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Downtown Continues to Grow: The 5 East Project

by Hart Real Estate Solutions

Do you remember the Black-Olive proposal that originated in 2016 and was later approved in the fall of 2017? How about the One 11 Lofts that were proposed just this year? The developer behind both of these projects, Andy Holloran, has proposed another mid-rise building for the downtown area.

Called 5 East, the proposed six-story, mixed-use building will include 30 condos with space on both the second and third floors for retail and office space. The current proposal for 5 East also includes 29 parking spaces on the ground level, with a mix of studio, one-bedroom, and two-bedroom condos on the top four floors, all ranging from 790 to 1,500 square feet. Located on the corner of Mendenhall and Tracy, the build site currently houses the Straightaway Motors auto shop and several homes, which would be demolished per an agreement with the landowner.

While many downtown residents are still concerned that contemporary buildings will negatively impact Bozeman’s small-town charm and compromise its historic integrity, Holloran states that in order to preserve our open land and agricultural space, we need to further develop our urban core, which includes “building up” instead of “building out”. As it currently is, the proposal includes in the northwest portion of 5 East scaled down to three stories “in order to respect the lower-density housing to the north and provide open space and outdoor amenities for residents”. These amenities include landscaped outdoor terraces, restaurants, and a spa.

5 East is currently set for review by the city planning department. If the plan is approved, construction could begin as early as the beginning of 2019.

 

Current Mid-Rise Development Projects/Proposals

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. 

Why Baby Boomers and Millennials Are Competing for Housing

by Hart Real Estate Solutions

For years, many parents put their family homes up for sale once the kids grew up and moved out— this is known as the “empty nest” story, where many parents wanted to downsize as they grew older and neared retirement. This isn’t the case anymore— many Baby Boomers (born between 1946 and 1964) haven’t been able to find a smaller home that was cheaper than the large family home, so instead they’re opting to stay put and not sell. With so many Boomers choosing not to list their homes for sale, overall inventory has remained tight and prices have stayed high.

Why is this?

In a recent survey conducted by Realtor.com, 85% of Baby Boomers said they were not planning on selling their homes in the next year. When asked why, 72% said that their current home met their family’s needs, 13% said financial concerns prevented them from selling, and 12% said they needed to make home improvements before selling. Baby Boomers hold a very high stake in the housing market, as they currently make up 78% of ALL homeowners, while Millennials only make up 41%.

As Baby Boomers decide to stay put, this removes about 33 million properties from the housing market. Many of these homes are suburban single-family homes or urban condos— the same types of homes that Millennials are looking to buy. However, many of these older homes do not have the same modern, open-floor plan that both Millennials and Baby Boomers alike are attracted to, making it difficult for Baby Boomers to sell their homes. Both generations are competing for the same types of homes (1,800-1,950 sq. ft.), even though they have different lifestyles.

Many low-end homes that Millennials would consider purchasing in a more balanced market are being rented rather than being available for sale, due to competition being so high. The idea of purchasing a starter home and reselling it several years down the right road when they’re ready to settle down and start a family is no longer a viable option for them, due to lack of inventory and affordability in today’s market. As a result, many Millennials are now skipping traditional starter homes, and choosing to buy something larger right off the bat.

The Future

Many analysts believe that more housing in the future should be built to cater to the desires of Millennials (greener materials, less square footage, etc.) rather than the older generations. Others believe that Baby Boomers will eventually sell their homes as they hope to get a better price later rather than settling for a lower price now. If and when “the great senior sell-off” happens, it isn’t likely until the mid-to-late 2020s, as the oldest millennials approach their mid-40s and are more interested in the larger homes that the preceding generation is ready to let go of.

New Short-Term Rental Rules Adopted in Bozeman City Limits

by Hart Real Estate Solutions

Bozeman City Commissioners adopted an ordinance on September 11th that includes new rules and regulations for the estimated 500-550 short-term rentals in Bozeman through platforms including Airbnb, VRBO and Homeaway. A short-term rental (STR) is defined as the rental of rooms or dwellings to paying guests anywhere from 1 to 29 days.

What’s the Gist?

