Bozeman Montana Real Estate Information Archive

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On the Rise: Condos and Townhomes

by Hart Real Estate Solutions

If you drive past any part of Bozeman, you’ll more than likely find some sort of new housing development under construction. What may be surprising for some though is how many of these new developments are actually condos and townhomes, as opposed to traditional single-family detached homes. With both mortgage rates and gas prices having risen recently, some buyers (especially younger, prospective buyers) may feel a bit uncertain about what they’re able to afford. Luckily, condos and townhouses may be more attainable than they think.

Nationally, new townhouses account for 12.3% of all single-family housing starts according to the National Association of Home Builders (NAHB). Over the past 5 years, the number of new construction condos and townhomes for sale in Bozeman has fluctuated quite a bit, with the most recent dip in activity having taken place in March of 2017. Since then, the number of condos and townhomes for sale has been on the rise. In Belgrade, there has also been some fluctuation during this same time period, with new condos and townhomes for sale having also been on the rise since March of 2017, though not nearly as rapidly as Bozeman.

 

Condos and Townhouses for Sale in Bozeman & Belgrade, Jan. 2013 - Present

            

This data was pulled from the Big Sky Country MLS for 2018. While we attempt to provide reliable, useful information, we cannot guarantee that the information is accurate, current or suitable for any particular purpose. Estimates are subject to change without notice.

Similarly, the median sales price for condos and townhomes has also risen in recent years. As of April 2018, the median sales price for both condos and townhomes was $289,900, while in Belgrade this median sales price was $267,400. (Disclaimer: either of these numbers could be skewed toward the higher end of the spectrum by a higher-end listing on the market.) While this may still seem high to many, the median sales price of a single-family home in April 2018 was $396,250, while in Belgrade this median sales price was $310,000. (Again, either of these numbers could be skewed toward the higher end of the spectrum by a higher-end listing on the market.)  Based on these stats, choosing to purchase a condo or townhouse in Bozeman (as opposed to a single-family home) could save you up to $106,350, while choosing to purchase a condo or townhouse in Belgrade (as opposed to a single-family home) could save you up to $42,600.

Number of Condo/Townhouse Sales 2014 - Present

Robert Dietz, Chief Economist for NAHB, states that “future gains in the share as townhouses are a useful bridge from rentership to homeownership for younger prospective buyers in high cost markets…”. This is good news for millennials, as they represented 34% of all homebuyers across other generations in 2017. With condo and townhouse construction on the rise, we can continue to expect an increase in closed sales for these types of homes as we move further along into 2018, and even into 2019.

 

How Rising Home Prices & Growing Wages Relate to Desirability in Montana

by Hart Real Estate Solutions

Montana housing market prices are high, especially in Bozeman. In 2016, the median sale price for a single-family home in Bozeman was $359,250. Fast forward one year— the median sale price in Bozeman in 2017 was $380,750 (a 5.98% increase from the previous year).      

This data was pulled from the Big Sky Country MLS for 2018. While we attempt to provide reliable, useful information, we cannot guarantee that the information is accurate, current or suitable for any particular purpose. Estimates are subject to change without notice.

 

In terms of median home values, Bozeman ranked the highest when compared to both other large cities in the state and the United States as a whole.

 

Median Home Values 

Although wages in Montana remain lower than the U.S. average, they are growing faster than other areas across the country. In 2000, the average weekly wage in Montana was 69% of the U.S. level— by 2016, they had grown to 76% of the U.S. level. Quickly growing wages could be a contributing factor to the ever-increasing demand for housing in Montana (and Bozeman in particular), although the demand for quality of life is likely the largest reason for the high demand and rapidly growing population. While the median household income in Bozeman is currently $68,000 (keeping pace with the current median home price), this statistic doesn’t account for the quality of the housing that is available at this price.

Many of the people coming to Bozeman are not reliant on Montana’s economy for income. This group of people includes out-of-state residents who own a second home in Montana, telecommuters, and retirees. In 2010, the share of second homes in Montana was 8%, while the U.S. percentage was only 3.5%. Our state also attracts a large number of people who have the financial means to live wherever they choose—23% of Montana’s personal income comes from non-wage sources such as dividends and retirement. The U.S. level is only 19%. In Gallatin County, more than 40% of adjusted gross income comes from non-wage sources.

