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Bozeman Building Still Booming

by Tim Hart

According to the Department of Community Development’s Annual Report, Bozeman has seen a huge spike in building permits over the past two years.

639 single-family resident permits were filed in Bozeman in the last two years. That number is more than 2008 to 2011 combined. 40 duplex permits were filed in 2014. 44 were filed from 2009 to 2013. 27 triplex permits were filed in 2014. 18 were filed from 2008 to 2013.

The report has shown most of the growth on the western end of town but growth is also present to the south as well. Bozeman Deaconess Hospital, among their other construction projects, may soon be developing the open space acreage around them. Preliminary plans include 300 homes with park and wetland additions.

When seeing numbers like this, its hard to say Bozeman is not doing enough to keep up with their lack of home inventory. As both home prices and rental prices have gone up and vacancies for both have gone down, its clear the builders are working as hard as ever to get people into homes in Bozeman. Whether they will be able to keep up with Bozeman’s growing reputation and tourism numbers is to be seen.

 

Source: http://www.kbzk.com/story/28186330/bozeman-building-boom-spreads-in-all-directions

http://www.bozeman.net/Smarty/files/dd/dd78ab4b-2733-4d86-af27-5a5ce25a2f10.pdf

 

 

Gallatin County Leading All Montana Counties in Economic Growth

by Tim Hart

Gallatin County has lead all Montana counties in economic growth in the past few years, according to a recent economic outlook presentation by the University of Montana. Already one of the fastest growing counties population wise, the county has seen growth in wages, tourism, manufacturing, energy and housing markets, suggesting a solid economic outlook for the county as a whole.

The county posted the highest real wage growth in the state from 2013 to 2014. Growing wages help all economic industries move in a positive direction because people have more ability to extend their checkbook into industries they may not have been a part of before.

For the housing industry, higher wages help push first time homebuyers over the edge into the buy side of the housing market as oppose to the rent side. The housing market in Gallatin County saw growth and has been projected to continue growing. 2014 real estate numbers confirm this growth.

However, the report showed the state may also be struggling with similar housing issues that Gallatin County has seen in the past. The lack of affordable houses and the lack of first time homebuyers in Montana continues to hold back the housing market from its fullest potential. Economists have been baffled by the lack of home purchases being made by the millennial generation throughout the US, though they have predicted a sharp rise in their presence on the housing market soon.

Gallatin County has struggled with a lack of home inventory and high rental prices due to the large influx of MSU students, creating a great situation for those already with homes or investment properties, but leaving little homes available for purchase. But on the positive side, sales have been steady and construction in the area has rebounded since 2008.

Tourism spending in the Gallatin County was nothing short of spectacular. The county made up nearly half of all non-resident dollars in the state, totaling more than 666 million dollars. Those numbers come from 2012 to 2013. Perhaps, Gallatin County's access to public lands has been the driving factor for the high tourism numbers. Yellowstone and the local state parks have both seen rises in attendance since then and a few new hotels have also moved into the area. As more people visit Montana, more of them will also stay in Montana—a positive omen for real estate in the Gallatin County.

 

Source: http://www.bozemandailychronicle.com/news/economy/statewide-economic-report-shows-gallatin-out-in-front/article_015fdaf6-c125-5fcb-891b-d99283be09e2.html

 

Home Rent Lower in Areas Surrounding Bozeman

by Tim Hart

I read a great article in the Bozeman Daily Chronicle today and I wanted to pass along some interesting numbers regarding rentals in the city limits of Bozeman compared to those outside of it. Long story short—it will be cheaper to rent outside of Bozeman compared to inside it.

The numbers were acquired by the Bozeman Daily Chronicle and they explain how they found them below:

 

“The numbers included in this analysis are based on 114 rental advertisements posted to Bozeman Craigslist between Feb. 1 and Feb.16, as well as classified ads placed in the Chronicle’s Sunday edition Feb. 15. Postings advertising individual rooms for rent, as well as most duplicate postings, were excluded.”

 

According to these numbers, the median per bedroom monthly price of a rental unit was $513. For Belgrade, Livingston, Four Corners and Gallatin Gateway, the median bedroom rent was $450. That totals a $756 dollar/year difference in renting in Bozeman compared to out of Bozeman.

For a 3 bedroom unit, the average rent in Bozeman was $1,300 a month compared to 1,200 a month elsewhere. When comparing median home prices between Bozeman and Belgrade, $325,350 and $223,000 respectively, Bozeman actually comes off well in terms of their direct proportion of cost to rent. From an investment perspective, it leads one to believe that higher profit margins may be had in the Belgrade rental market.

