, one company, AvalonBay Communities, on average spends $340,000 per unit, requiring a monthly rent of $2,900 to make up for the costs and have the venture be profitable. After the unit is built, adding luxury style amenities such as stainless steel appliances and granite counter tops are very cheap, yet these upgrades can bring in far higher rent if the unit is listed as luxury.

In lieu of luxury apartment construction, mid-tier and low-tier rentals have not been built, keeping competition and prices very high. Supply of low-tier apartments fell by 1.8% since 2008 while luxury apartment inventory has increased by more than 30% in that time frame. Historically, builders were able to create low-rise apartments in suburban areas to lower their own costs. However, government officials across the US have pushed more and more for mid-rise to high-rise buildings, which helps avoid sprawl, but also leads to high costs and therefore luxury building. Whether builders will eventually revert back to low and mid-tier apartments is yet to be seen.

Rising rental costs have not alleviated this issue. Although rent rose for types A B and C apartments, mid-tier saw the highest growth rate. Class B renters saw their rent jump 5.8% in the second quarter of 2015. Rising rent costs have also pushed many mid-tier apartments closer to the luxury market, leaving mid to low middle class scrambling to find affordable housing.

Rent has risen consistently over the past few years. Increasing inventory and improving first time homebuyer confidence will help alleviate these costs. Ideally, more renters will look to buy a home in the following years, deepening the for sale housing market, while lowering competition in the rental market.




Building Across US Still Strong

by Tim Hart

Building across the US remained strong with single family housing starts increasing, while multi family starts leveled off from a an exceptional month of June.

Single-family start-ups increased 13% from June and have now topped an annualized rate last seen in January 2008. The total number of single-family housing starts has increased over a three month moving average for every period since 2011.

Due to the unusually high level of multi-family start-ups seen in June, July housing starts fell slightly. In June, housing starts went up 28.6% compared to May and hit an annualized rate of 476k homes per year. July fell back to more normal numbers—back to an annualized rate of 440k home start ups a year.

Building permits declined by 16.3% over this time period. Renting will continue to be in high demand across the nation as newly formed households generally have yet to jump out of the rental market to buy a home. Locally, builders have been adding home inventory and permits increased significantly last year. Builders still have concerns with affordability of lots and the cost of skilled labor and those issues may also be impacting the total number of approved permits. Builders have and will continue to add home inventory to the United States Housing Market, helping to lower home values. As more buyers jump into the market, builders will be even more willing to take on additional lots.



Seattle’s Famous ‘Up’ House Set to Move

by Tim Hart

The home that many believed inspired the Disney movie Up will officially be on the move—though not by balloons. The ‘Up’ home became a symbol for anti-development groups, naturalists and crusaders alike as the 600 square foot home and its owner stayed put despite mass commercial development around it. For those who don’t know, the home’s past owner Edith Macefield turned down $1,000,000 to be moved from her small lot she had owned for a near half century. Once developers were spurned, they went ahead and built their project around her.

Her home became iconic for standing firm in the face of progress and was used as a symbol by many groups. Now, after a complicated series of bids to purchase the home, it will now be taken in by OPAL (Of People and Land), a Seattle land trust. The home, due to its complexities and age, will be moved from its current location to Orcas Island and added to an affordable housing project OPAL has headed.

There were efforts to have the home turned into some form of historical landmark, but the home had been fully renovated and therefore did not have historical significance in that sense. Now Seattle developers will be able to incorporate the gap and the small lot will more than likely be filled by a small retail store or coffee shop.




New Apartments Add Inventory to Bozeman Rental Market

by Tim Hart

Developers and city officials broke ground last week on a new, awaited apartment complex designed to help add more rental inventory to the Bozeman market. The complex will now bring 48 new rental units to the Bozeman area to the previously planned 47.