Because of the high quality of life in Montana, rising housing costs are partially related to the state’s desirability to those whose income isn’t related to Montana’s economy, which means that wage increases may not be as tied to housing cost increases as we previously thought.

With Bozeman’s population expected to hit 50,000 by the 2020 census, wages growing relatively quickly, and home prices continually on the rise, when will our local market start to become more balanced? With new construction expected to rise as we move closer to that 50,000 mark and potential inventory growth predicted countrywide by the fall, we may be moving closer to both a more balanced market and more affordable housing than we think. 

More Affordable Housing Coming to Bozeman

by Hart Real Estate Solutions

Bozeman is growing exponentially— this is no surprise. What might be surprising though is how quickly it is predicted to grow by 2045. Between 2000 and 2016, Gallatin County added roughly 2,200 new residents each year. From 2017 to 2045, Gallatin County is expected to gain nearly 55,000 new residents, with 50% of these residents expected to live in the City of Bozeman.

It’s been a seller’s market in Bozeman for some time now, with both available inventory and housing affordability increasingly becoming more of an issue in our market. The greater Bozeman area has experienced an average 8.3% increase in median sales price over the last 5 years. Currently, the median home price in Bozeman is $398,000— meaning that a household needs to earn at least $68,400 per year, or $32/hour for one earner, in order for this home to be considered affordable at the 30% of income affordability standard. While the median household income in our area is $68,000 (indicating that home prices are in line with incomes), this statistic doesn’t account for the quality of the housing that is available at this price.

However, with the city’s prices on track to surpass wages, and so many people moving to the area over the next few decades, the need for more affordable housing options is critical. The latest affordable housing project is being led by HRDC, and will be constructed on a parcel of land that partially wraps around Baxter Square Park (just under 3 acres), a quarter mile northwest of the North 27th Ave and Baxter Lane intersection. The 24 townhomes will be available to families who earn between $30,000 and $40,000/year, and those who are interested must financially qualify and complete HRDC education and home buying courses.

The Location Dilemma

Years ago, previous developers created a human-made pond adjacent to the future location of the new affordable townhomes. Their project was stalled in 2008 after the recession and was never fully completed. Over the past decade Cattail Creek merged with the pond, creating an expanse of wetlands in the area, resulting in a difficult location to build on.

Originally, HRDC had plans for a few single homes— they’ve since asked city commissioners to approve constructing the new affordable units closer to the pond, in addition to reducing both the size of the lots and the amount of space between homes and the streets. HRDC also proposed the creation of dog stations, individual lot fencing, and enhanced building signs for each of the units. City commissioners approved the project on February 26th, as it falls in line with their preference for constructing more homes on less space as Bozeman continually adds several thousand new residents every year. 

Future Location for Affordable Townhomes (Approximate)

 

Next Steps

If Bozeman continues to grow as quickly as it is predicted to (an additional 27,500 residents by 2045), then projection estimates will demand 12,700 new housing units over the 2017 through 2045 time period. In order to construct all of these units, developers need between 1,800 and 3,100 acres— the current supply in city limits for residential development is 1,300 acres.

While some of these new 12,700 units will be single-family homes, others will be multi-family buildings, townhomes and duplexes. Some will be affordable housing opportunities, and others won’t be.  At any rate, Bozeman IS growing, and quickly. Whether growth means that we expand up, or expand out, expansion of some sort and the addition of more affordable housing options will be necessary over the next few decades as our city prepares for massive growth.

Home Prices and Growth: What’s Going On?

by Hart Real Estate Solutions

What Does Growth Look Like Around the U.S.?

It comes as no surprise to many of us that owning a home can be an expensive venture. Factor in HOA fees, interior appliances/materials, miscellaneous maintenance costs and everything in between, and it’s easy to see why being a homeowner can appear to be daunting to some.

