Bozeman Montana Real Estate Information Archive

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Home Value Increase Doubles Inflation Rate

by Hart Real Estate Solutions

Home values in the United States are increasing at twice the rate of the nation’s inflation rate according to Mortgage News Daily. S&P/Case-Shiller released a home value index for January, suggesting that values in the US rose by 5.4% since January 2015, year over year. That rate is the same rate seen in December as well as the whole 3rd quarter of 2015, helping confirm that real estate values are still trending up.

The western region of the United States drove most of the home value appreciation in the nation. Several cities saw 10% home values rise by more than 10 percent. Portland home values rose by 11.8% from 2015 to 2016. The number of US residents who have equity in their home continues to increase as home values rise.

Currently, there is only about a 5-month home inventory supply on the US housing market. Economists believe that a 6-month supply represents a balanced housing sector. With a low number of homes for sale, buyers will need to offer their highest and best offers, driving up home prices. Home inventory still might rise in 2016. In February, single family home start ups were their highest since November 2007.

 

Source: http://www.mortgagenewsdaily.com/03292016_case_shiller_indices.asp

Bozeman Addressing Wages and Cost of Living

by Hart Real Estate Solutions

Bozeman’s new mayor, Carson Taylor, has probed interest from residents and city officials to see how they would react to a potential minimum wage hike in town. The query comes in response to the cost of living in Bozeman, coupled with its average wages.

Bozeman’s cost of living is slightly above average. Bozeman’s score for 2015 hit 102.7. An average cost of living scores a 100 flat, so Bozeman’s cost of living is 2.7% above the national average. Last year, Bozeman living sat at 0.8% above the national average. Manhattan, New York has an average cost of living at 27% above the national average.

The report researched six different categories: groceries, housing, utilities, transportation, health care, and goods and services.

Housing affordability has been one of Bozeman’s major obstacles as its grown. Housing costs were 12.9% above the national average. Low utility rates, 15% below average, helped bring Bozeman to a more average level.

However, once coupled with wage growth in Bozeman, the city may actually be less affordable than it appears on the surface. Bozeman’s wages sit at about 73% of national averages due to its high tourism, university jobs, and its status as retail center for Gallatin Valley. All of these sectors offer few full time jobs, often at lower pay grades. Once wage-adjusted, Bozeman’s cost of living increases to 140.1, or 40% above the national average.

Bozeman makes up for its costs with its amenities. Bozeman has been honored as one of the nation’s most livable places as well as a a top 16 worldwide destination. Its activities and its community continue to counteract above average costs. Although the cost of living may appear daunting, Bozeman’s economic growth bodes extremely well for wage growth in the future. As businesses continue to find great success in the area, competition will increase for qualified employees, helping job hunters negotiate for higher wages going forward.

 

Source: http://www.nbcmontana.com/news/Bozeman-mayor-considers-minimum-wage-hike/37785442

http://www.bozemandailychronicle.com/news/city/study-says-bozeman-s-cost-of-living-above-average/article_f87743af-6c4d-5326-8fa5-4dafcb0359b4.html

http://www.bozemandailychronicle.com/news/economy/low-bozeman-wages-put-cost-of-living-stats-in-perspective/article_150aa8f2-0acc-560d-93b7-472cfbdd11b3.html

Bozeman Planning for Growth in 2016

by Hart Real Estate Solutions

Bozeman officials made it clear they are planning for growth in 2016 when they outlined their goals and hope for the town for the coming year. With the fastest growing economy in Montana and part of the fastest growing county in the state, officials will need to continue working to stay ahead of growth.

The city wants to focus on improving infrastructure, streets and transportation and affordable housing. Street maintenance and traffic have both been impacted by Bozeman’s booming housing market—a market that has driven up home values in the area. As Bozeman continues to grow, officials will need to continue staying ahead of the curve on city growth and planning.

To do this, commissioners recently approved hiring an Oregon consultant to study and improve Bozeman’s strategic planning effort. HDR engineering will look at policies, land use planning, infrastructure and budgeting to develop a plan that will keep Bozeman on its positive track. The consultant will look for vague and contradictory planning strategies and look to improve them.

Leaders have also started to tackle plans to put a plan for a new Law and Justice Center on the November ballot. Ideally, Bozeman wants to make the new center more affordable by using the building for both Bozeman and Gallatin County legal matters. Right now, officials estimate that the building will cost between 50 and 80 million. To narrow the estimate by November to give voters a better sense of what they may or may not be approving, Bozeman has hired a contractor to provide a plan and price quote by July 1st.

Bozeman officials have done well to stay ahead of Bozeman’s growth. In depth planning, coupled with improving plans already in place, should help maintain Bozeman’s beautiful landscape and culture amidst its growth.