The project has been sponsored by the Montana Board of Housing to give low-income residents a chance to rent the new units alongside those who can already compete at full market value.  The MBH will give tax credits to the developers so they can in turn offer a few units to select families at up to 50% below market rent. The City of Bozeman continues to strive to have Bozeman be affordable to all residents and affordable housing projects like this, help keep people from being ‘priced out’ of their living arrangements.

In addition to increasing the number of subsidized, affordable units in Bozeman, the new apartment complex will add general apartment inventory. Having additional units in Bozeman will help increase rent competition, potentially lowering costs for tenants. Much like last year, Bozeman’s vacancy rate is essentially at 0 percent, which has lead to the sharp rise in rental costs around town. The overall population growth of Bozeman, as well as the growth of Montana State University, have both put a lot of stress of the remaining rental home inventory in the area.

Bozeman has approved both residential and commercial projects, whether full subdivisions or multi-family style living, all in an effort to increase the inventory and amenity spread of Bozeman. Bozeman continues to work hard to stay up with current growth and is still focused on keeping housing affordable in the area.




Commercial Real Estate Sale Breaks Online World Record

by Tim Hart

According to the Guinness Book of World Records, a 96 million dollar property sale in Manhattan Beach, California has become the most expensive online real estate transaction ever.

The property itself, a two building 300,734 square foot office space, sold in an online auction on In any industry, that transaction is now the biggest e-commerce transaction ever.

Personally, I think its clear that this sale will not hold the world record for all that long—so I think what makes it important is the marked shift in how real estate will perform as an industry moving forward. Up till recently, major real estate transactions have been in the realm of pen and paper. Deeds in particular almost don’t feel right aesthetically if they are not printed. Even if for peace of mind, many people still prefer to ink their signature and have extra copies on paper. Eventually, even this may be a rare occurrence. Doing transactions online will help keep wasted time to a minimum and so long as everyone’s personal security can be guaranteed, the shift feels inevitable.

You never know—even the richest men might not have two pennies to rub together in the future simply because their money is always in the digital realm. Obviously we have a ways to go until that happens but it is very fascinating to see all industries adjust to our slow shift into the digital world. Real estate will have a lot of growing to do, but even in a digital world, real estate will always be on the market.



FHA Loan Activity, Interest Rates Up

by Tim Hart

FHA loan activity rose to a two year high in the second quarter this year. FHA loans typically have very low down payments, designed for first time homebuyers looking to get into home ownership but may not have the capital to do so. Having FHA loan activity rise implies that these buyers are now feeling financially stable enough in a growing economy to take the plunge—great news for housing and the overall United States economy.

Buyers using FHA loans made up 23% of all home and condo sales that were financed. That figure is up 19% from FHA activity in 2014 and is the highest share of the market since the first quarter of 2013. In general, a strengthening economy and job market probably most effected the increase in activity. At the beginning of the year, the FHA lowered their mortgage insurance rates, which may have also helped provided more benefits and more activity. Mortgage activity across the board has been rising. Having high mortgage activity will help deepen and strengthen the overall housing market.

In similar news, mortgage rates did inch a few ticks higher this week. Mortgage rates went up for the first time in 4 weeks, but still remain very low. The 30 year fixed rate averaged 3.94%, up from 3.91% last week and below the 4.04% seen in July. Rates are expected to go up when the Fed raises their own interest rates, but when that will occur is yet to be seen.





US Home Prices Reach All-Time High, Inventory Low

by Tim Hart

Home Prices in the United States have reached an all time high according to the National Association of Realtors. The median sale price in June for all real estate housing types reached $236,400, up 6.5% from June 2014. Not only that, that figure hit above the 2006 record of $230,400 and is an all time high.

Limited inventory and high demand have been leading to the higher prices. Home sales increased by 3.2% in June to the highest level of sale activity seen since February 2007. Steady job growth and an improving economy have been pegged as the leading cause for the high activity.