Although home prices grew 5.6% last year, this is only determined when comparing dollars to dollars. If this statistic is adjusted for inflation, this increase is still actually 15% below the high that occurred in 2006. Of the country’s 100 largest metro areas, only 41 grew to new peaks, even though 97 of these 100 metro areas did see overall home price growth. Overall, housing markets on both the West and East coasts have experienced inflation-adjusted home price increases of more than 40% in the last 16 years, while markets in the Midwest and South have generally experienced decreases.

However, growth has not been the same across all income levels. After Harvard researchers collected data for more than 9,000 ZIP codes across the country, most home prices in all income brackets were LOWER than their pre-2006 peaks. Here’s the breakdown:

  • Low-income areas: 13.7% lower
  • Moderate-income areas: 6.5% lower
  • High-income areas: 3.3% lower

Because of the post-recession change in home prices, many homeowners were able to emerge from underwater, a term indicating that the value of a home is below or under its mortgage amount. In 2011, the number of underwater homeowners topped out at 12.1 million; by the end of 2016, that number was down to 3.2 million.

                   

Source: PalmBeachPost.com

What About Growth in and Around Bozeman?

Bozeman remains one of the fastest growing small towns in the country, with a population growth rate of 4.6%. Home prices across the state currently exceed pre-2006 levels by 10%.

When comparing median sales prices between Bozeman, Belgrade and other Bozeman areas, home prices are still steadily on the rise in all 3 areas.

 

Median Sales Prices (2011-2017)

This data was pulled Big Sky Country MLS for 2017. While we attempt to provide reliable, useful information, we cannot guarantee that the information is accurate, current or suitable for any particular purpose. Estimates are subject to change without notice.

 

Although median sales prices are continually rising, the good news is that the median sale price is often lower than the median original asking price: 

This data was pulled Big Sky Country MLS for 2017. While we attempt to provide reliable, useful information, we cannot guarantee that the information is accurate, current or suitable for any particular purpose. Estimates are subject to change without notice.

 

As for the country as a whole, Freddie Mac predicts an overall home price increase of 4.9% in 2018. While that may seem like quite a jump, this prediction is still lower than the 6.3% growth we’ve seen so far this year.  Much like the prediction for 2017, 2018’s prediction also suggests continued economic growth of around 2%, steady job gains and relatively low mortgage rates. 


Related Articles:

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Gallatin County Leads Montana's Economy

Red Flags in the Real Estate Market

Belgrade Expands and Prepares for Future Growth

by Hart Real Estate Solutions

In 2010, Belgrade had around 7,389 residents; as of last year, that number has grown to 8,254— a 10.5% population increase in just six years, and probably even more now that we’re in the 3rd quarter of 2017. Many of these residents were priced out of the market when looking to purchase a home in Bozeman city limits.

In a report released by Prospera Business Network, the average price for a 2,400 square-foot home in Bozeman on an 8,000 square-foot lot was $367,241. In Belgrade, the average price for a single-family home is $291,382. At the beginning of the summer, the price was about $260,000.

What Preparations Are Being Made For This Growth?

Plans to improve downtown, alleviate the city’s transportation problems and buy more land to build additional schools are already underway.

The Belgrade City Council is creating a special tax district downtown, with its purpose being to produce a new revenue stream to finance this project (among other infrastructure upgrades), rather than asking residents to borrow the money. The council hopes that after improvements are made, new businesses will be attracted to the area. Here are the 5 areas downtown that need the most improvement:

  1. Poorly designed parking lots
  2. Unsafe conditions
  3. Deteriorating buildings
  4. Deteriorating infrastructure
  5. Defective street layouts

As far as starting to fix current traffic problems, the city of Belgrade is working with the Montana Department of Transportation. So far, a website has been developed to gather comments on road conditions from drivers, cyclists and pedestrians. All input will be taken into consideration when deciding where and how to begin solving this problem.

Belgrade High School set an enrollment record this year with 917 students, and the population for the whole school district this year is 3,406— 5% more than last year. The school district is now looking to purchase anywhere from 12 to 200 acres to build two possible new schools, while still having plenty of space for sports practices and games.