 

 

Sources: http://www.abcfoxmontana.com/story/31298368/bozeman-sets-goals-for-new-year

 http://www.bozemandailychronicle.com/news/city/split-bozeman-commission-approves-k-strategic-planning-effort/article_6a350d69-4e36-57ad-839b-c6c53a649674.html/#utm_source=bozemandailychronicle.com&utm_campaign=related-by-section&utm_medium=direct&utm_term=split%20bozeman%20commission%20approves%20%24124k%20strategic%20planning%20effort

http://www.bozemandailychronicle.com/news/city/bozeman-gallatin-county-officials-to-hire-justice-center-contractor/article_c32249cf-8ae4-552f-90c6-7064b65f07f0.html

Cheaper For Sale/For Rent Properties To Improve Affordability in Bozeman

by Hart Real Estate Solutions

Over the past few months, the City of Bozeman and local builders alike have worked hard to continue making homes more affordable in Bozeman.

For Rent

Bozeman has partnered with developers GMD Development from Seattle and Homeward out of Missoula. Together, they are building a 136 unit for rent, affordable apartment complex. Bozeman helped fund $200,000 for the project using the workforce housing levy.

The complex will be made for residents who earn 60% or less of Bozeman’s median income. Rents will range from $560 to $940 a month. The units will be subject to a rental control clause that will keep rents at the same or very near to the rates seen today. The clause will be in effect for 46 years.

According to Bozeman’s local HRDC, rental or mortgage costs should only take up 30 to 40 percent of a person’s income. In Bozeman, most residents pay around 50% of their income to rent or mortgage payments.

For Sale

Four new properties have been approved on Cottonwood Road for sale to lower income residents. The new homes will be approximately 840 square feet and cost about $200,000.

Bozeman passed new home affordability ordinances in November 2015 to incentivize builders in Bozeman to construct more affordable homes. The city has required that 14 affordable homes are built by September 2016, that 27 are built by July 2017 and that 54 are built by December 2017. If not, the city will enforce mandatory inclusionary zoning ordinances to make homes more affordable.

This project would contribute 4 new homes to that number. The city would prefer to continue offering incentives and relaxed codes to build affordable homes, rather than force another rule on the building industry. Normally, the city requires homes be built on lots of at least 5,000 square feet. Under this program, builders can lower lot sizes to 4,500 square feet. Bozeman also expedites affordable homes through the building permit process, saving developers who make affordable homes time and money.

The median price for a single family home in the Gallatin County was $330,000 in 2015.  If a person wanted to only have 30% of their income go to their mortgage payment, they would need to make around $70,000 a year.

 

Sources: http://www.kbzk.com/story/30861473/affordable-housing-options-in-bozeman-to-expand-with-new-development

http://www.abcfoxmontana.com/story/30858148/bozeman-set-for-136-new-affordable-housing-units

http://www.nbcmontana.com/news/Construction-begins-on-affordable-homes-in-Bozeman/37972184

http://www.bozemandailychronicle.com/news/city/first-houses-approved-under-new-bozeman-affordabilty-plan/article_6070f54e-b9fe-5c76-8c50-ddcbc58fab81.html

Can Home Renovations Raise Property Taxes?

by Hart Real Estate Solutions

As spring approaches, many home sellers awake from their winter slumber, hoping to list and sell their home for top dollar. The current wisdom suggests that renovating the home in the right places can oftentimes drastically raise the list price. Although true for many, home renovations come at a cost. Renovations take up time that the home could otherwise be on the market and they take up-front money. Most homeowners see both of these costs and plan their investment accordingly. However, many renovators forget that improvements to the property can also raise their own tax bills. Though usually not a deal breaker, its something many overlook when they are trying to determine whether a renovation will bring a solid return on investment.

Renovations can raise a home’s assessed value and therefore its property taxes. Local governments valuate homes then take a percentage of that value to determine how much each homeowner should pay.

Homeowners who are unsure of how a renovation may affect their assessed value should communicate with government officials before taking on a major project.

Generally, increasing the living space (square footage) of a home will raise a property’s value. Finishing a basement or an attic, for example, will also require a reassessment. Of course, adding additional bedrooms or bathrooms can almost guarantee a property value rise.

Kitchen renovations are very grey area, so checking in with local officials first will alleviate worries of reassesments. According to Realtor Magazine, even adding things like garden sheds or regrading lots for drainage issues can affect a property’s value.

Renovations can often be the best way to improve a property’s listing price. With a higher listing price, comes a higher overall home value, increasing property taxes. Homeowners should make sure that the renovation, as well as future costs, are properly budgeted to avoid having to squeeze by financially.