But don’t go buying up all the homes in Belgrade quite yet, because here is a great fact that shows how quickly Bozeman rent has climbed in the last years. Only last summer in Bozeman, a 3 bedroom unit cost around $950 a month--$450 less than current rental rates. For six months, that is an exceptional difference. If an investor can find a good deal on a home, the increasing rental rate could really change his/her fortunes.

For renters, however, Bozeman still remains a tough rental market. However, the city continues adding home inventory, making subdivisions and creating affordable housing to address the issue.

 

Source: http://www.bozemandailychronicle.com/news/city/rent-too-high-look-outside-bozeman-city-limits/article_66ac83ed-200a-5cef-b375-2c32a8468050.html?utm_medium=desktop&utm_source=block_683269&utm_campaign=blox

In a report released by a local research group, Prospera Business Network, Bozeman is barely above the average cost of living of the national average in 2014. According to Prospera Business Network, Bozeman scored a 100.8 index cost of living score—or in other words, they were 0.8% above the average.

The data was drawn from an unweighted average from the first three quarters of 2014 from 281 participating towns and cities. The report took data from six categories—housing, utilities, grocery items, transportation, health care and miscellaneous goods and services. The report also broke down the cost of living by each category—something both home buyers and real estate agents may find more useful.

Housing: Bozeman scored an index score of 113.2, meaning houses cost 13.2% higher than the national average for 2014. This has both positive and negative elements. The negative is obvious—home prices are higher so it will cost a bit more to live in Bozeman than in other places. The positives lie in the implications of having higher prices. First, Bozeman has recovered faster from the housing recession than a majority of US towns. Second, Bozeman is attracting higher paying jobs that bring higher prices than the majority of the US. Third, Bozeman buyer demand has noticeably increased which has driven up home prices, showing just how marketable Bozeman has become. The outdoor aspects of Bozeman, its arts and culture and its reputation as an easy to live in town continue to draw interest from visitors.

The report released some interesting numbers as well. The average home price for a 2,400 square foot home on an 8,000 square foot lot in Bozeman was $353,777. The average monthly rent for a 950 square foot home in Bozeman was $917 a month. Those rent prices sure explain why renting has become so difficult in Bozeman.

Minus groceries and health care, Bozeman scored below the national average.

Transportation: 7.5% below national average

Utilities: 12% below national average

Misc. Goods and Services – 3.9% below national average.

Groceries – 2% above national average.

Health Care – 5.9% above national average.

Compared to some cities in the US, Bozeman is extremely affordable. Bozeman’s score of 100.8 looks pretty good compared to San Francisco, 303.9, and Manhattan, NY 439.5.

Here is a list of other cities in the survey that represented costs of living above and below Bozeman’s cost of living.

2014  Annual Average Cost of Living Index
  Composite Score Grocery Items Housing Utilities Transportation Health Goods & Services
 
City
 
San Francisco, CA 167.5 123.5 303.8 101.5 110.5 119 116.5
Grand Junction, CO 97.4 94.7 101.7 85.1 102.2 104.8 96
Twin Falls, ID 91.8 90.8 79 91.5 110.1 93.2 96.4
Bozeman, MT  100.8 102 113.2 88 92.5  105.9 96.1
Manhattan, NY 222.6 135.2 439.5 136.6 125.3 112.4 150.8
 
Portland, OR 125.1 114.4 160.9 90.8 111.7 114.3 116.2
Pierre, SD 102.3 111.3 113.5 89.9 91 95 97.7
Harlingen, TX 81.4 86.1 69.9 96.4 87.7 97.8 80
 
Cedar City, UT 89 98.7 76.1 86.5 96.6 88.3 94.1
Olympia, WA 101.1 102.7 99.2 83.6 113.5 122.2 100.9

 

 

Source: https://www.prosperabusinessnetwork.org/bozeman-cost-living

 

Streamline Bus System Hits 2 Million Riders

by Tim Hart

The Streamline Bus System had its 2 millionth rider last week—a noteworthy benchmark for the Gallatin Valley public transportation system. The busses have served its greater Bozeman area residents  for eight years and by breaking the 2 million rider mark has confirmed the Gallatin’s increased use and need of the bus system.