This ordinance was adopted with a 3-2 vote by city commissioners—commissioners also passed the new fees that homeowners will pay in order to continue using their property as an STR. There is now an annual $250 registration fee, in addition to a one-time fire inspection fee of $225. In addition, some homeowners may find themselves paying an administrative conditional use permit of $1,508. Commissioner Chris Mehl states that there may be adjustments to these fees in the future, as the city commissioners will have the chance to look at and assess the fees every year.

What Else?

The new fees will be used to balance the program’s cost— they will cover resources needed to process applications, respond to complaints, monitor regulations and inspect rentals. Many older homes that are being used as short-term rentals do not have the same fire-safety features that newer homes have.

While some are concerned that the new mandatory fees will have a negative impact on homeowners who use their properties as short-term rentals in order to generate additional income, Mayor Carson Taylor supports the fee increases because they are important to overall public safety.

Additionally, the new ordinance will forbid STRs that aren’t owner-occupied at any time within Bozeman’s residential districts. In this case, owner-occupied indicates that the owner occupies the dwelling for more than 50% of the calendar year. People who have been operating in these areas prior to January 1st will have the option to be grandfathered in.

When Does This All Start?

These rules will go into effect starting December 1st, and once the ordinance is passed (30 days from September 11th), homeowners will be given a 60-day grace period to meet compliance.

What makes Bozeman both unique and a desirable place to live all comes down to quality—quality of the community, quality of housing and ultimately the quality of the people who live and work here. The intended purpose of this ordinance, while seen as frustrating and expensive to some homeowners, may help contribute to the quality of life that is so valued here in Bozeman, and continue to make living and visiting here so enjoyable.

5 Areas to Focus On: How to Increase Your Home’s Resale Value

by Hart Real Estate Solutions

It’s the hottest time of year, and with that comes the hottest selling season. When aiming to sell, keep in mind that the littlest changes can often have the largest impact when trying to increase the resale value of your home. Here are a few ideas to get you started on preparing your home to sell this summer, while also getting a great price for it:

  1. Declutter

It is important to keep in mind that some of the changes you will be making may not suit your personal preferences and tastes— that’s okay! Packing away family photos and sports memorabilia will be less distracting during showings. Keep in mind that many buyers cannot visualize a space, and if you have too much “stuff”, this can overwhelm them and leave them with a negative impression of your home.

  1. Spruce up the bathrooms

42% of real estate professionals surveyed by Consumer Reports agree that bathrooms are one of the most important rooms in a home to have in good condition. You can invest as much or as little as you want into renovations and updates, but simple projects such as re-grouting the tile or replacing an old toilet could give you a potential increase in asking price of up to 3%.

  1. Update the kitchen

Millennials currently make up 34% of all homebuyers, and a “modern/updated kitchen” is one of their top criteria when considering which home to purchase. New or repainted cabinets, stainless steel appliances and a fresh coat of paint can completely transform your kitchen and potentially add between 3 and 7% to the asking price.

  1. Give the walls some TLC

Walls should be a backdrop rather than a focal point when trying to sell. Certain colors work better in some rooms than others and may have an impact on selling price. Homes with warm neutrals such as wheat yellow in the kitchen sell for $1,360 more on average. Comparatively, neutrals such as grey-beige win in the living room, adding an average of $1,104 to the selling price.

  1. Remember the curb appeal

The exterior of your home can easily be neglected when renovating the inside, but some potential buyers won’t even make it through the front door if they aren’t impressed with the outside. Basic landscaping, installing outdoor lighting and planting a few flowers can make a world of difference, and may bump up the asking price by up to 5%.  New roofs are also a huge bonus, as it shows buyers that the home has been cared for, and 31% of real estate professionals agree that the roof is an important part of the home to have in good condition.

In order to attract buyers and leave them with a positive and memorable impression, it’s important to spend a little time spicing up your home without going overboard. Researching which projects will suit your home best before spending money on unnecessary renovations will help to ensure that you’re only putting in what you’ll get out when offers start rolling in. 


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To Buy Before or After Selling Your Home?

by Hart Real Estate Solutions

One of the biggest frustrations in the real estate market is timing. Having another property lined-up after selling a home is not always easy. The ideal scenario for sellers is to close on their current home just as they purchase a new one, allowing a seamless move.

