Real Estate Information Archive


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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.





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.




Gallatin County Housing Market Update - November 2015

by Tim Hart

This month, we will compare Condo and Townhome sales in the Gallatin County for the first three quarters of 2015. Here are a few stats for Gallatin County townhomes and condominiums:

  • From Quarter 1 to Quarter 2, total home sales increased by 77.50%(120 sold in Quarter 1, 213 sold in Quarter 2)
  • From Quarter 2 to Quarter 3, total home sales increased by 5.16% (213 sold in Quarter 2, 224 in Quarter 3)
  • From Quarter 1 to Quarter 3, total home sales increased by 86.67%


  • From Quarter 1 to Quarter 2, dollar volume increased by 65.66% ($33,245,180 in Quarter 1, $55,075,255 in Quarter 2)
  • From Quarter 2 to Quarter 3, dollar volume increased by 5.11% ($55,075,255 in Quarter 2, $57,889,875 in Quarter 3)
  • From Quarter 1 to Quarter 3, dollar volume is projected to increase by 74.13%


  • From Quarter 1 to Quarter 2, homes spent 18.46% longer time on the market (65 DOM in Quarter 1, 77 DOM in Quarter 2)
  • From Quarter 2 to Quarter 3, homes spent 23.38% shorter time on the market (77 DOM in Quarter 2, 59 DOM in Quarter 3)
  • From Quarter 1 to Quarter 3 homes spent 9.23% shorter time on the market.


Summary – Sales and dollar volume continue to grow for townhomes and condominiums. Increased home sales and dollar volume imply more homes on the market at higher prices. They have been going quicker as the year has progressed, suggesting more buyers are jumping into the market. Overall, the market appears to be deepening as more homes are listed and more buyers start their search.

New Bozeman Neighborhood: The Lakes at Valley West

by Tim Hart

The final plat of Valley West Subdivision’s final phase was approved on October 5th, allowing development to begin on Bozeman’s west side. The Lakes at Valley West, as the final phase is called, has been under formal review for the past year. Now with approval, it will bring approximately 60 homes and 2 lakes to the already thriving subdivision.

Valley West has been one of the fastest growing and most active subdivisions in Bozeman. The final phase will help provide amenities to the current neighborhood while also increasing home inventory in the Bozeman area.

Bozeman, like the United States overall, has dealt with rising values and a very competitive rental market. Across the nation, builders have been trying to increase home inventory to help alleviate rising home values. With both rental values reaching an all time high as well as rental vacancies reaching an all time low, increasing the number of homes available should help increase competition.

Bozeman has approved additional neighborhoods, apartment complexes and multi-use properties to try to increase local inventory. Bozeman has also looked into trimming lot sizes to make the home building process more affordable. Currently, commissioners have put an inclusionary zoning proposal on hold as well.




Property Taxes Rising Suggests an Improved Economy

by Tim Hart

Property tax collections increased by 3 percent over the past year. Collections increased by 13 billion dollars to a total of 503 billion collected. The figures include both commercial and residential property taxes.

Property taxes might be rising thanks to improving home values. State and local governments might be re-appraising homes to raise their listed value. Whether it has happened enough in different towns and states to affect the national average is unclear.

Interestingly, property taxes have taken up a smaller percentage of total tax collections than in recession years. In 2010, property taxes held 44.9% of the total share whereas now they hold 38.9% of the total. According to the National Association of Home Builders, that proportion is very close to the pre-housing boom levels seen in 2001 to 2003.

This trend would suggest that non property taxes have grown significantly faster over this time than property-based taxes, meaning that Americans are taking in more income and are generally having better economic success than in years previous. As everyone’s financial situation improves, it would make sense for the housing market to see similar results as it tries to creep back to a normal, healthy market.





Fed Keeps Rates Near Zero, Mortgage Rates Fall

by Tim Hart

In light of the Federal Reserve’s decision to not raise the Federal funds rate, mortgage rates for a 30 year fixed rate mortgage fell to 3.86 percent this week.

The Federal Reserve continued to hold off on raising their interest rates, choosing to keep rates close to zero percent. The Fed attributed their lack of action to the lack of global growth that could potentially slow the domestic economy as well as the fact that inflation in the US remains subdued. The Fed committee also wanted to see additional evidence from the labor market to make sure it has and continues to improve.

The Fed made their decision 9-1 but they will meet again in late October and mid December. During those meetings, the Fed will once again decide on whether to raise rates. The Fed still plans on raising interest rates by the end of the year, but they have also said this for several previous years.

Currently, the Federal Reserve’s long-term goal is to have rates at or close to 3.5% by 2018.

Home buyers looking for a home loan will love the news that the Federal Reserve has not raised their rates as of yet. Mortgage rates are directly affected by the Federal Reserve rates and rise accordingly. Rates have stayed below 4% for 9 straight weeks. So long as the Fed does not raise rates, great financing opportunities still exist for buyers that might not be seen for some time. Having the Fed raise rates shows their confidence in overall economy, but from an individual buyer’s perspective, now is the time to lock in a great rate for the next 15 or 30 years.



Commissioners Delay Vote on Affordable Housing Plan

by Tim Hart

I wanted to quickly apprise Bozeman locals and potential residents of the impending decision Bozeman Commissioners need to make regarding affordable housing. On Monday, Commissioners heard arguments from all sides on whether they should move forward with an inclusionary zoning proposal that would try to lower costs of home within Bozeman city limits.

Commissioners received solid opposition from members in both the real estate and building industries.  Both the Gallatin Association of Realtors and the Southwest Montana Building Association raised concerns about the new proposal. These two groups worried the proposal would set back a rebounding Bozeman housing market while also encouraging sprawl outside of city limits to avoid the new laws.