Over the first 5 years, Streamline reached the million rider mark. However, it only took 3 years and 3 months to serve the second million. Not only does this show the growth of the Gallatin Valley in general, but it also shows the increasing popularity of the valley’s bus system. Last year, Streamline served 330,000 riders.

Streamline busses help Bozeman become more than just a “car only” town. The city has focused on keeping itself affordable for all types of people. Streamline helps those who want to live in the area without owning a car by offering them a form of public transport that had not really existed previously.

However, Streamline serves many people who have their own methods of transportation as well. 40 percent of Streamline riders own a vehicle. By keeping these people’s cars off the roads, the bus system has helped lower traffic and traffic emissions around Bozeman.

The streamline takes care of some “Bozeman wants”, in addition to the “Bozeman needs.” For example, the Streamline does go up to Bridger while its Big Sky brother the Skyline offers trips up to Big Sky resort.

As Bozeman and the surrounding area grows, it will be more important to have the necessary infrastructures in place. Bozeman has turned its attention towards its rental vacancy concerns and the prospect of a increasing internet speeds in the area. Hopefully, those issues will be addressed as soundly as public transportation was when they enacted the Streamline 8 years ago.

 

 

Source: http://www.bozemandailychronicle.com/news/city/streamline-hits-millionth-rider-mark/article_4ca09561-d97d-5fac-ad0c-a394d6b18a83.html

 

More Buyers Returning to Home Search

by Tim Hart

Reports from builders and real estate agents have suggested that buyer demand should see a sizeable increase for this year. According to Redfin, home tour demand reached an all time high last week, up 62% from 2014.  Redfin real estate agents also reported that accepted contracts rose 58% compared to last year.

Low mortgage rates and low down payments may be what is getting home buyers to start their home search. Many millenials who had not been as financially “ready” to buy a home or were waiting to be able to afford the type of home they wanted, have seen their loan eligibility increase significantly. In addition, as wages have grown and the labor market has strengthened, many of these buyers have seen themselves rise to higher levels of wealth. Some buyers have moved into home buying due to the lack of rentals or high priced rentals in their area.

Redfin reported 57% of home tours taken were by first time home buyers in the week of January 12. That ratio was much higher in comparison to the 48% share these buyers held in the same week last year.

Builders have also found increased traffic, helping them cautiously increase the home inventory in the states. Having additional houses will help keep prices down, hopefully continuing to attract more home buyers on the fence.

 

Source: http://realtormag.realtor.org/daily-news/2015/01/28/more-buyers-in-house-hunting-mode

Rental Vacancy at 20-Year Low in US

by Tim Hart

The nation is still looking for room to rent. The national vacancy rate for rented units has dropped to a 20 year low. The rate has not been this low since the Fourth Quarter of 1993.

Bozeman, Montana has seen these lack of vacancies first hand, thanks to a growing town and surrounding area, schools and university. Bozeman has preemptively added additional housing and even built new subdivisions to better address the rental needs in the area, though it is yet to be seen whether these changes will improve the vacancy rate compared to 2014.

In the US in general, rising rents and a small supply of rentable properties should help renters facing affordability issues transition to homeownership. Currently, the homeownership rate has been falling and has hit a point not seen since 1994. However, as mortgage rates have dropped, as the FHA has lowered mortgage insurance rates, and as mortgagees have began offering lower down payments, most believe that household formation should pick up its pace.

Many millenials, who had not been transitioning to homeownership, may now be able to jump in as buyers, not renters, especially with improvement in the labor market. First time buyers only hold a 29% share of the housing market, well below the average of 40 percent. As the economy has improved, several experts believe that these buyers will now do just that—buy.

Homeowner vacancy rate is low at 1.9 percent. Builders have shown increased confidence that they will have a buyer for their new construction.

Although the low rental vacancy rates have caused some issues throughout the country, the market has left positive hints at what could be in the future. The homeownership market could see big changes this year, as many renters will have to decide to buy or keep renting.

 

Source: http://eyeonhousing.org/2015/01/rental-vacancy-rate-at-20-year-low/

 

 

Earlier this year, the Federal Housing Administration announced they would lower mortgage insurance rates and now many housing experts believe that change will bring thousands of new real estate buyers to the US housing market. The FHA lowered their insurance premium from 1.35% to 0.85 percent.

According to the National Association of Realtors, the fee reduction could bring as many as 90,000 to 140,000 additional home purchases to the market annually. The fee reduction could also make 1.6 to 2.1 million renters eligible—renters who have been struggling with high prices and low availability. The NAR provided a pretty enlightening example that shows how much money these borrowers can save. A borrower with a 200,000 mortgage could save $1,000 over the first year of the loan. After 30 years, the lower insurance rate can end up saving a borrower $18,000.00. That amount of money can be a big difference on whether a homebuyer decides they are ready to take out a loan.