Unfortunately, as in most markets, it’s difficult to accurately predict timing between sale and purchase, causing frustrating conflicts in the transition process. The time-frame for getting a home under contract can range anywhere from days (not uncommon in here in Bozeman, Montana) to months or even years (typically for higher priced homes). This is why hiring a Realtor® is worth the investment to gain market insights about local inventory, months of supply, and other market conditions not entirely available to the public.        

In short, there’s no concrete answer about whether it’s better to buy before or after selling your current home. There are pros and cons to either decision (or outcome).

To Buy First?

Pros

If you have the financing available, buying a new home first may be a viable option. Having a home lined-up in advance has the obvious benefit of relieving pressure on your home search. This is typically the biggest advantage of buying first, because buying a home is no small deal, so you really shouldn’t rush and buy under pressure.

Buying first also allows you to move all your stuff and get your home just right before you move in, and again, without having to rush.

Another benefit of buying first is that, although you may end up having an extra mortgage payment, you won’t have to find a place to rent while searching for a new home. And because most renting agreements require a year lease, renting may not be the best option for you.

Cons

However, there exists the risk of not being able to sell your current home, or at least at the price or time-frame you were hoping for, adding the cost of a second mortgage.

Another major disappointment that you may face when buying first is losing out on your dream home. If you don’t have the funding to purchase a new home outright (as most people don’t), your offer will have to be contingent upon sale and transfer of title of your current home. Depending on how your contract is negotiated, a non-contingent offer may force your hand to remove a contingency in typically a 48 to 72-hour period, or terminate

To Sell First?

Pros

The main advantage of selling first is the strong position it puts you in as a buyer to negotiate, without being tied down by sale contingency terms. Offers tied to contingent-upon-sale contracts can significantly lower your negotiating power, and in a seller’s market, are often rejected.

Another great benefit of selling first is that it will give you the cash you may need for your new home.

Cons

On the other hand, selling your home before securing a new one will obviously entail the risk of not having anywhere to live in the meantime. When selling first, you may have to rent, stay at a friend’s house and pay for storage, or do whatever means necessary to find shelter in your transition between homes.

One way to avoid this, however, is to negotiate “rent-back” terms with the buyer of your current home, allowing some additional time for your home search.    

Why Hire a Real Estate Agent?

As discussed already, Realtors® have (or should have) a firm grip on local market conditions. Having experience and exclusive access to local market statistics, a Realtor® can provide a closer estimate of how long it should take for a home to sell in your neighborhood, and negotiate terms and conditions in your best interest. It’s the job of a real estate agent to be your trusted guide and ensure that the whole process, from marketing to writing a contract, flows smoothly.

With that, I have one last important tip: make sure to properly interview prospective real estate agents before entering a contract. Not all Realtors® have the same experience and wisdom in guiding you through the transaction process. Find an agent that truly cares about their clients and will go above and beyond expectations to serve you. Make sure to read through reviews, ask your friends and neighbors, and do some digging to find the right agent for you.

Follow us on Facebook, or sign up for our monthly newsletter to receive exclusive information about the housing market, real estate tips and advice, and local news and development in the Bozeman, Montana area.


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

 

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Bozeman Montana Becomes Hot Spot for High Tech Companies

 

 

Bozeman’s 4th Mid-Rise Building Proposed to Replace an Old Grain Mill

by Hart Real Estate Solutions

Bozeman’s 4th mid-rise building is currently being scoped out for a site on the east side of downtown. This BG Mill building will have a little more character than the rest though, turning an old grain mill that has been vacant for decades into a 5-story, multi-use building with a mixed modern/rustic style architecture.

The proposed plan for the BG Mill project includes a parking garage and a small commercial space on the ground floor, 18,000 square feet of office space on the middle levels, and 10 condos on the top two levels. The project developers, Michael Ochsner and Chris Lohss, plan to integrate three silos from the grain mill into landscaping features and hopefully keep the “BG Mill” logo for the new building.

Although there has been a long, drawn-out debate over mid-rise buildings changing the character of Bozeman’s small-town charm, Ochsner and Lohss point out that the site, located on the southeast corner of Mendenhall Street and Broadway Avenue, is already surrounded by other existing commercial properties.