Even the HRDC, a proponent of inclusionary zoning, took issue with the fact that it only helped the most affluent families who still qualified for affordable housing. But, the HRDC did still support the proposal as it stood.

For now, commissioners have tabled a vote on the proposal, with no deadline for when it may reappear for a vote. As of now, the Bozeman housing market will carry on as it had been.




Average Single Family Home Requires 22 Subcontractors

by Tim Hart

When faced with putting down 200k plus for a new single family home, some buyers may wonder if their builder is walking away with huge profits. Although the builder may very well be making a good profit on the home, many buyers forget the organization and costs required to subcontract out the work needed to build the best home possible—tasks best done by experts in a specific industry. Buyers want to know that their home has been wired, plumbed and floored with the best of them, but having that guarantee does come with a higher price tag.

Builder’s use of subcontractors is clearly as strong as ever. Now, according to the National Association of Home Builders, builders hire (on average) 22 subcontractors to build a new, single family home. Not only that, 70 percent of homebuilders use at least 11 and sometimes use up to 30 subcontractors on a given home.

16% use 0 to 10 subcontractors

36% use 11 – 20 subcontractors

34% use 21 to 30 contractors

9% use 31 to 40 subcontractors

4% use 41 to 50 subcontractors

2% use 51+ subcontractors

Even if a builder does not subcontract a job on a specific home, he may subcontract that task on the next one. Two thirds of builders said they generally subcontract 75% of the construction costs in a build.

So for homebuyers, remember that homes, like many human inventions, have a lot more subtlety and work put into them than what first appears to the untrained eye. Although home costs appear high, sometimes those profits are split among a wide group of people. It is up to the builder to determine how those profits are split and how much help he needs to build a quality home, while remaining competitive in the housing market.





Commissioners to Address Bozeman Affordable Housing

by Tim Hart

In a great article by Eric Dietrich of the Bozeman Daily Chronicle, he outlined the affordable housing proposal that commissioners will consider on September 21st as well as outlining the comments and concerns about the proposal from the two most prominent, opposing parties.

The proposal was made in light of rising values in the for-sale housing market in Bozeman and whether it’s the local government’s responsibility to help keep a certain segment of homes at the affordable level. Currently, there is worry that some residents will need to move to outlying communities to keep their homes affordable. Bozeman has had experts, non profits, builders and anyone else with creative ideas offer their best suggestions to tackle affordability. Ideally, Bozeman commissioners will reach a decision next Tuesday.

The Proposal: Currently, the median income for a resident in Bozeman is $61,800 and can afford a home up to $250,000. However, as of last November, median home prices sat at $287,000.

To help lower the average costs of homes in Bozeman, the city would try to build 14 new affordable single-family homes and townhouses by 2016 with 54 new units by 2017. The city would use inclusionary zoning to get the homes built. Essentially, they would ask builders to build a certain number of affordable homes for every full subdivision, development etc. To entice builders in, the city would help cut down their costs by subsidizing impact fees and reducing lot sizes.

Three quarters of these homes would be priced for residents only making 90% of the median income. That would help a family of three making $55,600 able to afford a home of $213,000.

The last quarter of affordable homes would be built for residents making $49,450 and below, or 80% of the median income. These residents could afford a home of $161,000. 

Currently, builders and home affordability non-profits sit on each side of the debate and both have brought up their own concerns with the proposal.

HRDC: The HRDC is a non-profit, community action agency that has helped build affordable homes across town as well as help residents below median income levels to keep a good quality of life.  The HRDC’s concern with the new proposal is that it does not go far enough. The HRDC would like to see more affordable housing for those making $49,450 or less. They were also disappointed that the proposal does not address issues of affordability in the Bozeman rental market.

Builders: Local area builders are concerned that the new proposal and regulations will require too much financial risk on their part without equal compensation for their sacrifice. Essentially, they would be asked to recoup the lost profits of adding affordable homes to a subdivision through the impact fees and lot sizes. Builders do not believe the profit line makes that feasible.  On top of that, builders are concerned that even if low income buyers were able to buy a home in Bozeman because it had been subsidized, they may not be able to qualify for financing from banks and other insitutions that want to see certain levels of income.  Builders would take on a lot of financial risk without the guarantee that a buyer would be waiting for them.

No matter what the City Commissioners decide, the affordable housing debate will continue in Bozeman. Hopefully, Bozeman will be able to come up with a proposal that would be agreeable to all parties, if not ideal.



Home Inventory Improves in July, New Home Sales & Values Up Too

by Tim Hart

New home inventory increased by 218,000 units in July – great news for the overall housing market as it deepens and strengthens. The market has not seen such a high month-to-month improvement since March in 2010. Homebuilders continue to put more faith in the housing market by adding more homes to lure in prospective buyers. Although this time the rise in inventory did not lower home prices, steadily increasing inventory should help normalize the market—ideally to a consistent growth rate.

The housing market can take a big step forward by increasing existing home inventory in the future. Previous homeowners buy most new homes. Having more sellers put their homes on the market will then make them eligible buyers in the new home market. Having more buyers in the new home market will help convince builders to build more homes. Building more homes will increase new home inventory, lowering prices and enticing homeowners to upgrade to a new home, once again adding more inventory to the existing home market. This is obviously a simplified look at the housing market, but positive cycles like this can really jump start a recovering market.

As alluded to earlier, home prices did increase by 2% in July, while average price increased by 4.8 percent. Increasing inventories may provide a check to rising values. New home sales rose by 5.4% from June and 25.8% from July of last year. More sales is always good news as it shows the market has become broader and therefore less volatile to external forces.




Displaying blog entries 1-10 of 166