 

Source: http://realtormag.realtor.org/daily-news/2015/11/30/some-home-renovations-can-raise-tax-bills

 

 

US Housing Market’s Third Quarter Best in Nearly a Decade

by Hart Real Estate Solutions

Existing home sales rose by 3.4% in the 3rd quarter of 2015 and has been one of the best quarters for the housing market in nearly a decade. The quarter has lead to a new annual rate of 5.48 million sales in 2015. Existing home sales increased by 8.4% compared to 2014.

In the United States overall, the single family median home price hit $229,000, up 5.5% from the third quarter of 2014. While home prices and sales continue to climb, their growth rates have slowed to a much healthier pace, providing a bit more depth and consistency to the US housing market.

Median prices rose in 87% of US markets and only 24 of these areas reported prices lower than in 2014.

In the West, existing home sales increased by 3.9% and are 9.7% higher than a year ago.

Issues still remain with lack of home inventory, which have pushed prices up and eliminated some first time home buyers from feasibly buying a home. But generally, more buyers are now able to buy a home than before.

 

Source: http://realtormag.realtor.org/daily-news/2015/11/13/housing-has-best-quarter-in-nearly-decade

 

Federal Reserve Raises Short Term Interest Rate

by Hart Real Estate Solutions

By unanimous vote, the Federal Reserve agreed to raise the federal fund rate (aka short-term interest rate) showing their confidence in an improving United States Economy. The Fed will raise their rates from near zero to 0.25 to 0.5 percent, a decision that had been expected to come at several different points in 2015. The Fed will shift between 0.25 and 0.5 based on market conditions. They are also willing to adjust their strategy based on how the economy performs in response to the move.

The Fed has kept rates at near zero since 2008. During the recession, the Fed did all they could to entice borrowers back into the fold. Now that the labor market and housing market have started performing well, the Fed has decided that now is the time to get rates up again. So far, the market has performed well in response to the news, with the Dow Jones Industrial Average rising by 224.18 points.

The Fed pointed to strong dollar values and a rebounding labor market as the major factors that convinced them to raise rates. As the dollar value has risen, emerging market companies that borrowed heavily during low rate periods will now have to pay more to payoff the debt.

But how will the rates affect the housing market?

With a rise in interest rates, each subsequent lender will need to raise their rates as well to keep their business profitable. It is fully expected that mortgage rates will increase over 2016. Mortgage rates have been at historically low levels during the recession. Buyer confidence has improved over 2015, allowing the Fed to raise rates without losing all their borrowers.

Although mortgage rates will in all likelihood increase, according to the National Association of Realtors Chief Economist Lawrence Yun,  the small uptick should not have a major affect on borrowers. However, other experts believe this is the first of several upticks, in which case mortgage rates may rise at several points over 2016.


Currently the 30 year fixed rate mortgage sits at 3.93 percent. In the short term, the housing market might actually have a small surge, as fence sitting buyers take the plunge with rising mortgage rates on the horizon.

 

 

Source: http://realtormag.realtor.org/daily-news/2015/12/17/what-fed-s-decision-means-for-housing

http://www.wsj.com/articles/fed-raises-rates-after-seven-years-at-zero-expects-gradual-tightening-path-1450292616

 

 

Bozeman Parks Exceeding 2012 Funding

by Hart Real Estate Solutions

In order to address Bozeman’s fast paced growth, the city has been hard at work to continue adding and enhancing the recreational parks in the area. Most of the funding has come from a 15 million dollar bond that passed in 2012. Unfortunately, as more visitors have taken up permanent residency in Bozeman, it appears that funding will fall short for the 6 major projects on Bozeman’s agenda.

The projects include the Bozeman Sports Athletic Complex, the Front Street Connector Trail, the Pass to the M, the Bozeman Pond Park expansion, the Bozeman creek work at Bogert park and the Story Mill Community Park Project.

Most of these projects are in the early design stages, but in order to have useful facilities for a growing populace, the city has already started work towards gaining additional funding through bonds, grants and donations.

A majority of Bozeman’s real estate activity since the recession has taken place from 2012 and on. Bozeman may ask for another bond to help address the growth and properly fund these projects, based on a more accurate city population.

The Story Mill Park project received 5 million dollars in bonds, but will probably end up costing closer to $10 million while the Sports Complex received 7 million in funding, but will probably tally closer to $20 million. Story Mill Park did recently receive a $75,000 dollar grant from local banks in the area recently.

Bozeman residents have been very good about passing new bonds, something they have been recognized for by community ranking organizations. However, if future bonds do not pass, the city will work on creating partnerships with outside organizations to help fund the projects.