Most phases of these plans are expected to take between 6 and 7 years until completion. With Belgrade expanding so quickly, it only makes sense that the city council is already preparing not only for future growth, but the current population and its present needs.


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Bozeman Continues To Grow With New Proposed Airport Expansion

Record-breaking Research At MSU In 2017

New Short-Term Rental Rules Adopted In Bozeman City Limits

Bozeman Continues To Grow With New Proposed Airport Expansion

by Hart Real Estate Solutions

It comes as no surprise to most of us that Bozeman is quickly growing, in terms of both population and city development. In the past seven years alone, we’ve grown from 37,000 residents to more than 45,000. Last year was a record year for the Bozeman Yellowstone International Airport, which is located in Belgrade and is the busiest airport in the state— there was an 8.4% increase in the number of travelers in and out of Bozeman, and 29% of all air travelers in and out of Montana fly through the Bozeman airport.

To better accommodate those flying in and out of Bozeman, plans to develop more than 50 acres of land south of the airport have been submitted. These plans include a mixed-use complex that will hold hotels, retail stores and restaurants. A Connecticut-based developer, Charter Realty & Development, is currently in negotiations to purchase the property from its current owner Knife River, a construction materials company headquartered in Bismarck, ND. 

With both the number of new listings and pending sales increasing in Belgrade, this development may also be beneficial to Belgrade residents and those looking to relocate to the area.

While the median sales price for Belgrade sat at $279,900 last month, this is still lower than that of Bozeman, with its median sales price hovering around $369K. Dan Zelson, a principal with Charter Realty, states that with growth coming out of Bozeman and into Belgrade, long-term plans may include residential buildings. While this isn’t part of the current proposal, this development could take place as soon as next year, with its first tenants moving in by 2019.

The plan will be presented to the Belgrade City Council on September 18th. Whether or not lower median sales prices are encouraging some Bozeman residents to relocate to Belgrade, the area is indeed expanding and will likely continue to do so with such a busy airport nearby that continues to set new passenger records every year, as well as with the high population growth rates we’ve been experiencing in recent years. 


Related Articles: 

Black-Olive Proposal Denied by Bozeman City Commissioners

Bozeman's 4th Mid-Rise Building Proposed to Replace and Old Grain Mill

Bozeman Ranks Second as the Fastest Growing Small Town in America

Survey Finds Seceding Buyer Confidence in the Real Estate Market

by Hart Real Estate Solutions

The National Association of REALTORS® (NAR) forecasts a negligible increase in existing home sales going into 2017. According to survey findings from a total of 2,776 household respondents from the fourth quarter of 2016, consumers are losing confidence that now is a good time to buy a home.

Much of the skepticism in the market is held by renters. According to the survey, 11 percent of renters lost confidence in buying a home last year. Last quarter, 57 percent of renters believed it was a good time to buy a home, down from 68 percent in 2015.

Homeowners, on the other hand, seem to be more optimistic, with 78 percent of homeowners believing that now is a good time to buy a home. At the same time, the majority of homeowners (62 percent) believe that it is also a good time to sell.

The Contributing Factors

There are several factors that are likely contributing to the seceding buyer confidence—rising mortgage rates, steady price growth, and limited inventory, countered by an optimistic economic outlook.  

Rising Mortgage Rates—With the considerable increase in mortgage rates after the election, buyers may be reluctant to lock themselves in on a higher interest rate than they could have had. However, with expectations of a continued climb in mortgage rates through 2017 and 2018, it might be a better decision to buy now rather than later.

Steady Price Growth—There has been a steady price growth since the housing crisis, with national averages finally back to pre-recession levels. Lawrence Yun, the chief economist of the National Association of REALTORS®, says there is declining affordability in many areas of the country. With rents and home prices rising faster than income levels, more buyers are falling out of reach of their dream home.

Limited Inventory—A declining supply of inventory is another major issue, one that largely contributes to price increases. The rate of new construction is falling short of demand, by what Yun estimates to be about 3 million homes. How the construction industry accommodates for the rising demand as millennials reach their prime home buying years will shape the market in the years to come.