While residents are concerned that the Black-Olive project, another mid-rise building proposed for Bozeman, would cast a shadow over Bozeman’s southern historic downtown neighborhoods, the BG Mill project may not cause nearly the same issue.

Positioned between the south end of a neighborhood and the north end of downtown Main Street, the site seems to be better suited for its location where it wouldn’t obstruct views of the Bridger Mountains to the North—a major point in the argument against mid-rise buildings in Bozeman.

The project developers said they haven’t filed an application for the project yet, but plan to do so by next week. Once approved, construction of the BG Mill project is hoped to break ground this summer.

A public meeting will be held at the Bozeman Public Library on April 13 at 7 p.m. to discuss the project and gather feedback from the public.

All Current Proposed Mid-Rise Development Projects for Bozeman.

Follow us on Facebook, or sign up for our monthly newsletter for exclusive access to our latest market stats, expert tips and advice, and local news and development in the Bozeman, Montana area.


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Bozeman Montana Becomes Hot Spot for High Tech Companies

by Hart Real Estate Solutions

The high-tech industry is thriving in Montana, growing at a rate seven times faster than other sectors.

Montana’s high-tech companies are expecting to add roughly 1,000 new jobs this year, paying an average salary of $60,000—more than double the median annual income in Montana.   

The Montana High Tech Business Alliance counted a total of 546 tech companies in Montana as of December 20, 2016. Yet the organization says there are even more companies unaccounted for, as smaller companies may be hiding in remote business parks and second-floor offices without signage.

Much of the attention seems to be focused around the Universities. With Montana State University pumping out more qualified talent each year, as FICO Chief Executive Officer Will Lansing says, “the talent pool in this part of Montana has attracted dozens of leading technology firms.”

High Density of High Growth, High-Tech Companies

He wasn’t kidding either. Here’s a list of some of the most successful high-growth technology companies in Bozeman, Montana.

Ascent Vision, an aerospace technology company based in Bozeman, grew from two people to a team of 50 and made millions within just the first year of operation in 2013. Last year, the company began construction of a new 30,000 sq. ft. facility by Belgrade. It will be interesting to see how this company will grow with the rising demand for sensors in UAVs, counter UAS systems, self-driving cars, and ground based military applications.

Elixiter, a marketing services firm, averaged an astounding 100 percent growth rate year over year, landing on the Inc. 5,000 list of fastest growing companies in 2016. Having such rapid and unanticipated expansion, the company relocated four times in four years, finally settling on the northeast side of Bozeman.

FICO, a data analytics company for credit rating services, plans to add a new location in downtown Bozeman, and hire 50 new employees within the next 18 months. The company employs roughly 3,000 around the world, and is a recognized leader in analytic technology. FICO was ranked #31 among the Top Technology Providers in financial services ​by American Banker and BAI, and was also named to the Analytics 50 by Drexel University and CIO.com.

Foundant Technologies, is a “software-as-a-service” company in Bozeman that develops grant and scholarship management software, was also on the Inc. 5,000 list of fastest growing companies in 2016, but for the third consecutive year in a row.   

PrintingForLess.com (PFL), while technically located in Livingston, Montana, is close enough to give credit to the Bozeman area. PFL landed on the Inc. 500 list of fastest growing companies for three consecutive years, and appeared on CNBC, Wall Street Journal, and the New York Times for having innovative HR policies. Having established the first website for commercial printing, PFL has made significant progress since it was founded in 1996. It evolved from a traditional print shop into a sophisticated marketing technology company. It’s expecting significant growth in 2017 with its new software, named “Tactile Marketing Automation.”

Quiq, a firm that develops text messaging software for customer service, scored a $6.5 million investment last year—a great start after just being established in October 2015. Company CEO Mike Myer, a former employee of RightNow Technologies before it sold to Oracle for $1.8 billion, says it was an easy decision to choose to start this business in Bozeman. He says “Montana is a great place to recruit up-and-coming people, and not just recruiting, but retention and loyalty.”