Coupled with high buyer demand, home inventory in the United States remains low. Housing inventories only saw a 0.9% increase in June, to a total of 2.3 million homes on the market. Inventory is 0.4% higher than a year ago but still remains at a 5-month supply. The supply represents how many months it would take to sell all the homes currently on the market. (Economists want to see a 6 month supply in an ideal market.)

Because of the high demand and low inventory, homes are moving extremely quickly. In June, 47% of homes stayed on the market for shorter than a month.

So long as demand stays high and home inventory continues to be low, we should continue to see rising home values.





June Home Sales Beating Prerecession Numbers

by Tim Hart

Existing home sales in June passed the highs for all of 2006 and hit the highest level it has been at since February of 2007. Home sales increased in June by 3.2% to a seasonally adjusted rate of 5.49 million units sold. Existing home sales made notable increases in February and March as well. Having these sales numbers outshining prerecession totals adds more evidence to the narrative that the housing market has returned to form.

The United States Housing market is moving quickly and at high volume. Forty seven percent of the homes sold in June had been on the market for only a month or less. Existing home sales were up 9.6% in June 2015 compared to June 2014. Existing sales also increased in every region of the United States.

Existing condo sales were up 5.5% compared to last year and single-family home sales increased by 6.6 percent. A growing job market and improving economy have been attributed to rising existing home sale numbers in the United States.




Bozeman School Board to Set Budget

by Tim Hart

Tonight, the Bozeman School Board will vote on whether to raise local property taxes to approve the $72 million in spending budgeted for this school year in Bozeman. Approving $72 million in spending would be up 3.4% from last year.

Enrollment for the Bozeman School District is expected to increase by 170 students, or 2.7 percent. The expected total will be 6,464 students—a new record for Bozeman school enrollment numbers. The new budget would add 10 new elementary teachers and 1 high school teacher to better address the growing student population. The school board will also increase their reserves to better tackle the proposed Sacajawea Middle School expansion and second High School. The district’s upgrade of Hawthorne Elementary, will use a TIF, and not raise taxes on those in the district.

In order to pay for the spending increases, 31 million will need to be raised from taxpayers. The process has been complicated because of the Department of Revenue’s property tax reappraisal. Property values only dropped by 3% from when the recession began in 2008—far better than the expected 11% drop that some predicted—but balancing the budget has been more difficult with shifting property values. If the budget is approved, each property owner in the Elementary district will see their taxes raise by 7.45 mills and those in the High School district will see their taxes raise by 3.79 mills.

A tax increase approved by voters as well as the Montana’s Legislature’s increased state spending on schools have also contributed to the budget. The total elementary budget would go up to $45.4 million and the high school budget would go up $26.8 million. The district has been awarded a plethora of awards in the last year, whether financial, academic, student based, or from an outside ranking system.




Rental Market Hit New Highs in June

by Tim Hart

Rental prices continue to grow in the United States Housing Market making many wonder when and where the tipping point may come. The national effective growth rate for rental values went up by 5.1% in June to a 47 month high. Effective rent growths have also been at 5% for 5 consecutive months, a streak not seen since April 2009.

Tight occupancy has pushed rent even higher as the intense competition has allowed landlords to consistently raise rates while still finding tenants. The US rental occupancy rate now sits at 95.3 percent. Although renters have struggled to keep up with the recent price growth, they’ve still made the payments work—but for how long renters can afford these high rates is to be seen.

The US Housing market may be catching up from the housing recession, when a very small number of apartments were made. Now, renters can only hope the recent economic growth will help builders increase home inventory and drive landlord competition to lower prices. Even despite low mortgage rates, the rising home values have kept many renters away from buying a home. Oddly, buying has been cheaper than renting in 66% of the national housing market, yet renters continue to pay steep prices for a place to stay.

In Bozeman, the local real estate market has acted as a sort of microchasm for trends seen in the US housing market. Bozeman continues to try to add additional inventory to keep rent prices low and have also looked into lowering lot sizes to increase the number homes they can build on a space of land.




Displaying blog entries 1-10 of 425