A Brighter Economic Outlook—The economy seems to be holding things together in the real estate market. Yun says that 2017 is expected to bring about 2 million new jobs. Unemployment levels have fallen to 4.7 percent last year, and is expected to be 4.5 percent through 2017 and 2018. According to a recent forecast from The Federal Open Market Committee projects that the U.S. GDP will rise to 2.1 percent this year.

With more jobs, and more millennials coming to market, Yun is hopeful that buyer demand will remain steady through the affordability tensions brought by rising mortgage rates and prices outpacing income growth.

With so many different factors affecting local markets, it would be wise to get in touch with a real estate agent for the best, and most informed decision about buying or selling. As NAR President William E. Brown says, “A Realtor® will have their pulse on current market conditions and can ensure a buyer is only searching for and making offers on a home that fits within the budget."

 


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Montana May Soon Be the New Silicon Valley

 

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Google Express Comes to Bozeman

Montana May Soon Be the New Silicon Valley

by Hart Real Estate Solutions

Montana is known for its wild countryside and its many great outdoor amenities, but there’s much more going on in our state than what you may realize. Montana has made some major strides in its economic performance in recent years, with more to come.

The High-Tech Sector is Booming

The high-tech sector is growing exponentially in Montana, contributing more than $1.5 billion in revenue last year, according to a survey conducted by the Montana High Tech Business Alliance (MHTBA). That’s an increase of more than 70% in revenue from what was reported in 2015! The board chairman of the MHTBA, Greg Gianforte, says that the high-tech industry remains the fastest growing sector in Montana.

For a better perspective of this substantial growth, the University of Montana’s Bureau of Business reported from a survey that the number of high tech business alliance members doubled in its first year from 101 companies in 2014 to 202 companies in 2015.

This survey revealed an increase of nearly $200 million in revenue from 2015 to 2016 across more than 200 high tech and manufacturing alliance members. High tech companies are expected to raise Montana’s average wages this year by adding nearly 1,000 new jobs paying an average annual salary of $60,000—$20,000 more than the state’s average.

The Silicon Valley may be getting all the attention, but it seems that may soon change. In 2016, the Ewing Marion Kauffman Foundation ranked Montana as the #1 state in the nation for entrepreneurship. There is great optimism for business ventures in Montana, particularly in Bozeman.

Successful companies like Oracle (which bought RightNow Technologies for an astounding $1.4 billion), Workiva, Foundant Technologies, Wisetail (whose owner has an inspiring start-up story to tell), Elixiter, and PFL.com, to name a few, have taken root in Bozeman and are growing rapidly.

SoFi, a finance company, announced plans in 2015 to double its workforce to 100 employees in Helena. Imagine what a company like this will bring to a small town of roughly only 30,000 people.  

The Talent is Growing

Surprisingly, Montana could be doing even better. Companies have mentioned their aspirations to grow faster in Montana, but their main inhibitor is a workforce shortage. There is plenty of work to go around, but there’s just not enough people. This is why many companies in Montana have positioned themselves near universities like MSU in Bozeman and UM in Missoula.

Fortunately, a qualified workforce seems to be ramping up. MSU has had record enrollment for 12 out of the last 14 years. And the computer science department at MSU is the fastest growing department on campus, with an amazing 40% growth from 310 to 430 majors from 2014 to 2015.

MSU has also been attracting the best and the brightest of the state. In 2016, 71% of all High School seniors that received an honors scholarship chose to enroll at MSU. And the talent is showing—the university’s average test score from last year’s freshman class broke a 27-year record, with a grade point average of 3.47.


Related Articles:

Google Express Comes to Bozeman

 

Uncertainty in the Market Amidst Diverging Mortgage and Treasury Yield Trends

 

Montana's Economy Leads The Nation

 

Gallatin County Leads Montana's Economy

Montana's Economy Leads The Nation

by Hart Real Estate Solutions

How's Montana Real Estate Market? 

As we recover from the housing crisis, it's evident that Montana performed exceptionally well through the recession as compared to the rest of the country. National home prices finally broke-even with the pre-recession peak, but Montana already reached that milestone back in 2014. Montana's real estate prices are now about 10% above where they were before the housing bust.