Wisetail, a learning management software (LMS) company in Bozeman, is an inspiring entrepreneurial example. Amidst the most recent housing crisis, company founder, Justin Bigart, started the company with the ambition to repay his debts, refusing to consider bankruptcy as an option. His hard work and determination certainly paid off. Wisetail ranked #32 in Outside Magazine’s 100 Best Places to Work in 2016, named one of the 5,000 fastest growing companies in America by Inc., and one of Fortune Magazine’s 50 Best Small Businesses in America.  


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Mortgage Rates Fall By Largest Weekly Margin Over Two Months

by Hart Real Estate Solutions

As of March 23, the average mortgage rates have just fallen by the greatest weekly margin over the last two months, according to Freddi Mac’s mortgage rate survey.

  • From last week, 30-year fixed mortgage rates declined by 7 basis points from 4.30 percent to 4.23 percent this week. At this same time last year, these rates were at a lower 3.71 percent.
  •  
  • 15-year fixed mortgage rates also declined, by 0.05 percent from 3.50 percent to 3.45 percent this week. At this same time last year, these rates were at a lower 2.96 percent.
  •  
  • 5-year adjustable rate mortgage (ARM) declined by 0.04 percent, down from 3.28 to 3.24 percent this week. At this same time last year, these rates were at a lower 2.89 percent.

Mortgage Rate Graph

This data was pulled from Freddie Mac weekly survey data 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.

 

With such a dramatic change in direction soon after experiencing a jump in rates last week, Freddie Mac notes that this is a sign of continued uncertainty in the market. The National Association of Realtors® (NAR) projected a steady climb in mortgage rates through 2017 and 2018, so this might be a better time to lock in on a mortgage rate while it’s lower if you have been looking to buy a home.

 

Follow us on Facebook, or sign up for our monthly newsletter to receive exclusive information about the housing market, real estate tips and advice, and local news and development.


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Red Flags in the Real Estate Market

by Hart Real Estate Solutions

The real estate market is similar to the stock market—it’s a roller coaster. Prices fluctuate, demand is seasonal, and a lot of money can be made by those who know how to play the game.

Tracking the trends and market conditions of your local area is key to anticipating opportunities and threats in the real estate market. Here are some of the biggest factors to look for to help you make smart, informed decisions, whether buying or selling a home.

Months of Supply, or Days on Market (DOM), determines whether the market favors buyers or sellers. As the phrase implies, months of supply indicates the average number of months it takes for a house to sell. Greater than 6 months of supply is considered a buyer’s market, less than 4 months is considered a seller’s market, and anywhere between the two is considered a balanced market.

Number of Closed Sales is a great way to get a feel of how “hot” the market is. Following the trend for closed sales is helpful for understanding the seasonality of your local market. Summer months are typically much busier than winter months.

Mortgage Rates is a major factor in determining buyer demand. The rule of thumb is that as rates go up, buyer demand goes down. In particular, if mortgage rates and housing prices outpace income levels (which is a national trend today), buyer demand will likely decline as home affordability becomes an issue. The Fed funds rate is also an indicator for which direction mortgage rates will go, and the Federal Reserve normally announces what the Fed funds rate will be in the coming years.  

New Construction is a big player (especially today) in determining price levels and available inventory. Currently, much of the nation (including here in Bozeman, Montana) is experiencing a housing shortage, causing prices to rise and intense competition among homebuyers. The construction industry is still recovering from the housing crisis, and is struggling to keep up with demand as millennials enter their prime home buying years.

Local Development is vital to uncover opportunity. Much like a business, real estate investment is all about location, location, location. Development such as new roads, schools, and shopping centers are all signs that property values may increase. A growing community (like Bozeman, Montana) can be very profitable you invest early.

Housing Affordability in city limits is an indicator for future development in outlying areas. Much like what we’re experiencing here in Bozeman, as properties in town become limited and overpriced, you can expect the outer fringes to soon be in high demand.    

Staying informed with these trends will help equip you with the best decisions going into the real estate market. Anticipating which direction the market will turn will not only uncover investment opportunity, but also help insulate you from any threats (like the recent housing crisis).

For exclusive information and statistics in your local market, you can contact a Realtor® for the most recent market conditions. Subscribe to our newsletter, and once a month, we’ll send you local market reports and news updates for the Bozeman, Montana area. 


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