 

Source:  http://www.nbcmontana.com/news/Bozeman-Parks-and-Rec-projects-exceeding-initial-costs/36266770

 

 

Bozeman Commission Passes Inclusionary Zoning Plan

by Hart Real Estate Solutions

After nearly a year of discussion and research from residents, consultants and builders alike, and after a voted delay in September, the Bozeman City Commission decided to move forward with a two-stage plan to help lower home values in Bozeman.  The plan, ideally, will help Bozemanites with modest means better afford to buy homes within the city limits.

Although the areas surrounding Bozeman have more reasonable home and rent values and although Bozeman’s cost of living is not outrageously above national averages, the city made it clear, by their decision, that they want Bozeman itself to remain a diverse and affordable place to live. Opponents to the plan did not want to hamper down a recently recovered housing market. Builders, who require on average 22 subcontractors to build a home, also felt the plan put too much financial risk on their shoulders.

The proposal has two phases to try to get builders and developers to start building affordable homes—one voluntary and one mandatory. The mandatory phase would only come into use should the voluntary phase not produce 54 affordable homes within the next two years.  Only the mandatory phase includes plans for inclusionary zoning – the most controversial aspect of the new ordinance.

The voluntary phase, as mentioned, requires that at least 54 affordable homes be built in 2 years within Bozeman city limits. During the voluntary phase, the city would try to entice builders to add affordable homes into their existing plans by including incentives like reduced lot size requirements, relaxed parking standards, expedited plan review and impact fee subsidies, incentives the city already may have added anyways. The voluntary phase also requires that at least 14 affordable homes are built by September 2016, otherwise, it would revert to the mandatory phase after only one year.

If the voluntary phase fails, then the city would move to a mandatory inclusionary zoning ordinance. In this phase, subdivisions would be required to either make 1 out of ever 10 units affordable to Bozeman residents making 80% of Bozeman’s median income or to make 3 out of every 10 affordable to residents making the median income.

Please read Eric Dietrich’s great follow up article going into the nitty gritty details of the new zoning ordinance here.

The new plan should help lower home values in Bozeman, helping free up more buyers in Bozeman’s housing market. How it will affect sellers and builders is yet to be determined. Rental values might also be impacted. High rents have been keeping investment properties in Bozeman at very high values. With additional homes on the market, both rental values and investment property values may decrease, helping keep renters in home while also helping them jump into homeownership.

 

Source: http://www.nbcmontana.com/news/Bozeman-City-Commission-passes-inclusionary-housing-ordinance/36512554

http://www.bozemandailychronicle.com/blogs/city/questions-and-some-answers-about-bozeman-s-new-housing-plan/article_be2e9b16-b1e8-5ce7-8f34-982e270cd21e.html

http://www.bozemandailychronicle.com/news/city/split-city-commission-passes-housing-plan/article_7080761a-5287-59dc-a4fd-7f73a12e3f7e.html

 

 

Study Recommends Bozeman Montana Update Historic District Regulations

by Hart Real Estate Solutions

A study commissioned by the City of Bozeman in April has concluded that the city should reconsider the intensity of its regulations in its Conservation Overlay District. Downtown residents within the district, currently have to apply for a certificate of appropriateness before being allowed to make exterior modifications to any properties. The study concluded that although district regulations had helped preserve historic buildings in the area, it was also a major contributor to the lack of infill development in the city, keeping home inventory low and affecting home affordability in Bozeman.

According to the study, there are not any detached, single-family homes in the conservation district  that are affordable to residents making 80% or less of the city’s median income. The study believes that by allowing and welcoming infill development, Bozeman can keep its historic charm while helping lower home prices downtown.

The study noted that vacant lots are scarce in town and suggested Bozeman start offering incentives like smaller lots, ground accessory dwelling units (normally ADUs are above garages etc, but do provide rental income to the homeowner and another bedroom for a Bozemanite.

The study believed that by replacing the overarching district with a collection of districts would help provide more specific regulations to neighborhoods. With code relaxations, 35 properties within the district would be eligible for renovation, expansion and densification.

As the overlay district, in a sense, operates as the city’s Home Owner’s Association, the study’s findings are not surprising. Although the study still suggests keeping control in the hands of the city, essentially, each historic district would operate as regulator for the quality and consistency of specific neighborhoods, like an HOA would. That would allow the city to lower standards in one area, while maintaining them in another, helping them preserve historic homes while also increasing downtown density.

 

Source: http://www.bozemandailychronicle.com/news/city/study-recommends-re-tooling-bozeman-s-historic-preservation-regs/article_90cbb01d-5268-5f4e-bd6f-ba9211fd6f20.html

 

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