 

Housing Price Growth.png


Before the recession, Montana's real estate prices were just under par with national averages. But when the housing bust hit, Montana had better resilience to price deflation than rest of the country. The housing bust wasn't nearly as harsh in Montana as other states. Since 2008, housing prices in Montana have stayed well above national averages.

Bozeman, in particular, had the most pronounced price growth of the state. Median sales price of single-family homes in Bozeman are now exceeding $350,000, higher than Montana's most populous cities.

How's Montana's Job Market?

The number of jobs in Montana are also growing at a considerable rate, with our manufacturing industry outperforming the national rate since 2010. From 2010 to 2012, Montana's manufacturing employment grew at an annual rate of 4% to 5%, while the nation's rate climbed by only 2% to 3%. 

Manufacturing Employment .pngEntrepreneurship in Montana

Much of the job growth can be attributed to a number of new establishments, rather than the growth of existing ones. Several of the largest contributors to Montana's rapid job growth through 2010 to 2015 were from fabricated metal products, beverage, and computer/electronic manufacturing. 

# of Establishments in Manufacturing Industry.png
Another achievement worth noting for Montana is the $4.6 billion Air Force contract won by S&K Technologies Inc., an enterprise headquartered on the Flathead Reservation in northwest Montana. While the enterprise has multiple offices in the U.S. and Saudi Arabia, S&K returned more than $25 million in dividends to the Confederated Salish and Kootenai Tribes (CSKT). As shareholders of the company, the success of S&K makes a significant impact on more than 7,000 members of the Tribes.

The Bureau of Business and Economic Research at the University of Montana projected in a 2016 report that the high-tech and manufacturing companies would grow seven-times faster than Montana's overall economy. These sectors are expected to pay average annual salaries of $57,000—more than double the median wage in Montana.


Montana's Economic Outlook

Overall, Montana's economic outlook is looking robust. Housing prices are climbing, high-tech companies are growing, and more high-paying jobs are becoming available. Montana's real estate market and the high-tech sector will be two things to keep track of in 2017.


See More:

Gallatin County Leads Montana's Economy

 

Bozeman Airport Expands For Explosive Traffic Growth

 

Mid-Rise Buildings To Doom Bozeman's Small-Town Charm?

 

Gallatin County Leads Montana's Economy

by Hart Real Estate Solutions

Gallatin County had remarkable performance in Montana's economy, leading the state in wage growth last year. While it experienced a slight drop in wage growth from 2015 to 2016, the county seems to be in much better shape than the rest of the state. 


Gallatin County's total wage income increased by a staggering $73 million in the first half of 2016 from the preceding year. Yellowstone County, the state's largest, lead the state for the first half of 2015, before Gallatin County took its place in the second half. By 2016, Yellowstone County suffered an abrupt slowdown, while Gallatin County lead the state by nearly $40 million ahead of the runner-up, Flathead County. 

Montana Economic Report


In 2016, almost every county in Montana had slower growth. The Bureau of Business and Economic Research credited this fact to the substantial increases in Medicaid not carried over to 2016, causing health care wages to drop across the entire state. However, there were unique cases for each region. 

Yellowstone County's severe economic slowdown in 2016 was mainly caused by the continued oil slump that devastated Billings' oil producers and energy services. This caused a ripple effect that lowered construction wages and weakened its real estate market. 

Butte (Silver Bow County) was another region that experienced a major loss. Although the county's visitor spending increased, a drop in copper prices profoundly impacted mining wages, which declined 28%.     

While most of Montana suffered an economic downturn, Gallatin County's performance remains the strongest in the state.

Gallatin County's wage growth in 2016 nearly doubled Montana's next best county.

 

Much of Gallatin County's slight drop in wage growth from 2015 to 2016 was due to rising housing prices, and strain on its transportation infrastructure. Gallatin County's median home price broke the $300,000 threshold in 2016, higher than the rest of Montana's most populated counties. However, construction, high-tech companies, and tourism continue to drive our county's prosperous growth.  

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