By 2016, Moody Analytics projected home sales to increase by 100,000.

The low FHA rates were expected to help homebuyers and borrowers alike—but the positive outlook from top experts in real estate make the outlook even more positive. Hopefully, this will better address the lack of room and high prices in the rental market. If this change can bring even more buyers to the market, builders and sellers can more confidently build and sell, knowing someone will be out there to make it worth the cost and effort.

 

Source: http://realtormag.realtor.org/daily-news/2015/01/29/fha-fee-cuts-expected-boost-home-sales

Montana's "Non-Disclosure" Status Up for Grabs

by Tim Hart

A bill has come forward in the Montana Legislature that could mean big changes for homebuyers, sellers and real estate agents alike. The bill would make all completed home sale numbers open and accessible to the public. Essentially, the bill will void Montana’s current status as a non-disclosure state.

A non-disclosure state is any state that does not release home sale values to the public. For example, if a nearby neighbor sells his home, another homeowner will not be able to find public record of how much the neighbor sold it for. The public will have seen the listing price, but once the contract goes into negotiations, only the buyer and seller would know how much higher or lower the true sale price became. Under the new law, the public would know exactly how much each home has sold for in its past.

Non-disclosure states currently provide property information, owner transfers with loan amounts, and mortgage transfer taxes. Though that information can help a person get close to the sale value, it will not hit it directly on the head.

Proponents of the bill believe that making that information public will help prevent events that occurred during the housing recession seen in 2008. Real estate values increased by 55% across the state, requiring thousands of reappraisals to find true home values.

Opponents like the Montana Association of Realtors have argued that individual’s right to privacy on large matters like home sales trump the public’s right to know. Sales made in financial distress and multi million dollar home sales alike would be made public record—information many homeowners would prefer to keep quiet from their neighbors.

Setting a price on a home can be trickier without disclosed sales, making online “home value” estimates from websites like zillow.com and trulia.com just plain wrong. To receive a proper evaluation in a state like Montana, an experienced broker or appraiser would need to value the home in person.

If the bill is passed, it will affect every real estate transaction in the future. Everyone should pay close attention to how this bill may affect their own real estate dealings in the state.

 

 

Sources: http://www.homeinsight.com/faq12.asp?GCID=Direct

 

http://www.bozemandailychronicle.com/news/economy/bill-before-montana-legislature-would-make-home-sales-figures-public/article_86a9b1fe-4494-5f1c-8609-8b10d7ada243.html?utm_medium=desktop&utm_source=block_953010&utm_campaign=blox

Belgrade Subdivision Reapproved by Planning Board

by Tim Hart

The Belgrade City / County Planning Board reapproved a 357 lot project this week—a project that had already been given the green light in 2006. The Ryan Glenn Estates project was once again approved, after the original project fell through during the recession. Glenn’s project went under after an Arkansas Bank that had funded the project had also folded. This subdivision is yet another recently approved development to increase home inventory and supply for the valley. Home values holding true, despite the increased inventory, reflect positively on the state of the market in Gallatin County.

With the re-approval of the subdivision, Ken Williams, one of the current owners, can now develop the land as it had been intended 9 years ago. The project will be built in 7 phases and is located at the corner of Penwell Bridge and Lagoon Roads.

The board added 3 variances to increase the city block length in the subdivision, eliminate curbs, and eliminate pedestrian ramps on the two major roads. The planning board also added a covenant eliminating future homeowners right to interfere with the nearby Gallatin Speedway. The board will also address the future of two of the lots in the development that are located on a floodplain. The board will decide whether to reshape them or eliminate them. Finally, the board wants to use cut-off street lighting to avoid light pollution in the area.

The growth of the Gallatin Valley has become increasingly evident. Subdivision projects like this one show that developers have regained their confidence that there are enough homebuyers waiting in the wings to legitimize the increase in supply. Bozeman and Belgrade’s home inventory has grown without creating many vacant lots, a positive sign for growth. Low mortgage rates and the lack of rentals in the area have created a deep source of potential buyers.

 

Source: http://www.belgrade-news.com/news/article_3f64b242-a5e0-11e4-9fe1-2bae5a6c51cc.html

Displaying blog entries 1-10 of 118